Aged care wage increase

This webinar provided information about the Australian Government’s $11.3 billion investment to fund the Fair Work Commission’s decision of a 15 per cent increase to the award wages of many aged care workers.

Audience:
Health sector
Webinar date:
to
Webinar Link:

Webinar recording 

1:00:30

[Opening visual of slide with text saying ‘Australian Government with Crest (logo)’, ‘Department of Health and Aged Care’, ‘Aged care wage rise’, ‘Emma Gleeson, Assistant Secretary, Aged Care Workforce Branch’, ‘Mark Richardson, Assistant Secretary, Residential Care Funding Reform Branch’, ‘Russell Herald, Assistant Secretary, Home Support Operations Branch’]

[The visuals during this webinar are of each speaker presenting in turn via video, with reference to the content of a PowerPoint presentation being played on screen]

Emma Gleeson:

Thank you all for attending today’s webinar. I’m Emma Gleeson, Assistant Secretary of the Aged Care Workforce Branch at the Department of Health and Aged Care and I will be co-hosting this event with my colleagues Mark Richardson, Assistant Secretary of the Residential Care Funding Reform Branch and Russell Herald, Assistant Secretary of the Home Care Support Operations Branch.

I would like to begin by acknowledging the traditional owners and custodians of the lands on which we are virtually meeting today. My colleagues and I are based in Canberra on the lands of the Ngunnawal people and the Ngambri people. I would like to pay my respects to Elders past, present and emerging. I would also like to extend the acknowledgment and respect to any Aboriginal and Torres Strait Islander peoples who are here with us today.

There will be a Q&A session at the end of the webinar. You can lodge questions in the Slido box on the right hand side of your screen. We will attempt to respond to as many questions as possible at the end of the webinar. All questions and answers including ones that we may not get to will be available after the webinar and emailed to you. Questions submitted during the registration process have also been considered for the Q&A session. There is no option for attendees to turn on their video or microphone however this session will be recorded and uploaded onto our website along with the slides.

[Visual of slide with text saying ‘Overview’, ‘Emma Gleeson’, ‘Assistant Secretary’, ‘Aged Care Workforce Branch’]

The Department is providing information on specific program changes flowing from the recent Budget across a range of webinars over the past few weeks. So we will skim over areas that we’ve already addressed in other forums. The webinar today will provide an opportunity to go into more detail about some of the implementation considerations including the release of the aged care worker wages guidance.

As you are no doubt aware by now this 15% interim wage increase which takes effect from the first full pay period on or after the 30th of June 2023 applies to predominantly direct care aged care workers in residential and home care settings. As set out on the screen these are workers covered by the Nurses Award, the Aged Care Award and the Social, Community, Home Care and Disability Services Industry Award, specifically those home care workers classified under Schedule E.

The wage rise also applies to the head chef or cook in a service under the Aged Care Award.

The Fair Work Commission is still to decide on further increases for direct care workers in the sector over and above the 15% noting the full work value claim was for 25%. The Commission will also decide whether increases should be provided to other staff including cleaners, gardeners and administration staff. We are commonly asked what is happening with the wage increases for these staff and can Government funding be used to give pay increases to these staff.

So upfront I want to confirm that as they are not in scope for the 15% wage increase the Government’s funding as it relates to the Fair Work Commission 15% increase is not directed towards supporting a wage increase for these support workers. We also don’t know the timing of when we will have a further decision from the Fair Work Commission on this matter but the Government has committed to fund the outcome of the case.

I will also note that over the past few weeks we have been asked how the funding applies to workers who are employed outside the Fair Work system and we will address these issues as we work through the presentation.

As you can see this slide provides a summary of the Government’s $11.3 billion investment in aged care wages which is made up of $8.5 billion in funding for residential aged care, $2.2 billion for the Home Care Packages Program, $310 million in additional grant funding for the Commonwealth Home Support Program. There is also $236.8 million for providers of flexible aged care programs including the National Aboriginal and Torres Strait Islander Flexible Care Program, Indigenous Employment Initiative, the Short Term Restorative Care Program, select providers of multipurpose services and the Transition Care Program. There is also $82.5 million for Veterans home care and community nursing and $98.7 million for leave liabilities.

