Abbott hints at changes to workforce compact

Opposition leader Tony Abbott has said he would direct funding from the aged care workforce supplement back to the general pool of aged care funding to the delight of provider peaks and the wrath of unions.


Oppostion leader Tony Abbott said this week that, if elected, he would change the existing Workforce Supplement agreement to lift the wages of aged care workers

By Natasha Egan

An announcement by Opposition leader Tony Abbott this week that he would take the funding out of the aged care workforce compact and put it back into the general pool of aged care funding has drawn support from the provider peaks, ire from aged care workers’ unions, and no detail from the Coalition about how the policy will work.

In a pre-election debate with Prime Minister Kevin Rudd in Rooty Hill on Wednesday night, Mr Abbott said while he broadly supported the Living Longer Living Better reform package, he did not support taking $1.6 billion out of the general system to be allocated for wage rises for some and not all aged care workers.

“Now I don’t believe in discriminating between aged care workers on the basis of whether they’ve got an Enterprise Bargaining Agreement or not. So I would put that money back into the general pool of aged care funding and I would make it available to all aged care workers,” Mr Abbott said.

A spokesperson for the Coalition later corrected the dollar amount, but didn’t add any detail.

“As part of the Coalition’s approach, we will work to ensure the $1.2 billion workforce supplement is provided in a way that is more flexible and better targeted to genuinely improving pay and conditions for the workforce, without jeopardising the viability of aged care facilities,” the spokesperson said.

An article in the Fairfax press reported that the Coalition would abolish Labor’s scheme to deliver pay rises for aged care workers. Others, such as Domain Principal Group CEO Gary Barnier, said he thought Mr Abbott’s comments implied only the enterprise bargaining part of the agreement would be abolished.

When AAA asked the office of the shadow minister for ageing Concetta Fierravanti-Wells whether a Coalition government would abolish the existing agreement; fully-fund wage increases for the aged care workers; and/or require providers to pass funding directly on to wages, a spokesperson said he could not say anything more until their ageing policy was released “shortly”.

The existing Workforce Supplement, which came into being on July 1, sees workers’ wages gradually increase over four years as set out by workplace agreements and funded by both the government and the employer.

Provider peaks Catholic Health Australia (CHA) and Aged and Community Services Australia (ACSA) said they supported the increase in wages but welcome removing an enterprise bargaining requirement from the agreement to lift wages, while Leading Age Services Australia (LASA) said it would like to see the allocated funding diverted back into care.

However, aged care worker representatives United Voice and the Australian Nursing and Midwifery Federation, said the only way for aged care workers to receive a much-needed increase in wages was through a workplace agreement.

Stakeholder reaction

Catholic Health Australia CEO Martin Laverty said they were pleased to finally get some clarity about how the workforce compact will or won’t operate under a Coalition government.

“We haven’t seen the detail but the principle that was flagged during the leaders’ debate on Wednesday night was for the compact to be abolished and pay increases to be spread across all workers.

“That’s what CHA and others have been calling for since July and we welcome that commitment from the opposition,” Mr Laverty said.

There is still a great deal of uncertainty in the aged care sector about the implementation of the workforce compact and despite coming into effect at the beginning of the financial year, there is only a small number of providers signed up to it, he said.

Since applications for the workforce supplement opened in July, as of last week, the department had received 18 applications covering more than 250 facilities across Australia, Minister for Ageing Jacinta Collins told delegates at the Catholic Health Australia conference on Tuesday.

Domain Principal Group is one of the providers already signed up. CEO Gary Barnier said they entered the compact because they believed in the strategy to increase wages.

“I would be disappointed if there wasn’t a program that does support the increase of aged care workforce wages,” Mr Barnier said.

But he doesn’t think Mr Abbott’s comments indicate there will be no program to lift wages under a Coalition government.

Rather, he reads it as they are only taking away the enterprise bargaining part of it, he said.

“We look forward to the Coalition supporting an increase in aged care workers’ wages and we haven’t heard anything saying otherwise.”

Aged and Community Services Australia CEO Adj Prof John Kelly said he was pleased the Coalition appeared to be planning to abolish the need for aged care providers to have an Enterprise Bargaining Agreement with workers to access money for wage increases.

Prof Kelly said while employers wanted to increase wages in the aged care sector, tying the funding to an industrial process presented difficulties for providers, especially smaller operators in regional and remote Australia and small standalone facilities.

”If the Coalition in its aged care policy announced its intention was to pass on that $1.2 billion contractually rather than requiring it to be done through an industrial process, we would be very supportive of that and would co-operate to ensure it happened as quickly as possible.”

