Chapter 7
Workforce supplement
Introduction
Workforce issues in aged care
7.1
The aged care workforce currently accounts for 2.7% of all employees in
Australia.[1]
As the number of Australians aged 70 years and older continues to rise, there
is a corresponding need for growth in the aged care workforce. The Department
of Health and Ageing (the department) noted in 2012 that:
Based on estimated demand projections and assuming models of
care are maintained, there will need to be approximately 827,100 aged care
workers by 2050 (up from 304,000 in 2010).[2]
7.2
The need for increased support to boost the capacity of the aged care
workforce is recognised across the sector. Aged care workers are traditionally
low paid, despite increasing recognition that the work is labour intensive and
that a well-qualified workforce is imperative to the delivery of quality aged
care. As United Voice noted:
The effect of low pay in the aged care sector is
well-documented in our work. The two key issues of low pay are high staff
turn-over, and the difficulties that providers experience in recruiting and
retaining staff. ...
United Voice members in aged care live the experience of poor
pay and conditions every day. The labour market disadvantage they suffer has
been well-documented. In addition, the reform process has consistently outlined
the challenges the sector faces in attracting and retaining staff as the aged
care sector rapidly expands.[3]
Providers also raised the issue of low wages in the sector.
UnitingCare Australia noted that:
UnitingCare Australia has always argued for a better deal for
aged care staff who are crucial to quality care and currently poorly paid but
committed to caring for older people.[4]
Workforce supplement
7.3
As part of the Living Longer Living Better reform package,
Government has announced its intention to introduce a workforce supplement to
address critical shortages in aged care workforce. The supplement would to be
used to increase wages of employees in aged care. The aim of the Aged Care
Workforce Supplement is to:
improve the aged care sector’s capacity to attract and retain
a skilled and productive workforce; and
provide Australian Government funding to assist the sector in
delivering fair and competitive wages in the short-term, while longer term
options for meeting the challenges of the sector are considered by the Aged
Care Financing Authority.[5]
7.4
The workforce supplement will be available to both residential and home
based aged care providers who meet eligibility requirements. While providers
are free to choose whether or not to apply for the additional funding, those
wishing to access the supplement are required to meet a number of conditions to
be considered eligible for the funding. In particular, supplement monies are
required to be passed on in full to aged care workers in the form of higher
wages. To ensure that all supplement monies are passed onto workers, providers
are required either to have an enterprise agreement in place that meets the
eligibility criteria, or, if the provider is a home care provider, a residential
care provider with fewer than 50 operational places, or a provider of a
specified program, they will need to certify that their working arrangements
meet the eligibility criteria. These include:
- Writing to employees to signal the intention to apply for the supplement
- Taking part in the Aged Care Workforce Census and Survey
- Minimum wage requirements[6]
- Enhanced Training and education opportunities
-
Improved career structures, and
- Improved career development and workforce planning.
On-costs associated with implementing the supplement are to
be borne by individual providers.[7]
7.5
Payments from the workforce supplement will be available to providers
from 1 July 2013. The supplement would be paid through the Conditional
Adjustment Payment mechanism or amendments to funding agreements, depending
upon the type of provider accessing the supplement. The supplement will not be
calculated as a proportion of a provider's wages bill, though it is to be used
for the purpose of wage increases. According to the Aged Care Workforce
Supplement Guidelines Consultation Draft version 2, released on 9 May 2013, the
supplement will be calculated as a percentage of either the daily Aged Care
Funding Instrument (ACFI) subsidy rate, the daily Resident Classification Scale
(RCS) saved rate, the daily residential respite care rate or a default rate for
new residents, depending on which applies to the provider. The rate does not
include any supplements.[8]
The draft eligibility criteria require that a provider must undertake to, if
they received the supplement, deliver wage increases above those in their
certified agreement (or equivalent) by a minimum of 1 per cent each year to
2015–16 and 0.5 per cent in 2016–17. The supplement must only be used for the
purposes of wage increases.[9]
The draft guidelines also state that:
On-costs are to be borne by providers or organisations, and
cannot be offset against wage increases made using Aged Care Workforce
Supplement funding. On-costs include superannuation...and provision for leave.[10]
7.6
The workforce supplement lies largely outside the scope of the bills,
apart from one matter that is addressed later in this chapter. However, its
regular discussion during the inquiry warranted some consideration by the
committee.