I will now hand over to my colleague to discuss the wage increase in the context of residential aged care funding.

Mark Richardson:

[Visual of slide with text saying ‘Residential aged care funding’, ‘Mark Richardson’, ‘Assistant Secretary’, ‘Residential Care Funding Reform Branch’]

Great. Thanks Emma. As Emma mentioned at the start my name’s Mark Richardson and I’m the Assistant Secretary of the Residential Care Funding Reform Branch.

I’ll give you an overview on the Government funding announcements made as part of the 23-24 Budget for residential aged care including the new AN-ACC price. But given that many of you probably joined our residential aged care webinar a few weeks ago I’ll keep it pretty short and just provide a recap.

So the Government has provided an $11.1 billion funding injection over four years from 23-24 which fulfils a commitment to fund the Fair Work Commission decision to increase award wages by 15% for selected residential aged care workers as well as the annual increase to the AN-ACC price to align it with increases in care costs since AN-ACC was introduced on 1 October 2022.

As you can see on this slide this $11.1 billion in funding is made up of:

  • an additional $10.1 billion in AN-ACC funding to implement the new AN-ACC price of $243.10 as recommended by the Independent Health and Aged Care Pricing Authority, or IHACPA,
  • an additional $116 million to establish a new $10.80 hotelling supplement per resident per day,
  • an additional $6 million to establish a new one-off grant opportunity under the existing AN-ACC Transition Fund to support residential aged care services with specific characteristics for the 23-24 financial year only,
  • an additional $743 million to cover the costs of delivering 215 care minutes over three years from 24-25 following the 15% Fair Work Commission wage increase, and
  • an additional $178 million to align the 24/7 RN supplement with the 15% increase in award wages.

Now I should point out that of the $11.1 billion, $8.5 billion, as Emma mentioned at the start, is associated with the Fair Work Commission wage increase and $2.7 billion, accounting for rounding, is associated with indexation to cover increases in costs such as inflation, other care wage increases and the superannuation guarantee.

As you are aware, IHACPA’s role is to provide annual, independent aged care pricing advice to Government to ensure aged care funding is directly informed by the actual costs of delivering care.

The pricing advice from IHACPA, which they released on their website in late May, includes consideration of changes to all care related costs for residential aged care providers.

The price itself is drawn from all the data available on cost-of-care delivery and while it reflects the daily costs of care it is an aggregated price per day that does not break down into detailed individual price components such as wages or on-costs.

The price of $243.10 represents a price increase of $36.30 or 17.6%. The table on the left of this slide shows how IHACPA calculated this by subtracting the $10 basic daily fee supplement from the current $216.80 AN-ACC price and indexing the resulting $206.80.

In summary as shown on the right-hand side of the table the indexation included a Fair Work Commission wage component increase of $22.76 or about 63% of the $36.30.

This includes funding for on-costs such as leave entitlements and allowances but as mentioned these costs cannot be itemised. To explain this further, the approach that IHACPA took was to look at the proportion of total sector expenditure on labour which includes on costs as it relates to the interim Fair Work Commission decision and to index these costs as they relate to the AN-ACC price. In effect this means the additional funding for the interim Fair Work Commission decision supports an increase to sector average wages of an estimated 13.65% for all workers in these professions, that is RNs, ENs, assistants in nursing, PCWs and recreation activity officers (or lifestyle workers), not just the 15% increase for workers on the award.

In addition to the $22.76, there is an indexation component for other changes in care costs such as inflation, other wage adjustments and the superannuation guarantee changes for an increase of $13.54 to the AN-ACC price.

Last of all the new hotelling supplement includes $0.36 per resident per day to support higher wages, including on costs for head chefs and cooks.

To sum it all up, the increase to the AN-ACC price together with the new $10.80 hotelling supplement, additional funding for the 215 care minute commitment and the 24/7 RN supplement means that there will be substantially more support for residential aged care providers to:

  • attract and retain a high quality workforce,
  • better meet the mandatory 24/7 registered nurse responsibility from 1 July 2023 and care minutes from 1 October 2023, and
  • ultimately to deliver increased direct care time to residents that reflect their individual care needs.

