The wages warning

Commissioner Robert Fitzgerald has warned of some possible flow-on effects of higher wages, within a deregulated aged care system.

Above: Commissioner Robert Fitzgerald speaks at the Community Services and Health Industry Skills Council Conference (image: CS&HISC).

By Yasmin Noone

Aged care services could soon fall out of the reach of disadvantaged, vulnerable and marginalised older Australians, if sector wages increase significantly, a Productivity Commissioner (PC) has cautioned. 

Commissioner on the PC’s Caring for Older Australians inquiry, Robert Fitzgerald, warned of the very real possibility that wage increases could have a negative impact on the affordability of aged care services, at the Community Services and Health Industry Skills Council (CS&HISC) national conference, Making a Difference…2011, last week. 

He explained that in the PC’s proposed market-orientated system of the future, aged care wages would need to increase substantially to become “competitive” with wage levels in other, comparable industries, and effectively retain and attract staff to key positions within the sector. 

Increased wages would force up the provider’s operating cost and consequently, the price of care. Mr Fitzgerald said that although the federal government would pay two thirds of the consumer’s costs, the remaining one third borne by the provider would most likely be passed onto the older adult in need of services.

“Yes, costs could go up,” assuming that ‘all things remain equal’, Mr Fitzgerald stated.

“It’s important to ensure that costs don’t go up so much that the people who need services…or are entitled to services, withdraw from the system.”

The best mechanism to guarantee that wage increases do not have an adverse affect on care costs, Mr Fitzgerald stated, is additional government funding. 

“The government could pick up more of the costs but it must maintain a level of costs that ensures that wages [don’t increase so much] that it pushes people out of the system.”

However, he said, in the absence of government funding within a market-orientated sector, increased wages would result in a decrease in demand for aged care services. 

“This demand [for residential aged care places] will then flow into other forms of care.

“Policy makers must therefore be aware of the long-term flow-on effects of resource allocation and the public policy implications of substantial wage increases.”

The age of advocacy

According to Mr Fitzgerald, the Commonwealth’s adoption of the PC’s market-orientated recommendations could also lead to the development of a new area of service – aged care consumer advocacy. 

Putting the consumer at the centre of all care and business decisions, obviously means providing the older person with the choice and power to decide what services they need and want to receive. 

But, he said, some older, vulnerable consumers will be unable to make a decision about the type of care they want without additional help and support. 

“It is true that for some, choice is an illusion so we must ensure that [all] consumers have choice, and [there are] supports for those who are vulnerable.”

The role of the aged care advocate or intermediary would therefore “grow in importance…as people are expected to make choices”.

Reiterating the recommendations of the PC’s final inquiry report, Mr Fitzgerald stated that block funding should also be continued in remote, Indigenous, homeless and other services. 

“Residential aged care facilities will look nothing like they do today.

“We need to fund the change and reform the system.

“…Systematic reform is important. The cogs that work the system must be realigned.”

Tags: choice, cs-and-hisc-making-a-difference-conference, cshisc, disadvantaged-older-adults, pc, productivity-commission, robert-fitzgerald,

3 thoughts on “The wages warning

  1. It never seems to amaze me that when a profession or industry seeks a pay rise, it always come with the same old chesnut…pay rises will cause a loss of services and the increased costs will be passed onto the user therefore creating a reduction in access to services. Why is it that workers in aged care aren’t entitled to a decent living wage and why should this reduce access to adequate, appropriate professional care for the aged? I will tell you why – because somebody has to make a profit, it’s all about dollars and how many of these can be squeezed out of aged persons who are looking for what they deserve in the way of quality care in their final years. It’s their final years, so lets make what we can and if the aged care workers want increased wages, we will just cut back on care. I am just 62 with a chronic illness and multiple comorbidities; our aged care services are a disgrace and I hope that I have passed over before I need to be a recipient of it.

  2. I believe Robert Fitzgerald is correct in his prediction regarding a higher level of wages for the aged care sector. At present those employed in the sector sit at the bottom of the food chain for healthcare workers.

    Remuneration, and therefore cost control will become problematic for aged care operators as they face the labour demands of an economy driven by the high wages of the mining sector and growth from other sectors as the global economy rebounds from its recent woes. At the same time all other costs will also rise on the back of rising wages.

    Allied to providing consumers with choice, where they pay for added value, is their perception of value. A key factor contributing to consumer perception is the level of training provided to carers and nursing staff. Often when providers look to trim costs, staff training and development is the first item they look to trim. This can lead to perceptions of poor care and value by the aged and their families at a time when the cost of care is increasing. When this occurs the door opens to others who have creative ideas on how to provide care and can lead to increased competition.

    It is less expensive to retain good people than it is to recruit someone with equal experience and knowledge. Each employee is different and has different needs. It is important managers make time to understand individual employee needs. In this way creative solutions can be developed to retain the best people. Treating all carers as if they were cast from the same mould is likely to result in higher turnover.

    Govermnents are able to restruction the macro aspects of aged care and enable the sector to operate in a more viable manner. It is up to individual managers to focus upon the micro, or internal aspects of resource allocation and cost minimisation.

  3. It never fails to amaze me!!! A pay increase for those who more than deserve and yep, then there is the loss!! Of course the loss will be to those who are vulnerable and in need of being cared for..

Leave a Reply

Your email address will not be published. Required fields are marked *