Funding the workforce supplement
7.7
The government has announced its intention to provide up to $1.2 billion
over five years to better support the people who work in aged care. This
funding will be made available to providers through the Addressing Workforce
Pressures Initiative which consists of two parts: the workforce supplement, and
an Aged Care Workforce Development Plan to be developed during 2013.[11]
7.8
In announcing the full package of aged care reforms in 2012, the Prime
Minister noted:
We are deliberately taking the opportunity today to make this
announcement well in advance of the Federal Budget, because whilst this policy
has some fiscal impacts, it's not a budget measure per se, there's some new
funding here, but for the most part, the funding for the package comes from a
combination of redirected funding and means testing.[12]
7.9
The new funding for the Living Longer Living Better package was
approximately $500 million. The majority of new funding is intended to be
introduced in 2015-17.[13]
Changes to the ACFI, which came into effect on 1 July 2012 as a result of the
aged care reform package, make up the largest proportion of redirected aged
care funding, comprising $1.6 billion of the total $2.5 billion over five
years.[14]
The department notes that:
These changes are designed to bring future growth in care
subsidies back to historic growth rates of between 2% to 3% above indexation
and to enable funds to be redirected to other elements of the package. These
changes have been developed following extensive consultation with the sector
since December 2011.[15]
7.10
In the budget announcement for the Addressing Workforce Pressures
Initiative, the Government noted that:
The Aged Care Workforce Compact will be funded by redirecting
funds currently provided through the Aged Care Funding Instrument so that the
funding claimed by aged care providers better matches the level of care being
offered.[16]
7.11
Some providers raised concerns regarding the nature of funding for the
workforce supplement. These are discussed below.
Broad support for workforce funding
reform
7.12
The committee notes that there has been broad support for wage increases
across the aged care sector. There is also broad support for a specific measure
directed to wage increases. In February 2012 the National Aged Care Alliance (NACA)
published its 'Blueprint for delivering positive aged care reform'.[17]
This Blueprint was a consensus document developed by peak provider, health
services and union groups. The blueprint recommended that:
To ... prepare a foundation for expanding and developing the
workforce there is a need for:
- a bridging supplement for payment
of fair and competitive wages for nurses, allied health professionals, personal
carers and support staff;
-
the Government, unions and
provider representative organisations to sign a Heads of Agreement which
ensures the bridging supplement is paid to aged care providers for increased
wages; and
-
incorporation of the wage
increases into a registered industrial agreement to enable the supplement to be
paid to individual aged care providers and ensure it is used solely to pay fair
and competitive wages.[18]
7.13
The Blueprint also noted that:
Wages are only one, albeit major, issue that needs to be
addressed. Career structures, training (including in specialist areas such as
dementia and palliative care), use of technology and flexible models of care to
enhance service delivery efficiency and effectiveness must be considered as
part of an overall aged care workforce strategy. To do this the Alliance
recommends:
Establishing a Ministerial Aged Care Workforce Taskforce
including provider, union and consumer representatives.[19]
7.14
The government set up a Strategic Workforce Advisory Group (SWAG)
comprising representatives from providers and employees with the following
terms of reference:
...to develop a Compact for Government endorsement to improve
the capacity of the aged care sector to attract and retain staff through:
- Higher wages
- Improved career structures
- Enhancing training and education opportunities
- Improved career development and workforce planning
- Better work practices[20]
7.15
The final report of the SWAG noted that there was in principle agreement
by providers and employee groups on all areas of a workforce compact apart from
the mechanism for realising higher wages (enterprise agreements) and the
quantum of wage increases.[21]
However, because these were two key elements of workforce reform, unions and
provider groups could not agree to the compact.[22]
Despite the failure of these parties to reach agreement over the compact, the
workforce supplement retains the majority of features that were agreed to
during negotiations. United Voice noted that:
After six months of negotiation for a Compact, key employer
groups removed their support for the final outcome. This was evidenced by a
letter sent from employer groups to government in January 2013...
