Care economy must not be bottomless pit for taxpayers

Members of the Albanese government during a caucus meeting ahead of the 2023 Federal Budget at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

When Labor, then in opposition, announced it would fully fund a 15 per cent pay rise for aged-care workers if it won the election in May last year, The Australian was sceptical for three reasons. First, expecting taxpayers to fund a pay rise for workers, many of whom are not on the public payroll, is a bad principle, extending the reach of big government to new lengths. Second, the move would help fuel a wages spiral. And third, we anticipated it would have unintended consequences in other spheres of the care economy, including disability and childcare. We have not been surprised by the outcomes as they continue to unfold.

A week ago we reported that the prospect of significant pay rises flowing to aged-care workers from July 1 had caused an increase in the number of frontline disability workers looking to leave the sector to transfer to jobs in aged care. Disability support wages have generally been 25 per cent higher than aged-care pay but the gap will narrow from Saturday because of the 15 per cent wage rise flowing from the aged-care work value case and this year’s increase in award wages. Health Services Union national president Gerard Hayes said the two rises amounted to a pay rise of close to $5 an hour, which was significant for workers earning as little as $22 an hour. National Disability Services chief executive Laurie Leigh said the disability sector workforce remained precarious, with a continued undersupply and high turnover.

And, as education editor Natasha Bita reported on Monday, short-staffed childcare operators want taxpayers to spend up to $2.2bn a year to directly fund wage rises in their sector through multi-employer bargaining. The Australian Childcare Alliance has calculated that centres will have to increase fees by 18 per cent, as families struggle with living costs, unless taxpayers directly fund the pay rise. United Workers Union members are campaigning for a 25 per cent wage increase – way beyond reasonable expectations – for workers in the early learning sector. Economic modelling for the ACA by Dandolo Partners shows a 25 per cent rise would cost $2.2bn a year if granted to all staff, including teachers and centre directors paid above-award wages. That would equate to an increase in out-of-pocket costs for families ranging from $34 a week for a low-income single parent to $20 a week for a low-income couple both working part-time and $33 a week for a couple working full-time on an average wage.

The Albanese government prides itself on expanding the care economy and counts the sector as an important contributor to productivity growth. Productivity and efficiency to stretch resources as much as possible are vitally important. But the sector is an increasing burden on taxpayers. And paying staff 25 per cent more – or 15 per cent more or 5 per cent more – for doing the same thing is the antithesis of improving productivity. Expenses need to be contained as much as possible, with a moderate element of user-pays where appropriate, especially in aged care and early childhood learning. Childcare centres provide a worthwhile service in freeing up parents to work and pay off homes or student fees. They also set many children on the road to early learning. But they are often businesses.

The National Disability Insurance Scheme needs to be centred on the people it was established to help, the severely disabled, to help improve their quality of life and, if possible, assist them back towards participating in the economy. The rising number of children joining the scheme because of problems such as autism and attention deficit disorder cannot be brushed aside indefinitely. Taxpayers are not a bottomless pit. The public purse cannot continue indefinitely funding pay rises more than double the inflation rate, a reality the government must address.