Importantly it also means all providers – and that includes State Government providers and local Councils – regardless of whether they pay at or above award rates, will get a funding boost next financial year.

That’s it from my part. I’m happy to answer any questions at the end of the webinar as Emma mentioned but I’ll now hand you over to Russell Herald to talk about home care funding.

Russell Herald:

[Visual of slide with text saying ‘Home care funding’, ‘Russell Herald’, ‘Assistant Secretary’, ‘Home Support Operations’]

Hey all. For those who haven’t seen me before I’m Russell Herald, the Assistant Secretary of Home Support Operations.

So we’ll start off with Home Care Packages. Now Home Care Packages have been indexed collectively by 11.9% from 1 July through a $2.2 billion funding injection. That includes 3.3% of ordinary annual indexation as well as 8.3% for the 15% wage rise. Now that’s been calculated based on wage costs information that has been held and provided by the providers in recent history which is similar to what has been done with some of the AN-ACC work. You will notice that 8.3% plus 3.3% doesn’t equal 11.9%. We’ve had a few questions about that. And that’s because it’s cumulative. So the 8.3% is on top of the 3.3%. So that will give you the total uplift.

So if we think about the wage review, the 5.75% increase, that’s drawn from the 3.3% ordinary indexation and then there’s the 8.3% for the 15% wage increase. Some of the other questions that we have had is it’s not 15% so we’re not getting enough money to meet the 15% wage increase. And it’s important to note that not all of the costs of home care providers are on wages or on wages for those that are in scope for the Fair Work Commission decision that cover those 3 awards for direct care workers. So that’s why it’s not 15% just applied on top.

So in terms of what providers will need to do if they haven’t done so already is communicate all of this information to their workforce as well as gain consent with each individual home care package – recipient on the changes that will apply to the package costs. And to support that the department/Minister has issued a letter to all Home Care Package -recipients to advise them of reasoning underpinning the price changes. Noting that through that process providers may look at realigning or adjusting their pricing models given the relative exposures of costs under the decisions and ordinary inflation. So that’s the general requirement or expectation of what is happening over the next few weeks.

There is a small grant process that will be opened in the not too distant future, I think probably around about early August. This grant will allow providers who have Level 4 home care recipients where the package is fundamentally driven by care costs, -- really high care funding and low administration, low technology, -- to get a little bit of extra supplementation where the 11.9% increase provides a shortfall. So that grant opportunity will come out soon and further advice around all of that but it’s really focused heavily on areas where there’s high care exposure.

The next slide. A copy of the letter was published on the department’s website on the 25th of May as well as 2 fact sheets providing further details for the sector and care recipients. If you haven’t seen these letters or they haven’t been shown to you by clients I would encourage people to read up on those. They were developed with the Aged Care Quality and Safeguards Commission, the Fair Work Commission and peaks to ensure that all the relevant information was included.

So now let’s talk about CHSP. Similar to the small grant process for Home Care Packages we will have a grant process put out in probably early August as well that will deal with a top-up of CHSP funding for the actual costs of the Fair Work Commission decision on CHSP providers. I will be distributing soon a letter to all CHSP providers, which goes through a detailed explanation and some questions and answers that will address a number of the queries that have come through to our mailboxes over the last few weeks. But fundamentally, it will be a grant based on the actual impact on wages. The funding will flow most likely by the end of the calendar year. And to address any cashflow issues sometime probably mid to late July (this is the latest advice I have) that all CHSP providers will get six months’ worth of their contract value to ensure that there is sufficient cashflow to meet payroll obligations and on costs until that additional funding comes through.

Now I’ll clarify that the grant opportunity also does include on costs. Further detailed information around the methodology, and how to apply for that, will be part of the grant application process. It does mean however that workers on other awards not in-scope of the Fair Work decision will not have additional funding coming through. So that’s people on state awards, or on other federal awards not covered by the Fair Work Commission decision. So for instance allied health awards or SCHADS Award Schedule B, as opposed to Schedule E, which is where a lot of the disability workforce is employed. And so providers will need to clearly account for the workers that are on the specific awards in place affected by the Fair Work Commission decision.

So that’s the CHSP update and I will hand back to Emma.