Despite this letter, the evidence stands that there was
strong support for the vast majority of the elements of the Supplement late
into the negotiation process. This is evidenced by the nature of the final
terms and conditions. Many of the key terms and conditions reflect status quo
terms and conditions in the sector. During the negotiations, these terms and
conditions were nominated and agreed by key employer representatives. ...there
was strong support from the clear majority of employers for a large proportion
of the terms and conditions enclosed in the Compact, now known as the
Supplement.[23]
7.16
The committee was presented with a range of view about the supplement itself.
Concerns raised by various provider groups over aspects of the supplement are
outlined below.
Concerns over funding of the workforce supplement
Concerns about redirection of
funding from ACFI monies
7.17
A number of organisations expressed disappointment that the workforce
compact was to be funded through redirected aged care funding, and not 'new
money'. In particular, some residential aged care providers considered that the
redirection of ACFI funds to other areas of aged care, including the workforce
supplement, could cause financial hardship, particularly for some smaller and
rural or regional providers. Catholic Health Australia claimed that:
The Workforce Supplement in residential care will be created
by quarantining a percentage of the forward estimates for residential care
subsidies. These estimates are based on a reduction in growth rates to be
achieved by changes to the Aged Care Funding Instrument (ACFI) which applied
from 1 July 2012 ie reducing the per capita annual growth in care subsidy per
resident to 2.7% real per annum. The Workforce Supplement is inclusive of the
reduced forward estimates for residential care subsidies.[24]
7.18
The Western Australian branch of Aged & Community Services Australia
argued that:
To take away funds from ACFI, which essentially belong to our
residents, and then transfer them to workers, is wrong in principle. And it is
particularly wrong in an environment where a consumer direction will be the
future. Also it is futile, because robbing Peter to pay Paul does not generate
more money in the system, sustainably, to pay higher wages.[25]
7.19
Southern Cross Care (Victoria) were concerned that:
This real reduction in ACFI care subsidy will have a direct
impact on our ability to maintain service levels to residents.[26]
7.20
The committee notes that the government has been up-front in announcing
that the aged care reforms, including the workforce supplement, are to be
funded for the most part from redirected aged care funds and income testing.
Reducing the growth of the ACFI has contributed to the pool of aged care funds
to be redirected into the aged care reform package. While changes to the growth
of the ACFI may have financial implications for some residential care
providers, this seems to be a separate issue to the affordability of
implementing higher wages through the workforce supplement. Concerns over the
affordability of the supplement for aged care providers are dealt with in the
following sections.
Concerns that the compact is not
'fully funded'
7.21
On-costs arising from wage increases under the workforce supplement are
to be borne by employers accessing the additional funding. The department notes
that these can be covered through resulting productivity gains arising from
wage increases and improved conditions, and in decreased staff turnover.[27]
Providers, however, were concerned that, combined with the potential loss in
revenue due to the reduction of ACFI monies, the imposition of on-costs would
result in an added burden that would particularly cause difficulties for
smaller providers to meet the criteria of the supplement. A number of providers
wanted the supplement to be 'fully funded', and to cover on-costs associated
with wage increases. Aged and Community Services Australia (WA), argued that:
(The workforce supplement) should be rejected because the
proposition is not fully funded. So, in addition to recycling existing funds,
so we have no more money, it does not cover on-costs. That includes numerous
expensive expenditure items that will be part of the overall deal. Our
calculations suggest that the cost will outweigh the income by two to one. That
seems extraordinary, but it is true once you add up all the elements. We have
an example from the bush, where to gain $17,000 will cost $30,000.[28]
7.22
Narrogin Cottage Homes also asserted that they are not considering
signing up for the supplement as they believe they will be unable to afford the
on costs associated with the higher wages afforded by the supplement:
I am very happy to let the committee know right now that we
will be one of those who will not be signing up for the workforce supplement.
