Aged care providers alarmed as funding increase falls short of award wage hike

Taken from yesterday's Aged Care Pay Rise webinar

Aged care providers have learnt that the increase in funding they will receive next financial year will be insufficient to cover the increase in their wage bill.

Yesterday’s webinar by the Department of Health and Aged Care provided details about funding the wage rise, with multiple questions from providers asking whether there would be an adjustment to cover the 5.75% increase in award wages – taking effect from July 1, 2023.

Earlier in the year, the Fair Work Commission (FWC) granted direct care aged care workers a significant 15% pay rise. Just earlier this month, the FWC further increased the minimum wage by 5.75%.

As previously reported by Inside Ageing, the 5.75% increase in the minimum award would apply to all aged care workers on a federal award starting from July 1, 2023. This increase would be added on top of the 15% Work Value increase for eligible workers, which is set to apply from June 30, 2023…Read more.

Mark Richardson, Assistant Secretary of the Residential Care Funding Reform Branch at the Department of Health and Aged Care, stated in yesterday’s webinar that the AN-ACC (Australian National Aged Care Classification) would definitely cover the 15% increase. However, he expressed less certainty about the AN-ACC covering the 5.75% increase.

Inside Ageing has spoken with a residential aged care provider who has run the numbers on the additional cost of the 5.75% wage increase after assessing the cost of this based on current achieved staffing levels – 160 minutes (this delivers current costing numbers and is a realistic assessment); the cost of the increase based on the gap to reach 200 minutes plus oncosts (38%) based on the additional wages equates to about $400k per annum for their 100-bed service.

To ensure providers are held accountable for passing on the increased funding to aged care workers, the quarterly financial report for the fourth quarter of the 2023-24 financial year will collect additional information about wages. This includes minimum and maximum wage rates for direct care workers and details about how workers are paid, such as through enterprise agreements or individual agreements. Providers will need to attest in the quarterly financial report that all funding provided to implement the 15% wage increase has been passed through to workers.

Aged care provider spending on labour and wages will also be published on the My Aged Care platform from January 2024 as part of a broader expenditure reporting initiative.

For home care workers, their pay rises will be funded by an 11.9% increase in funding. A grant process will be opened in early August to allow home care providers with high care costs to access additional supplementation to address any funding shortfalls. The grant is likely to be paid out in December.

In the case of Commonwealth Home Support Programme (CHSP) providers, they will receive a payment in mid to late July equivalent to six months’ worth of their contract values to help address cash flow issues in meeting the increased wage bill.

The Department will be providing further details to CHSP providers via written communication soon.

The webinar slides can be found here. A recording will be available on the department’s website in a week or so.


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