A Department of Health and Aged Care webinar last week revealed the Government will fund wage rises for 60,000 aged care nurses, awarded the increase by the Fair Work Commission (FWC) from 1 March 2025.

But according to providers, Government funding for leave liabilities associated with the FWC's aged care worker wage rises, including the upcoming increase for nurses, are well short of the amounts required, and there are other unfunded additional costs associated with higher wages

Alasdair Croydon, CEO of Not For Profit Holy Family Services, which operates a stand-alone aged care facility and retirement village, in Marayong, 38km west of the Sydney CBD, told The SOURCE that the Stage 2 pay rise, which came into effect on 30 June 2023, left them more than $160,000 out of pocket.

"As an aged care provider it feels like every few months there is something else that changes that we have to manage and no one gives a thought to what that means for the small providers,"Alasdair said. 

"And more importantly the government does not think about how or why those same small providers struggle both financially and why they struggle to keep staff."

The Stage 2 pay rise plus the FWC's 5.75% annual wage review decision both came into effect on 1 July 2023. Holy Family Services increased pay rates for eligible staff by 20.75%, in line with the FWC recommendations.

"The government grant to fund that increase [in leave entitlements ] was supposed to be 50% of the increase, months later," Alasdair said.

"After we provided the detail of that increase, which was around $271,000, we received around $110,000 for the grant which was not close to 50%."

He said workers compensation insurance premiums have also increased in line with the wage rises. 

"That meant that the 20.75% salaries and wages increase also increased our Workers Compensation premium by the same percentage, and that is funded by us.

"For the wage case rise [for aged care nurses ] from 1 March 2025 we will have the same outcomes - most of the leave liability will be internally funded and the Workers Compensation premium will be internally funded."   

Alasdair added that the indexation of subsidy and supplements, which used to take place from 1 July, last year did not occur until 1 October, leaving providers to fund the difference for three months.

Govt should be "taken to task"

David Reece, CEO of Not For Profit aged care provider AdventCare, which has two residential aged care homes in Victoria as well as four retirement communities, told The SOURCE, "For the Stage 3 increase from 1 January 2025 it has cost us $64,000 in additional cost off our bottom line in January.

"We had [a cost of] around $70,000 for Stage 2 where we received a grant of 50%.  

"These amounts will not be funded by the grants.

"The Government has to be taken to task and stop saying it is fully funded."

In its 1H 2024-25 results presentation held on Monday this week, Regis Aged Care noted that small and single home aged care operators are leaving the sector due to increased costs, regulation and compliance complexity, and greater staffing requirements.