We cannot afford it ... in my particular case, if you look at our on costs, I
think you will find that it is 3.25 for one. I am running at a loss now. I am
hoping we will balance the books next year. I cannot afford anything else.[29]
7.23
Hall and Prior Aged Care Organisation had initially considered that
signing up to the supplement would be cost neutral to their organisation:
Our high-level analysis of the Workforce Compact has
indicated that it will be cost neutral to us in both WA and New South Wales
after taking into consideration all employee entitlements and oncosts. This
assumes the workforce supplement continues beyond the 2016-17 financial year.
It will be cost neutral to us as we have a very high level of resident acuity
and already pay wages well above the margin for the relevant award rates... in
summary, we thus support the Workforce Compact and we feel it will invigorate
the aged-care workforce.[30]
7.24
Shortly before the committee was to table its report, Hall and Prior
representative Graeme Prior wrote to the committee stating:
At the time of my appearance before the Senate Committee I
indicated that our initial modelling was that the Workforce Supplement would be
cost neutral to our organisation. However, based on the information in the
consultation paper, this is no longer the case. It appears that if we were to
sign up to the Workforce Supplement it would cost our organisation $2.1 million
over the next four years (in addition to the annual financial increases passed
on to employees).
7.25
In answers to questions on notice, United Voice argued that a large
proportion of on-costs that providers associate with the supplement will
already have been accounted for under existing plans for wage increases either
under an enterprise agreement, or under the current award for aged care workers:
...aged care providers, on average, are providing wages at a
margin over the award of 3.99%. United Voice assumes that most, if not all,
providers are competent and execute their fiduciary duties well, and thus would
plan to provide salary increases for their staff along with the attendant
on-costs forming part of their calculations.
Average Weekly Ordinary Time Earnings over the last 5 years
and recent Fair Work Commission minimum wage adjustments have been running
between 3% and 4.5%. We therefore assume that the majority of aged care
providers (through their internal budget planning processes) are well equipped
to contend with the salary increases’ (and associated on-costs’) component of
the Supplement – that is, the requirement to provide a minimum of 2.75% per
year or the Fair Work Commission minimum wage adjustment, whichever is higher.[31]
7.26
United Voice also considered that on-costs can be borne by employers
through increases in productivity and decreased turnover:
In terms of the wages’ on-costs associated with the
Supplement funding, there are productivity gains to be made through reduced
staff turnover and decreases in the costs of utilising agency staff by
providers. In terms of personal and community care and support staff, United
Voice estimates, given the assumptions made above, that the effect of the
Supplement proportion of salary on-costs to be approximately 0.25% - 0.3%.
These figures do not take into consideration efficiencies gained from reduced
turnover or a reduction in the use of agency staff.
With the average provider having a net profit margin of
approximately 8%, United Voice believes that the on-costs for the Supplement
funding component can be met by aged care providers. The assertion made in
relation to providers putting in $3 for every $1 of funding from the Workforce
Supplement does not make sense in light of the calculations performed above.[32]
7.27
A number of providers told the committee that they could not be sure of
the effects of the supplement until they had seen more detail about its
requirements. The committee notes that comprehensive draft guidelines were
released for consultation with the sector after the conclusion of hearings for
this inquiry.[33]
7.28
There appeared to be some confusion about the on-costs associated with
accessing the workforce supplement. Based on the evidence available, it appears
that in referring to 'on costs', some providers were including wage increases
required to be made in order to qualify for the supplement. These are not 'on
costs', but the consequences of the policy intention on which the rules
governing eligibility for the supplement are based: namely, to increase wages
in the sector.
Committee view
7.29
The committee notes that consultation around the Workforce Supplement
Draft Guidelines is ongoing.[34]
The committee agrees on the importance of increasing wages in the sector. There
was mixed evidence about the costs to providers of securing the supplement.