Emma Gleeson:

Thanks Russell. I will now discuss the guidance on the aged care wages. The guidance was released on Monday [12 June 2023] and has been developed in consultation with unions and the Aged and Community Care Providers Association. It sets out the Government’s expectations about how much providers should pass on for wages where providers are paying above minimum award wages.

The reason this guidance is important is that we know that many providers particularly in residential aged care have enterprise agreements and are paying above award rates already. The Government wants to see substantial investment in the aged care workforce end up in the pockets of workers.

Now for clarity this guidance relates to mainstream residential aged care and the Home Care Packages Program. This is due to the mechanisms by which we are funding the increases. That is through across the board program pricing and subsidy uplifts. These uplifts are directed at all approved providers and are agnostic to how workers are currently employed and at what rate.

The guidance provides a standardised methodology for providers to determine what is a reasonable above award increase rather than it having to be worked out at a provider by provider level.

So what is the guidance asking you to do? Well the tables at the end of the guidance provide the difference in dollar terms between the current award rate and the new award rate at 30 June 2023 for workers award classifications. These are the amounts the Government is asking you to pass on. Now we understand that there is a good understanding amongst providers as to how the federal awards mapped their Enterprise Agreement classifications and this should not cause any issues. For those awards or agreements outside the Fair Work system there may need to be some cross matching of classifications that is required.

A standardised approach via this guidance provides a reference for Enterprise Agreement negotiations.

Providers can of course pay over and above the amount set out in this guidance and the Government expects the usual enterprise bargaining to occur. We also expect that any negotiated or scheduled increases continue to be paid.

Now I’ll come back to the guidance in a moment but firstly I want to highlight the annual wage review decision which was announced on the 2nd of June 2023. The Fair Work Commission determined that minimum award rates will be increased by 5.75%. This annual wage review increase applies to all aged care workers who are covered by a federal award from 1 July 2023. So for those workers who are covered by the Fair Work Commission aged care work value case the annual wage review increase will be applied in addition to the 15% that is due to commence on the 30th of June.

I note that for some providers consideration will also need to be given to the timing of annual wage increases that arise through state-based industrial relations systems for example in New South Wales and South Australia.

The Government funds annual indexation to aged care programs that takes into account annual wage increases.

Now the guidance takes into account the 15% increase only when we calculate the dollar amounts. That is we’ve calculated between the award as it is today and the 15% increase applicable on the 30th of June 2023.

I would also like to flag that obviously every provider is different and the effect of the guidance on your pay rates will vary according to your Enterprise Agreement rates. Providers need to consider the effect of the 15%, the 5.75% together with the dollar amount set out in the guidance and any existing scheduled increases.

Updated wage tables incorporating all the minimum award wage increases will be available on the Fair Work website shortly or you can also view the draft determinations which provide the new weekly rates on the Fair Work Commission website. We’ve provided links for those sites at the end of this presentation.

The Fair Work Ombudsman is also a good source of advice in regard to award coverage.

So on this slide we provide an example of how to apply the wages guidance to a current aged care agreement. As you can see the Enterprise Agreement on the left includes hourly rates for enrolled nurses at each level while on the right we have the relevant section from the guidance table. In this example it shows enrolled nurse at pay point two is paid an hourly Enterprise Agreement rate of $31.12. This means a provider would be expected to pay $31.12 plus the additional $3.84 to get a new hourly rate of $34.96 once the guidance is taken into account.

Now our next example is for a registered nurse. So again on the left we’ve got registered nurses at Level 2. So for example a registered nurse at Level 2 pay point four is paid an hourly rate of $47.13. This provider would be expected to pay $47.13 plus the additional $5.25 per hour to get a new hourly rate of $52.38 per hour.

Our last example is for a home care worker. In this example the Enterprise Agreement shows a home care worker Level 2 paid an hourly rate of $28.19. As providers a home care worker would receive – providers would expect to be giving the home care worker an additional $3.64 per hour providing a new pay rate of $31.83.

In this last section of the presentation I will discuss the accountability arrangements. From quarter four 23-24 the Quarterly Financial Report will also collect additional information regarding wages including the minimum and maximum wage rates for direct care workers as well as information on the primary way workers are paid, for example according to award, Enterprise Agreement or individual agreements.

