By Yasmin Noone

The aged care sector stands divided over its reaction to the newly announced Workforce Compact, with trade unions congratulating and provider peaks commiserating the federal government move to subsidise a three and a half per cent wage increase over four years for aged care workers on enterprise bargaining agreements.

While the sector’s trade unions – the Australian Nursing Federation (ANF) and United Voice – are rapt with the compact, the government wage subsidy and the employer requirements that go with it, employer representatives say the $1.2 billion government contribution is not enough to encourage ‘all’ employers to sign up to the deal and remain viable.

Federal Secretary of the ANF, Lee Thomas, said the union – a member of the Strategic Working Advisory Group (SWAG) which worked with the government to create the compact – could not have asked for a better outcome.

“It’s a reasonably good increase for aged care workers,” Ms Thomas told AAA.

“The government was always really clear that this funding was ‘bridging finance’ and we have said that it’s a great start. [The compact] is a welcomed commitment by Minister Mark Butler to aged care.

“…We said this is a first step and we will continue to work with the government [to increase aged care wages].”

The stressed the catchphrase, circulated by most of the sector once the Living Longer. Living Better aged care reform package was released last year, commenting how the compact is a “once in a lifetime” move. 

“This is the first time that aged care workers can be assured that federal government money will flow directly into their pockets. In the past, under previous governments, money has been earmarked for aged care workers and never reached them.”

Answering AAA’s question on why the compact was three months late and on rumors that members of the SWAG – employer peaks and unions – could not agree on the terms of the compact, Ms Thomas said: “All negotiations are, at times, difficult and this was no different. But the reality is that this is a great outcome for workers in aged care and for older Australians”.

“…Our members who worked in aged care are realists. They work in aged care because they love their work.

“Aged care workers were here today [yesterday at the press conference where the compact was announced] and congratulated the minister personally. And they can absolutely see that it will go a long way to making retention and recruitment in the sector more viable.”

Yet the sector’s employer peak bodies which were also members of the SWAG – Aged and Community Services Australia (ACSA) and Leading Age Services Australia (LASA) – and the nation’s largest non-government provider of health, community and aged care services, Catholic Health Australia (CHA), have been quite vocal in their opposition to the compact.

The compact, opposed

All agree that aged care workers deserve pay increases and wage rises are essential to solve the sector’s recruitment and retention troubles, and are wary about the perception that they are ‘crying poor’ because, they all state, they are not.

But, employer groups added, the compact’s conditions and the requirements contradict the intended spirit of the compact: to ‘improve’ employer viability.

ACSA CEO, Adj Prof John Kelly, said the government’s announcement will create significant difficulties for providers in regional and remote Australia as well as standalone urban providers.

"The government is making a range of assumptions about capacity and viability that does not recognise the diversity in service providers,” said Prof Kelly.

“…There are a substantial number of providers around the country covered by an EBA (enterprise bargaining agreement) and a substantial number are represented by the bigger providers which [accounts for] a substantial number of the employee workforce in residential aged care.

“The difference is that at least 30 per cent of small-to-medium remote rural providers are not covered by an EBA, just a modern award.”

The $1.2billion, Prof Kelly added, is not new money but rather funds redirected away from the Aged Care Funding Instrument (ACFI) that is “currently used to care for residents”.

He also stressed that no measures were introduced to help organisations with the ‘on costs’ associated with increased wages, like superannuation, and moving a workforce to EBAs.

CEO of CHA, Martin Laverty, said that on average estimates, the cost to a provider of setting up EBAs for entire aged care workforce is around $38 000 inclusive of external legal and internal management costs.

“That’s an initial barrier of new costs for providers who don’t have [that kind of money on hand],” Mr Laverty said.

“Then the maths has to be done to account for the jump in wages for the provider that doesn’t have an EBA, to fund the compact. How much money does the provider have to give to meet that increase?

“Where there’s a shortfall [between the government subsidy and the required pay increase], the provider will either struggle to meet costs or they don’t sign up to the compact.

“So the question is, has the government calculated the difference between the 30 per cent [maximum increase over four years], floated and the amount of money the government is paying providers for wage increases?

