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Aged Care providers face growing financial pressure

Release date: 23 Jun 2022

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Aged care providers are facing growing financial pressure according to the latest StewartBrown figures which show more than two thirds of providers are operating at a loss.

Aged & Community Care Providers Association (ACCPA) Interim CEO Paul Sadler says the StewartBrown data, released today, confirms the feedback from ACCPA members of increasing financial pressure.

Sixty-four per cent of residential aged care homes recorded an operating loss in the nine months to March 2022 with an average operative loss of $12.85 per resident per day, a position which has progressively worsened since 2018. 

StewartBrown is predicting that losses will continue to grow in the last three months of the 2022-23 financial year, reaching $15.59 per resident per day by the end of June 2022.

“Based on these figures many providers could be forced to leave aged care unless there is additional funding to allow providers to meet the increasing costs of providing quality care and support,” Mr Sadler said.

“It is clear that aged care workers need a significant pay rise but without additional support, aged care providers will be unable to attract more workers and to realise improvements in the quality of care.”

Mr Sadler said that ACCPA had recently raised with the Albanese Government two solutions to the immediate problem: an indexation adjustment to increase subsidies to providers; and legislation to introduce an independent pricing authority as recommended by the Aged Care Royal Commission.

“We look forward to working with Ministers Butler and Wells on practical solutions which maintain important aged care and support services for older people,” Mr Sadler said.

The former government rejected a Royal Commission recommendation to raise the level of indexation of subsidies for providers. Indexation for 2021-22 was 1.1 per cent compared to last year’s 2.5 per cent Award wage increase and 0.5 per cent Superannuation Guarantee increase.

“We are expecting an even bigger gap this year between the increase in wage costs and indexation unless the government adopts the Royal Commission recommendations 110 and 11 to increase indexation,” Mr Sadler said.

The Aged Care Royal Commission found that:

The Australian Government’s approach to indexation of funding levels for aged care services has been inadequate to keep up with real cost increases over many years. We recommend short-term measures to address the inadequacy of indexation of aged care funding levels in the next few years, until the independent pricing of aged care services by the Pricing Authority can begin.

“To ensure more robust and evidence-based funding can be implemented from July 2023, the Government must also legislate the expansion of the functions of the Independent Health and Hospital Pricing Authority to include aged care, consistent with the Royal Commission’s recommendation on independent pricing,” Mr Sadler said.

“We look forward to working with the new government to address this issue and other unfinished business from the Royal Commission.”

Media contact: Kate Hannon 0499 106 957 or Jane Garcia (Essential) 0455 111 593

About Aged & Community Care Providers Association:

ACCPA is the national association for all providers of aged and community care in Australia from 1 July 2022. It unites the aged care sector’s two largest organisations, Aged & Community Services Australia (ACSA) and Leading Age Services Australia (LASA), for a stronger voice for aged care providers.

 

Background – Royal Commission Recommendations on Interim Indexation

Recommendation 110: Amendments to residential aged care indexation arrangements 

  1. Commencing with effect on 1 July 2021, the Australian Government should amend the indexation arrangements for residential aged care so that all care subsidies, and the viability supplement, are increased on 1 July each year by the weighted average of:

    a. 60% of the yearly percentage increase to the minimum wage for an Aged Care employee – Level 3 under the Aged Care Award 2010 (clause 14.1) that is determined by the Fair Work Commission immediately prior to 1 July as part of the annual review of award minimum wages

    b. 30% of the yearly percentage increase to the minimum wage for a Registered nurse Level 2 – pay point 1 under the Nurses Award 2010 (clause 14.3) that is determined by the Fair Work Commission immediately prior to 1 July as part of the annual review of award minimum wages

    c. 10% of the yearly percentage (to the 31 March immediately preceding the indexation date) increase to the Australian Bureau of Statistics Consumer Price Index. 

  2. Whenever the Fair Work Commission makes a change to a minimum wage in either the Aged Care Award 2010 or the Nurses Award 2010 other than as part of the annual review of award minimum wages, subsidies should be indexed from the operative date of those increases by the weighted average of:

    a. 60% of the percentage increase to the minimum wage for an Aged Care employee – Level 3 under the Aged Care Award 2010 (clause 14.1) that is determined by the Fair Work Commission

    b. 30% of the percentage increase to the minimum wage for a Registered nurse Level 2 – pay point 1 under the Nurses Award 2010 (clause 14.3) that is determined by the Fair Work Commission. 

  3. The increases based on these arrangements should apply to the financial year commencing 1 July 2021 and continue until such time as the Pricing Authority has commenced independent determination of prices for residential care.

Recommendation 111: Amendments to aged care in the home and Commonwealth Home Support Programme indexation arrangements 

  1. Commencing with effect on 1 July 2021, the Australian Government should amend the indexation arrangements for home care and the Commonwealth Home Support Programme so that subsidy rates are increased on 1 July each year by the weighted average of:

    a. 55% of the yearly percentage increase to the minimum wage for a Home Care employee – Level 3 pay point 1 under the Social, Community, Home Care and Disability Services Industry Award 2010 (clause 17.3) that is determined by the Fair Work Commission immediately prior to 1 July as part of the annual review of award minimum wages

    b. 15% of the yearly percentage increase to the minimum wage for a Registered Nurse Level 2 – pay point 1 under the Nurses Award 2010 (clause 14.3) that is determined by the Fair Work Commission immediately prior to 1 July as part of the annual review of award minimum wages

    c. 30% of the yearly percentage (to the 31 March immediately preceding the indexation date) increase to the Australian Bureau of Statistics Consumer Price Index. 

  2. Whenever the Fair Work Commission makes a change to a minimum wage in either the Social, Community, Home Care and Disability Services Industry Award 2010 or the Nurses Award 2010 other than as part of the annual review of award minimum wages, subsidies should be indexed from the operative date of those increases by the weighted average of:

    a. 55% of the percentage increase to the minimum wage for a Home Care employee – Level 3 pay point 1 under the Social, Community, Home Care and Disability Services Industry Award 2010 (clause 17.3) that is determined by the Fair Work Commission

    b. 15% of the percentage increase to the minimum wage for a Registered Nurse Level 2 – pay point 1 under the Nurses Award 2010 (clause 14.3) that is determined by the Fair Work Commission. 

  3. The increases based on these arrangements should apply to the financial year commencing 1 July 2021 and continue until such time as the Pricing Authority has commenced independent determination of prices for aged care in the home.

As the peak body representing church, charitable and community-based organisations providing accommodation and care services to older people, people with a disability and their carers, ACSA can be contacted for comment on issues affecting the industry.

Areas ACSA may provide media commentary on include:  

  • Aged care reforms
  • Residential aged care
  • Home care
  • Independent and retirement living
  • Housing for older Australians
  • Palliative care
  • The aged care workforce in Australia

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