Providers are required by law to provide accurate information to the Commonwealth. This is already a requirement for the quarterly financial statement and the Aged Care Annual Financial Report.

Providers of residential care and home care packages will need to attest in the Quarterly Financial Report from quarter one in the new financial year that all funding provided to implement the 15% wage increase is passed through to workers. Specifically the attestation will seek confirmation from providers they have passed on all funding that is identified as being for the purposes of the wage increases to workers as increases in wages and on costs taking into consideration this guidance.

Sector trends will be monitored and published through the Quarterly Financial Snapshot. The Department will closely monitor providers’ expenditure on labour costs and identify trends in spending overtime.

Finally service level expenditure on labour and wages will be published from January 2024 as part of a broad suite of expenditure reporting on My Aged Care.

[Visual of slide with text saying ‘Questions?’]

Okay. So that brings us to the end of the presentation which I hope has provided some useful information. I will now open up the Q&A session. And thanks to those that have been submitting questions.

So the first one’s for me.

Q:        We increased wages above award in anticipation of the work value case being approved and to incentivise staff to stay in aged care. How do we apply the guidance?

So I would suggest to you that you look at the guidance and consider whether what you have done in terms of wage increases meets the intent of that guidance. We’re not asking providers to pay twice for the same pay rise. What we’re asking you to do is make sure that you’re passing on the funding available for workers. What we do want to avoid is providers substituting this Government funding for increases that they already planned or scheduled. So I hope that’s clear. We’re not asking you to pay twice but we don’t want this new funding to replace already scheduled increases.

Then the next one is for Mark.

Q:        Was the AN-ACC starting price intended to cover the costs of the 15% increase on award for care workers plus the 5.75% from the annual wage review?

Mark Richardson:

Thanks Emma. So, it definitely covers the 15% and I think I went through some details I guess in the presentation of that. In terms of the 5.75% wage review decision what IHACPA have done is they’ve included a forecast or indexation for the 23-24 financial year for indexation of all wages and inflation. So that’s incorporated into the price of $243.10. Now that applies to, I guess the entire AN-ACC price. And what I mean by that is not just those workers that are on the award but all workers whether or not they’re registered nurses, allied healthcare workers, care admin staff, care managers. The wage indexation they’ve included covers everyone. And also, there’s an inflation component for the non-wage part of the AN-ACC price. So, they have included indexation for the 23-24 financial year I think is probably the best way to answer that, Emma.

Emma Gleeson:

Thanks Mark.

The next one I think is for me again.

Q:        Is 15% the only increase in the awards or is it mileage, break allowance, uniform, etcetera increasing, and is the 15% only being applied to the ordinary rate?

The 15% is being applied to the current rates in the awards. So this will cover the base rate for a full time worker. It also includes rates for part time and casual workers. So anything that is contained within the award relating to wages will increase by the 15%. The funding that you will receive is inclusive of both the wage increases and the on costs. So if there’s other allowances that have been paid in the past the funding uplift covers those related on costs. I’d encourage you to again look at the Fair Work’s pay and conditions tool which will be updated shortly which will give you all the rates for both full time, casual workers and that sort of thing. And that’s really the go to guide for all those adjustments.

So next one back to Mark again.

Q:        Total funding increase appears to be $37.10 per resident per day so AN-ACC increase is actually $26.30 per resident per day of which $23.12 per resident per day is passed through to workers. $10.80 hotel supplement will be absorbed by the NWC. I hope you know what that might stand for Mark. Employment cost increases including EA increases means providers will not be better off. Please comment.

Mark Richardson:

So, I guess thanks for the question. I think what’s happened there is that someone’s added up the additional funding from the AN-ACC price increase and also, I guess the hotelling supplement to come up with those figures. It should be sufficient to cover off on the 15% increase that we’re talking about consistent with the interim Fair Work Commission decision. As I think I’ve mentioned during the presentation in the hotelling supplement itself there was 36 cents for head chefs and cooks included in the $10.80 and there was $22.76 included in the increase in the AN‑ACC price of $36.30 for the 15% Fair Work Commission decision impacting RNs, ENs, lifestyle workers and PCWs. So, look there’s sufficient funding there. You can add these figures up different ways which I think is what this particular person has done. So hopefully that answers the question, Emma.