7.30
The committee acknowledges the issues around the workplace supplement and
the link to increased wages, and notes the need for continuing discussion
around the implementation in the workplace, and the full payment of
entitlements.
Recommendation 11
7.31
The committee recommends that the government examine whether it may be
appropriate to revise the Supplement Guidelines to permit in some circumstances
the use of the workforce supplement in meeting employee entitlements.
Intervention in industrial agreements
7.32
As discussed above, to access the supplement, providers must have an
enterprise agreement, or working arrangements in place that meet the conditions
of the supplement. This is to ensure that funding from the workforce supplement
is passed on in full as higher wages for aged care workers. The Department noted
that:
The mechanism which was identified in the NACA blueprint was
to use an industrial agreement as a mechanism to ensure that that payment
flowed through.[35]
7.33
Some providers objected to this choice of mechanism, claiming that it
went against a principle of government not intervening into industrial
agreements. Catholic Health Australia argued that:
...behind this there is also a much bigger policy issue: is
there a role for governments in setting wage rates? Current policy is that wage
levels should be negotiated by parties at the local level, using a legislated
industrial framework and taking into account local operating circumstances. We
think that compromising this policy principle is also a factor affecting our
members' attitude to the supplement. If a government wishes to increase wages,
it should do so by proposing increases in the various aged-care awards and
funding the increases it seeks.[36]
7.34
Some providers were also concerned that prescribing enterprise
agreements as a condition to receiving the workforce supplement would have
negative consequences for local arrangements and the flexibility that local
arrangements can provide. ACSA argued that:
The funding arrangements as proposed place wage determination
mechanisms in a national industrial framework to the exclusion of allowing the
continuation of negotiations in the 'local' context. This compromises
individual negotiation within workplaces, informed by local circumstances.[37]
7.35
Some homecare providers also expressed concern over a potential loss of
flexibility when using enterprise agreements prescribed under the supplement
guidelines. KinCare were concerned that:
There is more cost to an organisation in the home care sector
around loss of flexibility than there is around increase age (sic) rates for
the most part. When you start to talk about negotiating enterprise agreements,
the more flexibility that you can build into them... the easier they are to
manage. Where we find that a lot of costs are built into the system is around
things like minimum starts and the way that mileage, or travel time, might be
included and the way that breaks have to be applied to work, and so on. It can
add quite a significant percentage to the total cost of the workforce.
...Our analysis at the moment would indicate that the amount of
money that is being provided as part of the Workforce Compact is not
compensating for the increased cost across the workforce. Of course, there is
the added consideration of needing to negotiate with a third party, which will
have a third party's agenda, rather than working with a workforce that has an
agenda which is related to the organisation.[38]
7.36
As shown above, however, some providers recognised the opportunities for
flexibility inherent in enterprise agreements as opposed to the modern award
process. KinCare also noted that:
As the award stands at the moment, we have lost some
flexibility as part of the modern award process. We have been supportive of the
award modernisation process because we believe that in the long term it makes
sense for us to have a national structure. But it has been a fairly expensive
process for a lot of organisations to work through as they have transitioned
from the old state based awards, which were built around the industry, to a
much more standard template, which has been applied across industries without
necessarily understanding the unique nature of what happens in the community
care sector.
Senator FURNER: Surely that may lead to an incentive for you
to wish to consider enterprise bargaining, to come up with greater flexibility,
if you have issues around that in the modern award?
Mr Howie: We are certainly considering that.[39]
7.37
Union groups were adamant that the supplement and its requirement for
enterprise agreements preserved and enhanced flexibility for aged care
employers and workers. United Voice noted that:
The requirements to receive the Supplement are not
prescriptive in terms of mandated outcomes, or prescribed content and wording
for enterprise agreements or equivalent. Instead, the Supplement provides a
framework through enterprise bargaining - and it is up to the local workplace
level discussions between employers and employees to determine in what form the
requirements will be met in their workplace.
