Fair Work accelerates aged care pay rise in hit to the budget

Australian Financial Review, 21 February 2023

The Fair Work Commission has ruled its 15 per cent interim increase for up to 320,000 aged care workers will hit in full on June 30, flying in the face of the Albanese government’s claim it was not feasible to fund the increase before mid-year.

A full bench of the commission has also extended the pay rise for direct care workers, based on their increased work value such as higher qualifications, to recreational and lifestyle officers in aged care facilities.

The decision, handed down on Tuesday, will add pressure on the federal budget due in May and is expected to cost the Albanese government at least $1.9 billion a year.

The government told the commission it had committed to fund a 10 per cent interim increase from July 1 but wanted to hold back the remaining 5 per cent until mid-2024.

Aged care unions were outraged at the government’s suggestion of a delay, saying it would lead to the collapse of the sector’s workforce.

But aged care providers had warned the bench of “further material financial distress” if it ordered the interim increase to take effect before government funding kicks in.

Aged and Community Care Providers Association chief executive Tom Symondson said the sector was “extremely concerned” the commission had decided not to align pay rises with government funding.

“With seven out of every 10 aged care providers already losing an average of $21 per resident per day, this decision of the commission changes everything,” he said.

“It is critical the government revisits its position on funding.”

StewartBrown partner and accountant Grant Corderoy estimated the cost to industry of a 15 per cent increase that was paid but not funded by a third would be $540 million for 2023-24.

“If there’s a $500 million gap [in funding] the industry can’t sustain that,” he said.

“Residential aged care lost about $1.4 billion in aggregate and this year it’s probably on track for that or more.”

But Health Services Union national president Gerard Hayes welcomed the bench’s rejection of a delay, saying the June 30 date will “accelerate the delivery of higher wages and help stave off the collapse of the workforce”.

“Some aged care workers are paid as little as $22 per hour and are really struggling to stay in the sector,” he said. “This provides some light at the end of a very dark tunnel.”

Mr Hayes also welcomed the extension of the pay rise to recreational workers.

“To prevent aged care from collapsing every link in the chain must be strengthened,” he said.

“There’s no point lifting wages for direct care workers if large chunks of the workforce miss out. This decision will include more classifications, and we will continue to push to have the entire aged care workforce covered.”

The union is continuing to argue for an additional 10 per cent pay rise so that the total increase amounts to 25 per cent.

The full bench, led by deputy president Ingrid Asbury, said it was satisfied it was “appropriate” to specify the June 30 date and it would hand down its reasons at a later date.