Payments to the aged care workforce under the government’s COVID-19 retention bonus grant will be taxed, the government has announced.
The $234.9 million COVID-19 Workforce Retention Bonus Grant, which was announced on 20 March by Minister for Aged Care and Senior Australians Richard Colbeck, entitled eligible residential aged care workers up to $800 after tax per quarter and up to $600 after tax per quarter to home care workers for two quarters (read our story here).
However, the government announced on Friday that the payments made to eligible aged care staff, will be taxed.
Eligible residential aged care staff include direct care workers providing clinical and personal care and allied health workers.
Minister for Aged Care and Senior Australians Richard Colbeck said the payment is considered income and will be taxed.
“The retention bonus of up to $600 for eligible home care workers and up to $800 for eligible residential care workers payable for two quarters is income and as such is subject to income tax,” Senator Colbeck told Australian Ageing Agenda.
“This is consistent with other COVID-19 measures, such as JobKeeper,” he said.
Senator Colbeck said the amount of tax an individual pays will depend on their marginal tax rate.
The Government also received backlash from provider and worker representatives, who called to expand the retention bonus to include laundry, cleaning and catering staff in residential aged care (read our story here). This was also backed by federal opposition leader Julie Collins.
“There are no plans to change eligibility arrangements,” Senator Colbeck said.
Provider peaks displeased
Leading Age Services Australia CEO Sean Rooney said the government broke a promise to the aged care workforce.
“The Government said in black and white that frontline residential care workers would be paid up to $800 after tax, while home care workers would be paid up to $600 after tax. Now, as the payments are about to start the rules have changed, with all payments subject to tax,” Mr Rooney told AAA.
“In practice, this sees workers out of pocket by up to $200 or more,” Mr Rooney said.
He said the change will be disappointing to the aged care workforce.
“We call on the Government to honour their promise to aged care workers and not tax this payment,” Mr Rooney said.
Aged and Community Services Australia CEO Patricia Sparrow backed Mr Rooney’s comments and said the government has short-changed the aged care workforce.
“This has been simply mean-spirited and misleading. Workers were led to believe the payments would be more generous,” Ms Sparrow said.
“The government has short-changed some of the nation’s hardest working people on some of the lowest wages,” Ms Sparrow said.
Ms Sparrow said frontline aged care workers deserve the best possible support.
Announcement is ‘stingy’ and an ‘insult’
The Health Services Union national president Gerard Hayes said the taxable payments will leave those eligible hundreds of dollars worse off.
“This is sneaky and stingy. The Federal Government is splashing cash all over the place and recently discovered it had a spare $60 billion. To now claw back hundreds of dollars from the lowest paid, hardest working people in our society takes a special kind of cruelty,” Mr Hayes said.
“Throughout this pandemic aged care workers have exposed themselves to a deadly, unknown pathogen. They have literally compromised their own health in order to care for the elderly. Many of these workers could have earned more on the JobSeeker payment, but nonetheless have fronted for work,” he said.
Mr Hayes said the government needs to reverse the decision to make the payments taxable.
“The Federal Government needs to do the right thing. Extend the payment to all workers and honour the commitment to pay the full amount,” Mr Hayes said.
Mr Hayes said eligibility for the payment was already too narrow.
“The COVID-19 virus didn’t discriminate but the Federal Government did. To now pare it back even further with a tax grab is inexcusable,” he said.
United Workers Union director Carolyn Smith said the announcement is unfair to the aged care workforce.
“The devil is in the detail, and the detail of has revealed a mean, tricky and divisive scheme which is an insult to hard working aged care staff,” Ms Smith said.
“Workers are hugely disappointed now that they have seen the details and feel like they’ve been tricked on tax being removed,” she said.
Australian Nursing and Midwifery Federation federal secretary Annie Butler said the bonus was intended to recognise the dedication and commitment of aged care workers.
“Just as we’ve gained control over the pandemic, aged care workers have weathered that storm and we’re on the path to recovery, the Government has backflipped on its promise, which was in writing to every aged care worker, and now said ‘we don’t actually think you’re worth the full amount’,” Ms Butler said.
Find out more about the grant here.