Evidenced by the uptake of workplace enterprise agreements in
the aged care sector, the flexibility of these bargains indicates a preference
for this method of industrial regulation over the industry award... Employer
evidence to the Aged Care Low Paid Bargaining hearings indicate “bargaining under
the act [Fair Work Act] is actually flourishing...” The Compact’s requirements
are such that there remains workplace flexibility as to how the workplace will
best meet these commitments. This ensures that the enterprise agreements or
equivalents are specific to the local circumstances and are flexible to meet
the needs of the workplace.[40]
7.38
Union groups and the Department also pointed out that the use of
enterprise agreements as the mechanism for delivering increased wages is based
on the NACA Blueprint, which was supported by all major organisations across
the sector. In developing its Blueprint for Aged Care Reform, NACA also
published a number of papers to provide additional advice to government on features
of the Living Longer Living Better reforms. In its paper on the aged
care workforce, NACA noted that there:
needs to be a transparent, accountable and enforceable
mechanism to deliver fair and competitive wages through the Government funded
bridging supplement.
Use of existing industrial processes, such as
certified/enterprise agreements, are the most appropriate mechanism to ensure
that fair and competitive wages are established and maintained.
...
While other options were identified the Alliance believes the
mechanism it proposes is the most effective way to deliver fair and competitive
wages because it:
- is consistent with the existing system of enterprise bargaining
in which unions and providers are already engaged;
-
clearly ties increased funding to increased wages and will hold
providers accountable for the flow on to workers; and
- provides certainty for providers that funding will be made
available.[41]
7.39
The committee considers that providers were given an opportunity to
raise in principle objections to tying workforce funding to industrial
agreements during the development of the NACA Blueprint.[42]
Given both the prevalence of enterprise agreements across the sector, and the
provision for smaller residential providers and home care providers to satisfy
the requirements of the supplement by ensuring employments arrangements meet
the minimum requirements, the committee does not consider the workforce
supplement to be an unreasonable interference by government into industrial
relations between employers and employees. The committee rejects the suggestion
by ACSA that the policy would 'place wage determination mechanisms in a
national industrial framework to the exclusion of allowing the continuation of
negotiations in the 'local' context'. To the contrary, the policy explicitly
supports bargaining at the enterprise level. At the other extreme were
suggestions that if the government wished to improve wages it should do so
through award increases that it should then fund. Apart from being unrealistic,
this would go directly counter to most providers' preference to maintain
enterprise bargaining, and also be inconsistent with one of the main policy
intentions behind the reforms (supported by all major stakeholders), which is
to ensure the financial sustainability of the sector.
Claims regarding union recruitment
7.40
During the inquiry, an article was published by The Australian
newspaper which claimed that:
...unions have been recruiting on the back of government-funded
pay-rise offers in childcare and aged care, telling workers to expect pay rises
of up to $10,571 a year under the government schemes as long as they follow a
three-step plan that starts with joining a union'.[43]
7.41
Departmental representatives were asked about the newspaper article and
the idea that a pay rise might be linked to union membership:
Ms Huxtable: ...I believe that there might be a link being
drawn between eligibility for the supplement and union membership which I do
not believe is there, and I do not believe it is in the material that we have
produced.