The government, he said, “hasn’t released the details [of the shortfall between the percentage rates] because it knows there’s a shortfall.

“Today [yesterday], Catholic Health is conflicted. It wants to see nurses earn 30 per cent more and care-givers get a better deal. Those aspirations are terrific but the government hasn’t provided the dollars to fulfil those aspirations.

“…If the government wanted to seriously increase wages, it’d go to Fair Work Australia and propose an amendment to award wages, and commit funding to flow through the system to meet the adjustments in award conditions.”

Trade unions beg to differ

United Voice national president, Michael Crosby, said the employer’s reaction to the compact outcome is unfounded because the peaks were parties to the agreement.

“The employers can’t complain about it,” Mr Crosby said.

“They signed up to the deal. They all put names to it. The document the minister had in his hand at the press conference had their names and [organisation’s] logos all over the back of it.

“They know what they’re getting into and they know it’s a really good deal…
 
“Over the last three years each year, these aged care providers have, on average, had a 22 per cent increase in the amount of money the government has given them.

“Labor makes up 70 per cent of an employer’s costs. But labor [wages] has only gone up by five per cent. No wonder the government is saying they’ve got to pass on the minimum wage increase and the money we give you.”

The parliamentarian who announced the compact, Minister for Mental Health and Ageing, Mark Butler, also responded to the employer’s concerns during a phone interview yesterday with AAA, citing the same figures as United Voice’s Mr Crosby.

“We’ve lifted [ACFI] funding quite substantially. It’s 70 percent bigger than when came to government.

“…But we haven’t seen employee expenses go up that amount. We’ve seen them increase up by 5 per cent a year….

“This is a challenge that the government and providers have to meet together. It’s reasonable that providers are expected too make a contribution to the challenge of lifting wages to a point where they become more sustainable.”

Political opposition

Shadow Minister for Ageing and Mental Health, Senator Concetta Fierravanti-Wells, also criticised the compact, saying it was nothing “but a bad joke”.

Adding insult to injury, she said, the announcement is about wage increases “that may never materialise” because providers can not afford to fund their share.

“Peak industry bodies and leading providers have boycotted this announcement and some were not even invited,” Senator Fierravanti-Wells said.

“The whole point of the compact was to have a collaborative agreement with providers, not a confrontation.

“The aged care sector is already reeling from having $1.6 billion slashed from the Aged Care Funding Instrument (ACFI) to fund this $1.2 billion Compact.

“With only 40 per cent of providers operating in the black, many providers will be unable to pay the wage increase and meet the associated on costs. These cost pressures will further erode their viability, especially smaller providers in regional and rural areas.

“We all accept wage rises are good but they need to be affordable and sustainable. Minister Butler’s Compact has failed its principal objective to find a sustainable agreement with the aged care sector on workforce improvements.”

“If the aged care providers are not viable now, how can they afford to pay the increases?”

The Senator accused the government as using the compact to help the Labor-aligned trade union movement.

Disagreeing that enterprise bargaining agreements are the best way to deliver wage increases, the Senator said she sympathises with small providers unable to afford to move its workforce over to EBAs.

“This is nothing more than a union driven industrial process, dressed up as administrative change,” she said. 

“It is not supported by aged care providers who will now be forced to subsidise union membership growth in the aged care sector.”

The minister's reply

Minister Butler replied saying “what was announced today [yesterday] reflects exactly the requests in the NACA (National Aged Care Alliance) blueprint for reform, which [was created by] both the employer peaks, CHA and other big providers.

“It’s on page seven of the blueprint which says quite clearly that NACA wanted a bridging supplement to start to lift wages and wanted a supplement incorporated into registered enterprise agreements.

“What we are doing is following the direction of what NACA asked the government to do.”

The minister added that the instrument embedded in the Fair Work Act to increase wages is an enterprise bargaining agreement.

“It’s has been the main form of fixing wages for more than 20 years in this country.”

And, he concluded, whether or not a workplace has its entire workforce on EBAs and represented by a trade union or not is a debate his government needs to weigh into.

“Some aged care workers have union representation and some don’t. It’s not a matter for me or a matter for the Opposition.”