Wage decision creates $1.9b budget problem

  • Published February 23, 2023

Sydney Morning Herald, 22 February 2023

Unions and aged-care providers are calling on the government to guarantee it will fund the full 15 per cent wage rise for workers by June 30 after Prime Minister Anthony Albanese and Treasurer Jim Chalmers said the Fair Work Commission’s decision would add pressure to the budget.

The government had agreed to fund any increase to aged care workers handed down by the industrial umpire last year, but argued in a submission before the industrial umpire in December that it wasn’t feasible to fund the full 15 per cent before July due to administrative issues.

It proposed funding 10 per cent of the pay rise from July and 5 per cent from July 1, 2024, but the commission on Tuesday rejected that plan and awarded workers the full 15 per cent by the end of the financial year.

Grant Corduroy, senior partner at StewartBrown, estimated the pay increase would cost the government $1.9 billion, but providers would be $575 million out of pocket if Labor decided to only fund a 10 per cent increase from July.
Prime Minister Anthony Albanese told the National Press Club on Wednesday the Fair Work decision would weigh on the public purse.

“Health, with the ageing of the population, including to name just one, the aged care wage increase, for example, that will have an impact on the budget coming through,” Albanese said.

Earlier, Chalmers told ABC radio’s RN Breakfast the government will have to find money in the May federal budget to fund the aged care increase.

“We’ll have to find room to strengthen Medicare, we’ll have to find room to fund our national security ... One of the things I’ve tried to do since I’ve been treasurer is not to try and kind of pretend away some of the pressures on the budget.”

A government spokesperson repeated the commitment to funding the wage case outcome: “Now that we have the FWC decision, we will finalise funding arrangements in the budget context.”

Health Services Union national president Gerard Hayes called on the government to assure the 15 per cent would be fully funded in the budget. “They have to, don’t they,” he said, adding the government had previously said the timing of their funding wasn’t up to Fair Work.

The Australian Nursing and Midwifery Federation also called on the government to fully fund the increase.

In a win for staff in the sector, the Fair Work Commission has also announced the interim wage rise will not just apply to those involved in the direct care of elderly Australians, such as nurses, but also cooks working in aged care homes and workers involved in recreational activities.

Hayes said the HSU, whose case before Fair Work asking for a 25 per cent pay rise prompted the industrial umpire’s decision, would keep campaigning for the bigger wage hike. “We will also continue to push hard for this to apply to the entire aged care workforce,” he said.

Earlier this month, a government submission to the Fair Work case argued it wasn’t within the body’s remit to determine when the Commonwealth must deliver on its election promise to fund the pay rise, adding the haemorrhaging of the sector’s workforce should have no bearing on the timing.

“The commission does not need to consider whether it would theoretically be possible for the Commonwealth to fund the full interim increase through its funding mechanisms sooner than it has decided,” the submission said.

Aged and Community Care Providers Association head Tom Symondson said it was critical the government revisited its position on funding, as the industry couldn’t bear the increase alone.

“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.