Aged care matters more as older population increases

In preparing to fund pay rises for aged-care workers to retain and build up the sector’s workforce, the Albanese government will be baking billions of dollars in extra spending into future budgets when the nation needs to be reducing deficits and debt. Under current structures and demographic trends, this is probably inevitable. Treasury’s Intergenerational Report last year noted aged-care spending was expected to increase as a share of the economy from 1.2 per cent of gross domestic product in 2020-21 to 2.1 per cent of GDP in 2060-61. Much of the increase will flow from increasing the size of the aged-care workforce and paying them more. Such work is difficult, as Employment and Workplace Relations Minister Tony Burke said on Monday. And it will get only harder as baby boomers and those born after them live longer and eventually become increasingly frail. The Intergenerational Report noted the prevalence of dementia would continue to rise in the next 40 years to overtake ischaemic heart disease as the nation’s leading cause of death.

Trade unions have applied to the Fair Work Commission for a minimum 25 per cent pay rise for aged-care workers, some of whom earn as little as $23 an hour. In its submission to the FWC, the Albanese government does not nominate a figure but “supports a minimum-wage increase for aged-care workers” whose work value is “significantly higher than the modern awards currently reflect”. The inclusion of home-care aged-care workers in the upcoming pay rise is important. In allowing the elderly to stay in their own homes for longer, home care is an increasingly important feature of the system, providing social and emotional benefits for the elderly and their families. It also reduces financial pressures on taxpayers by curtailing numbers in residential aged care.

Estimates vary as to how many extra aged-care workers, including those delivering home-care packages, will be needed in coming years and at what cost to taxpayers. The Committee for Economic Development of Australia anticipates a shortfall of up to 35,000 aged-care workers a year for the next decade, driven by increasing demand and workers leaving the industry. The federal government’s submission to the FWC notes that, to support quality care and meet demand, the Department of Health and Aged Care estimates the aged-care workforce would have to expand by an average 6.6 per cent a year across the next five years. Health Services Union national president Gerard Hayes says the sector will need $20bn in additional funding across the next four years to attract and retain an adequate workforce. The union has modelled the 25 per cent increase, plus 59,000 additional staff needed to resource the sector and provide an extra 90 minutes of extra care per resident a day.

The Labor Party took an ambitious agenda to the federal election. In addition to funding whatever pay rise the FWC decides on, it promised to work towards every aged-care facility having a registered, qualified nurse on site 24 hours a day, seven days a week. It also promised every Australian living in aged care would receive an average 215 minutes of care a day, as recommended by the royal commission; better food; and greater accountability. If those worthwhile ambitions are to be realised, reforms beyond lifting pay rates need to be considered, including drawing on new entrant workers and migrants. The latter also would benefit non-English-speaking residents.

Nor should governments or providers, over time, ignore the user-pays principle. Allowing nursing home residents or families to pay for better facilities, food or extra comforts if they can afford to do so should not detract from basic standards but enhance them if the process was well managed. A substantial pay rise for aged-care staff should be a first step in putting a growing and increasingly important sector for many people on a better footing.