Senator FIERRAVANTI-WELLS: You have to join and you have to
have an EBA—
Ms Huxtable: Sorry, Senator, but I think they are two
somewhat separate things...For facilities of a certain size an EBA would need
to be in place which covers the terms of the supplement. But an EBA can cover
the extent of a workforce. You do not have to be a member of a union. That is
my understanding.[44]
7.42
Union representatives were also asked about these claims. They rejected
the statements in the article, both in respect of the magnitude of possible pay
rises and the claim that unions had suggested securing a pay rise was
contingent on joining. Union officials stated that they began bargaining
processes by seeking to recruit members, but made no suggestion that a pay rise
was contingent on membership:
The Australian seeks to attack United Voice on the
basis that it is starting the enterprise bargaining process by asking workers
to join the union. I find it hard to understand this criticism. Our credibility
and capacity depends on the number of members we have. In bargaining and
representation, we take our instruction from members - no-one else. Our
resources come from the membership dues of members - no-one else. How then is
it expected that we would launch an enterprise bargaining process? Convene
meetings of non-members? Ask cleaners, security guards and health care workers
to pay to have bargaining done for a group of non-members in aged care? Pretend
to the employers that we can speak authoritatively about the concerns of their
employees when we represent no-one? The idea is ridiculous. Rule 1 of any
collective bargaining process is to first establish a collective. That is all
we are doing. To then be attacked as opportunistic or in some way corrupt when
we ask workers to join and be represented at the bargaining table simply
betrays the animus of our critics.[45]
7.43
The Nurses Federation representative stated:
We have been bargaining in the aged-care industry for 20
years. As we pointed out in our submission, most nurses in the aged-care sector
are covered by agreements. We do not discriminate between members and
non-members in that process. The fact is, Senator, that most nurses in aged
care are already in the union and always have been.[46]
7.44
On the quantum of possible pay increases, witnesses indicated that the
figure in the newspaper report was not relevant to aged care, with
correspondence from United Voice indicating how the misapprehension may have
arisen: 'the article in the Australian mistakenly links the $10,571
package in the Early Childhood Education and Care Sector with the Aged Care
settlement'.[47]
Inclusion in the list of primary supplements
7.45
The workforce supplement is included in the list of primary supplements for
residential providers and homecare providers in new sections 44(5) and 48(3) of
the Act. Residential aged care providers have expressed concern that the
inclusion of the workforce supplement in this list of primary supplements could
lead to their clients contributing to the payment for the supplement. ECH,
Resthaven and Eldercare claimed that:
The effect of this is that the workforce supplement will be
taken into account in applying the new means test to the calculation of means
tested care fees in residential care and the income tested fee for home care. As
a result, if a care recipient’s care subsidy reduction exceeds the sum of the
basic subsidy and all primary supplements applying to that care recipient, they
will be fully subsidising the workforce supplement.
...it now appears that a proportion of care recipients will be
subsidising the government’s workforce supplement (along with all other primary
supplements potentially), on top of the cut to ACFI funding.[48]
7.46
During a committee hearing in Perth, ECH explained these concerns
further:
If a person is of wealthier means, the means test could
result in them paying for their care or having their care subsidy reduced by an
amount that includes all of the primary supplements. Again, we are talking
about wealthier people but, nevertheless, they would contribute to the cost of
the workforce supplement by virtue of the fact that it is a primary supplement.
We had not understood that that would be the case; we had understood the
government's position was that the workforce supplement would be fully funded
from the $1.2 billion that is being redirected from the Aged Care Funding
Instrument subsidy to providers. Although it may not be a huge amount of money,
we were a bit surprised that some residents could actually end up contributing
to the cost of the supplement as well.[49]
7.47
The other supplements included in the list of primary supplements in the
Bill are the respite supplement, the oxygen supplement, the enteral feeding
supplement, the dementia supplement, and the veterans’ supplement. Unlike the
workforce supplement, each of these primary supplements relates directly to an
individual's care requirements. The workforce supplement is not targeted to
individual care recipients, but addresses the broader systemic issue of aged
care workforce capacity. The above providers recommended that the workforce
supplement be removed from the list of primary supplements in the Act and
transferred to a list of 'other supplements', which are not included in the
calculation of the care subsidy reduction.[50]
7.48
It appears clear that classifying the workforce supplement as a primary
supplement will lead to certain residential care recipients, who are subject to
means testing, paying increased fees. At this stage, however, it is difficult
to determine the financial impact on fees payable by individuals. The detail as
to when the supplement will apply and how it is to be worked out will be
contained in the new 'Subsidy Principles' and legislative instruments to be
made by the Minister. As the new Subsidy Principles and legislative instruments
are not available at this time, it is currently difficult to predict the
financial impact of including the workforce supplement in the list of Primary
Supplements.
