Independent pricing adviser excludes nurses from Labor’s pay increase

Advice from the independent Health and Aged Care Providers Authority assumed 23pc of nurses would receive no pay increase

Independent pricing body excludes one in four nurses for pay increase

Labor has been directed to fund only 11.5 per cent of its trumpeted 15 per cent pay rise for nurses in aged care, as the government’s independent pricing adviser excluded one in four nurses in its calculation for the Fair Work wage boost.

Advice from the Independent Health and Aged Care Pricing Authority (IHACPA) assumed 23 per cent of nurses would not ­receive any pay rise because they were already paid above the award.

Since it assumed Labor’s 15 per cent pay rise affected a smaller pool of workers, the pricing body has told the government that an 11.5 per cent funding increase is all that is needed to fund a pay rise for the remaining 76 per cent of nurses.

The rest of the trumpeted pay rise is money being paid directly to employers in the hope it will be passed on to wage increases for workers, with the government promising a wage rise to all aged care workers.

The new independent advice comes despite Labor’s rhetoric that it is fully funding a “historic” wage boost for aged care workers in a bid to attract more workers to the sector ahead of new reforms including 24/7 nursing and mandated care minutes.

The advice has sparked concern from advocates who say providers could be forced to pay for a widely-expected wage rise out of their own pocket, despite the sector facing significant financial losses.

The concern comes after a new report by aged care accountancy firm StewartBrown found financial problems continue to plague the sector, with the latest data showing the sector was facing a loss of more than $850m.

Aged Care Industry Association chief executive Peter Hoppo expressed concern that the federal government had not been transparent about how much of the aged care pay rise it was actually funding.

“I find it astonishing that no additional funding was allocated for over 20 per cent of nurses, ­especially considering the challenges faced by the sector in meeting the demands of around-the-clock nursing and increased mandated care minutes,” Mr Hoppo told The Australian.

“In cases where nurses are earning significantly more than the award rates, it is often because they work in areas that are difficult to staff, such as regional and rural locations but they have been discarded from the costing advice.

“Moreover, it appears contradictory to claim that the 15 per cent FWC decision has been fully funded, when in reality, the allocated budget only covers 11.5 per cent of the cost for all nurses.”

A government spokesman told The Australian that total per-resident funding per day would rise an estimated 17 per cent from next month, which would be sufficient for providers to pass on a 15 per cent increase to award wages for aged care workers.

Aged Care Minister Anika Wells said providers would be ­legally obliged to pay the award increases and must pass on “all funding earmarked for wages to their workers”.

“Since the day we announced the pay rise we have repeatedly said our expectation is the 15 per cent pay rise will be passed on to all workers, including nurses,” Ms Wells said. “We will require providers to attest that they are passing on the government’s investment in wages to workers.”

But StewartBrown partner Stuart Hutcheon said that new IHACPA advice provided to the government appeared to contradict Department of Health and Aged Care guidance given to aged care providers, which said they must pass on a wage increase to all workers.

According to the department’s own guidance, providers must pass on all the additional funding allocated to wage rises to their workers including those earning above the minimum award.

Mr Hutcheon said there could be providers who were left out-of-pocket being forced to fund higher wages without a sufficient funding boost from the government, considering Labor’s own independent advice did not allocate funds for a wage boost for nurses working above the award.

“The government has said in their own advice to providers that the award increase should be passed on to all workers, and it is the government’s view that the increase in funding will cover providers to pay above the award,” Mr Hutcheon said.

But he said it was questionable whether that promised funding was based on a pay rise for only 77 per cent of aged care nurses.

“We have done analysis to suggest the average subsidy increase will cover it, but there will be some providers who will be disadvantaged,” he said.

StewartBrown’s latest Aged Care Financial Performance Survey covering nine months up to March found that providers were losing an average of $15.74 per bed per day or about $5221 per bed per annum and a continuation of losses for over five successive years.

Bed occupancy has also ­declined to about 90.9 per cent of available beds, with the fixed costs per bed increasing and further eroding the sector’s financial performance.

Opposition health and aged care spokeswoman Anne Ruston said Labor had lied to the aged care sector by promising a 15 per cent pay rise and short changed Australia’s “hardworking nursing staff by millions and millions of dollars”.

“The IHACPA’s report indicates the Labor government will only fund 11.5 per cent of the 15 per cent pay rise for residential aged care nurses,” Senator Ruston told The Australian.

“It appears as if the government is forcing aged care providers to pick up the rest of the tab, which shows just how completely out of touch the government is with the current financial pressures facing the sector.”