However, Leading Age Services Australia CEO Patrick Reid said they supported the abolition of the Workforce Supplement and would like the money diverted back into care.

The current agreement is an ineffective method for supporting better wage outcomes for aged care staff and the net result is that the industry will lose critical care funding, Mr Reid said.

“[The supplement] is complex and cumbersome and does not recognise the current level of remuneration being paid to staff by individual providers,” he said.

“LASA supports repealing the Workforce Supplement and diverting allocated funding back into care as an interim step towards a properly constructed indexation of age services.”

United Voice national secretary Louise Tarrant said Tony Abbott was ignoring the overwhelming evidence there is a serious crisis with the aged care workforce.

“Effectively, what Tony Abbott would do is take money out of the pockets of low paid workers,” Ms Tarrant said.

“Tony Abbott is opposed to the enterprise agreement provisions of the Workforce Supplement. But as a former Minister for Ageing he knows only too well that an enterprise agreement is the only way of ensuring funding provided by government to lift wages of workers in this sector is actually passed on to workers,” she said.

Howard government attempts when Mr Abbott was Minister for Ageing to enhance the capacity of the aged care sector to offer competitive wages failed, she said.

Similarly, Australian Nursing and Midwifery Federation federal secretary Lee Thomas said the ANMF and its membership were “angry and disappointed” that nurses and care workers in aged care would miss out on better wages and conditions if the Coalition won the election.

“These hard-fought wage increases as part of the Workforce Compact, were the first time ever that government funding has flowed directly into the pockets of nurses and care workers,” Ms Thomas said.

“If the Coalition is serious about raising the wages of aged care workers they would ensure that any additional funds are acquitted appropriately,” she said.

“Tying funding to a requirement that an employer has an industrial agreement with their workforce is the most simple and transparent way to ensure that the money reaches nurses and other aged care workers.”



Tags: election-2013, gary-barnier, john-kelly, lee-thomas, loiuse-tarrant, martin-laverty, patrick-reid, tony-abbott, workforce-compact, workforce-supplement,

5 thoughts on “Abbott hints at changes to workforce compact

  1. Louise Tarrant is correct about the history. A Howard Govt. initiative (gesture?) to improve the wages of some of the best-qualified low wage workers in Australia signally failed to do so. That is why this mechanism was put on the table. Whether it’s good or bad is clearly arguable but it looks like it may already be differentiating along those lines between aged care employers. BTW Does ‘putting money back into care’instead of giving it to workers mean that clients will receive more hours of care? If not, does it mean anything?

  2. How quickly we seem to forget… Can I just refresh memories for just a tad? There was $ 1.6bn taken out of forward RAC subsidies, and $ 1.2bn to be returned through the so-called “Compact”. To imply that “the government and industry” was somehow funding this ignores the slight of hand of removing the funding and then putting the very same money (less a mere $ 400m) back via a mechanism that completely ignores existing structures, wage rates and agreements, and imposes an enterprise agreement structure that includes DH&A dictating industrial terms. And people wonder why it has not been uniformly embraced by the industry. To get 1% ACFI increase through the “compact” you guarantee a minimum 2.75% wage increase, fund the 34% or so on-costs through existing funding, and then hope the money doesn’t run out and stop in 3.5 years.And the industry gets slammed as being short-sighted! Many providers already pay significantly above the award and none of that is recognised. Simply “smoke and mirrors policy” that will reduce hours available for care through reduced income and increased unit labour costs.

  3. Some facts would be useful. The Workforce Supplement for residential aged care (estimated to amount to $880m over four years)is unfunded – there is no additional funding. Instead, the Supplement is to be funded from within the residential care subsidy forward estimates which are a product of applying the ACFI tool to future resident appraisals and re-appraisals. The ACFI was changed on 1 July 2012 to reduce real growth in care subsidies per resident from over 5% real in recent years to an average of 2.7% real over the next four years. The Supplement has to be met from within this lower growth target for residential care subsidies. In effect, what is happening through the Supplement is that access to ACFI subsidies is conditional on providers agreeing to direct a proportion of their ACFI care subsidies (1% rising to 3.5%)to wage increases. My interpretation is that the Coalition is simply saying that accessing ACFI care subsidies will not be conditional on achieving prescribed wage increases.

    By the way, to correct another myth. The Conditional Adjustment Supplement was not a workforce measure. It was a measure to improve viability after successive years of COPO. Of course, it was expected that some of the CAP funding would go to salaries, but this was not its primary purpose.

  4. Congrats to both Glenn & Nick for laying out the facts and exposing the “smoke & mirrors” of Mark Butler’s trickery together with the DHAs collusion.

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