Committee view
7.49
The committee considers that the workforce supplement should be retained
as an important element of the Living Longer Living Better aged care
reforms. There is a pressing need to ensure that an adequate and capable aged
care workforce exists to meet the present and future requirements of an ageing
population. The committee also accepts that reform in the aged care system must
be sustainable. In this regard, the committee therefore does not consider that
the workforce supplement is less viable because it is being funded from
monies that were previously directed to other areas of aged care. While some
residential care providers may experience a decrease in revenue from changes to
the ACFI, the committee considers this to be a separate issue to the viability
or affordability of the workforce supplement.
7.50
The committee has considered arguments raised around costs that might be
incurred by providers seeking to access the supplement. While accepting that
there are costs involved in negotiating enterprise agreements, there are also
benefits, and in fact negotiating to secure efficiency gains is one of the main
purposes of bargaining. The committee does not consider the choice of these as
the main mechanism for delivering supplement monies to be either an
inappropriate intervention into industrial arrangements, or an undue burden on
providers. The extent of the aged care workforce covered by enterprise
agreements is considerable, and the NACA recommendation discussed above demonstrates
that, until recently, the mechanism had support from providers. The committee
also considers that there are adequate concessions made for non-residential and
smaller residential providers, who are able to certify that they meet the
requirements of the supplement by other means.
7.51
The committee recognises that some providers may choose not to access
the supplement, and it is conceivable that these will be smaller, less
profitable organisations that may already face financial difficulties across
their operation. However the committee has also received evidence that the
majority (up to two thirds) of the aged care workforce is covered by enterprise
agreements, and that the majority of these agreements more than meet the
requirements in the compact. According to United Voice, most of the
compact/supplement requirements actually reflect current practice, due to the
consensus nature of the consultation process involving NACA and SWAG. The
committee also heard evidence that a considerable number of providers already
pay wages that are well above award rates. These providers will also find it
easier to meet the requirements of the supplement.
7.52
It is also important to note that the supplement is an initial, interim,
measure to address workforce pressures in aged care. The recommendation from
the NACA Blueprint was to put in place a bridging supplement to immediately
begin to address wage concerns, and then work towards longer term reform
options. This is the structure that has been followed in the Addressing Workforce
Pressures Initiative, which first introduces the workforce supplement, and then
provides for the Aged Care Workforce Development Plan to be developed during
2013, to address longer term, systemic issues. The supplement is a bridging
measure to begin to attract and retain aged care workers before engaging in 'longer-term
work that must be done on a wages structure that will allow a quality workforce
to grow'.[51]
During the SWAG process it was noted that:
While some participants expressed a preference for some
targeting of the compact monies, the unions and providers agreed that the
monies should flow to all employees equally as it would be difficult to develop
an enterprise agreement which was supported by all employees at the workplace
if some groups were disadvantaged vis a vis other groups.[52]
7.53
The committee expects the Addressing Workforce Pressures Initiative to
specifically address workforce shortages for individual smaller, regional,
rural and remote providers through the Aged Care Workforce Development Plan. In
the meantime, regional, rural and remote providers are able to access specific
funding through the viability supplement.
7.54
Finally, the committee notes the argument made for removing the
workforce supplement from the list of primary supplements, and placing it in
the list of 'other supplements' which do not count towards a reduction in the
ACFI care subsidy. While the workforce supplement appears different in nature to
the other proposed primary supplements in new section 44-5 of the Act, the
committee accepts that care recipients who can afford to, should contribute to
wage increases for the workers who care for them. This accords with the general
emphasis on revised income testing throughout the Living Longer Living
Better reform package. The use of income testing is designed to ensure that
the aged care system 'recognises a simple reality that those who can support
themselves, and contribute a bit more should, and that we must look after the
needs of those who can't'.[53]
This will be the principal effect of including the workforce supplement in the
bill, and as such should be supported.
Recommendation 12
7.55
The committee recommends that references to the workforce supplement be
retained as they appear in the proposed legislation.
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