By Yasmin Noone

Social and community service (SACS) organisations around the country could be forced to slash essential jobs or cut vital welfare, home care, crisis and supported housing services for society’s most vulnerable if the federal and state governments do not cover fully cover their true share of the SACS-award wage increases, provided under the recent Fair Work Australia (FWA) equal remuneration decision.

Shortly after the FWA full bench handed down a decision in favour of the Australian Sector Union’s application yesterday, Prime Minister Julia Gillard guaranteed that the federal government will fund its “fair share” of the 19 to 41 per cent increase in SACS award wages, to be phased in over the next eight years.

The PM also called on all state and territory governments, as significant funders of SACS-services, to mimic the federal government’s commitment to funding “their share” of wage increases.

Yet trade union groups, industrial relations commentators and welfare organisations have since expressed concern that SACS service providers could be caught in between a rock and a hard place if state and territory governments do not commit to funding the wage increases and if politically opposing governments play games about who pays what.

Pictured: Tim Longwill, Partner at McCullough Robertson Lawyers

Industrial relations law expert and partner at McCullough Robertson Lawyers, Tim Longwill, said the PM’s support for the case is welcomed but the ambiguous term “fair share” guarantees little and needs to be clarified.

“What Julia Gillard has said in about the decision is that the federal government will fund its ‘fair share’,” Mr Longwill said.

“Now what does that mean?

“…A government could say ‘you want to fund X but that’s not your ‘fair’ share. Your ‘fair’ share should be Y. And then there’s a shortfall. So [what fair share means] needs to be worked through.

“There’s certainly agreements to be made as to how much governments will fund and how they funds will be [phased-in].”

According to the FWA equal remuneration decision, most state and territory governments (parties to the application) supported or opposed the ASU application according to party lines, with all Labor governments backing the PM’s support for the case and the federal government/union’s joint submission.

The NSW government’s submission stated it opposed the application, citing affordability as the key concern.

“The overall budget impact on NSW of the remedy proposed in the Joint Submission and the NSW Government’s policy of escalating the wages component of non-government organisations’ funding was estimated to be between $977 million and $1.65 billion over the seven financial years affected by the proposed phase-in period,” the decision said.

“The NSW government concluded that the outcome of the case should not be regarded as setting a precedent.”

Victoria stated similar reasons for its objection, estimating that the cost of increased wages would be between $900 million and $1.1 billion over six years.

The full-bench however recognised that although some state governments opposed the application, no government specifically indicated that it would be unable to fund its share.

The UnitingCare network provides social services to over two  million people each year in 1,300 sites in remote, rural and metropolitan Australia, has 35,000 staff and 24,000 volunteers.

UnitingCare Australia’s national director, Lin Hatfield Dodds, said she is wrapped about the FWA decision and supports the call for increased SACS award wages but wants states and territories to commit to funding wage increases.

“We’ve won the battle [for better wages],” Ms Hatfield Dodds said.

“But what is now needed is for every government to step up and actually close the gap [between what SACS workers are paid, what they will be paid in the future and what providers can afford to pay].

“Most funding for our SACS award workers comes from governments. About 60 per cent of our funding comes from the states, about 24 per cent comes from the federal government and the rest is self-funded through a mixture of fundraising, philanthropy and investment funding.

“What that leaves you is about 15/16 per cent of services that are self-funded. So the question is who will close that gap?

“Providing your ‘fair share’, [to me], means meeting the full cost of wage increases over the next eight years.

“So, we need the governments to step up. The Australian government talked about funding its ‘fair share’. But the Prime Minister has not said that she will fully close the gap.”

Ms Hatfield Dodds stressed the reality that most providers will face if there is no commitment from relevant parties to fund the agreement: agencies will have no choice but to cut services and rationalise staff.

“…That’s a potential trade-off that none of us want to see happen.

“It is my concern that this will turn into a public debate about whether you choose staff or services.

“[To me], there is no choice. I don’t choose staff or services. Let’s look for funding elsewhere.”

But, she said, there is a belief that “we have a chest of money buried in the backyard for a rainy day. That’s certainly not the case”.

“We do not have big reserves. We have the kind of reserves that are prudent to have in order to run a business well and that’s about it.”

Ms Hatfield Dodds also explained that no or limited government wage-related funding would also affect the organisation’s aged and community care arm, as increased labour costs could deteriorate the organisation’s bottom line.

“Governments really need to be serious about making sure that Australian social services are not negatively impacted by [us wanting to and FWA ruling that we have to] pay our SACS award staff more.

“The bit we are all banking on is that the governments will step up to the plate.

“…We will continue to work with all stakeholders on this issue to ensure those increases are adequately and equitably funded so vulnerable and disadvantaged Australians get access to the services they need.”

Mr Longwill predicted the true extent to which this decision will impact on Australian governments will no doubt "be spelt out” during the next federal budget and respective state and territory budgets.