Emma Gleeson:

Thanks Mark. And I might give Russell a turn.

Q:        As a home care provider our staff work across aged care and disability care and they would have a mix of these clients on their daily roster. If the wage rise is award based but the funding increase is only related to aged care how are workers paid?

Russell Herald:

So fundamentally the wage that is paid obviously would be based on the person’s award - be it under the Aged Care Award or under the Disability Award or other industrial relations mechanisms. In the aged care system we’ll provide the funding for the aged care side of the equation. Now what I think the question is suggesting is that because that worker is on the Aged Care Award and say 50% of their time is spent on NDIS as an example that there won’t be funding for the NDIS side of the equation. The difference there will be NDIS will lift their prices again soon with the annual indexation on that side of the equation, so there will be a funding mechanism there. But within the Home Care Package side of the equation yes the time spent working on aged care is what is funded through the 11.9% increase and what is funded through the CHSP costs on actuals. If that helps.

Emma Gleeson:

Thanks Russell. One for me.

Q:        What about all the other workers in the sector?

And I appreciate we’re getting asked about this a lot. The Fair Work claim related to all the workers in the sector that are employed under those three awards that we’ve been discussing, the Fair Work Commission decided to deal with the claim in stages. So that’s why they’ve proceeded to award what they’re calling an interim increase for direct care workers while they continue to consider the work value claim in relation to the other workers. So we don’t know whether they will get a wage increase. It’s not known to us. The Fair Work Commission will need to make that decision in due course. And as I said during the presentation the Government’s committed to fund the outcome of the case.

One for you Mark.

Q:        Page 10 states the funding boost will be from August. Does this mean the new AN‑ACC rates will not be paid for July?

Mark Richardson:

Short answer is no. Look I guess what that’s getting at – it gets a little bit technical but even though the new AN-ACC price kicks in from 1 July consistent with the way claiming works now with residential aged care you get an advanced payment for July based upon the previous two months of your claims. There’s a reconciliation process that’s conducted the following month. In this case that would be August. And then there’s an adjustment for the new price. So yes, you’re paid from 1 July the new price, $243.10, but it kicks in in true force, I guess from August as part of that adjustment process.

And that’s it Emma on that one.

Emma Gleeson:

Thanks Mark. Okay Russell.

Q:        What happens if HCP clients don’t agree to the price increase?

Russell Herald:

Yeah. This is a bit of a tricky one obviously. That’s one reason why everyone has been sent letters explaining the reasoning for the change. And we would ordinarily expect that if a HCP provider is going to the client saying we’re increasing prices to pay our workforce more that we’re not going to get too much resistance. But in the eventuality that it does come through the first point of call is always to make sure that the communications are very clear about what is driving, whether or not they’re reasonable or unreasonable, working with available support organisations to help clients understand. Worst case scenario is it does become a security of tenure issue but we wouldn’t imagine that that would arise in any real magnitude. And I don’t think experience has shown in recent history when we have made these changes that we’ve had a massive issue here. But there are a bunch of steps in place and if you are running into those issues I think more than happy to receive advice around that on a case by case basis so that we can support both providers and consumers through the change. But I would be surprised if people will reject a wage increase to aged care workers as the basis.

Emma Gleeson:

Thanks Russell. We’ve got a similar question to the one before about why not all workers. And just to add to my response there are of course allied health professionals, allied health assistants, other workers in aged care that might be covered by awards that are out of scope of the Fair Work Commission’s consideration and the reason for that is the claim that was brought forward to the Fair Work Commission related to the three awards. So that is why we’ve got the scenario that we’ve got. It’s because the claim was specific to those three awards.

Q:        Is the 15% wage increase from their current pay or increase 15% wage just for the minimum wages?

So the decision from the Fair Work Commission is about the minimum wages. So providers are legally required to pass on the 15% and then also the 5.75%. With the guidance we’re not asking – say if a worker is paid 10% above the award already we’re not asking for that worker to receive another 15% on top of that. The funding is not sufficient to allow that to happen. That’s why we’ve released the guidance which sets out what we think a reasonable increase for those workers who are already paid above award is.

So again one for me.

Q:        The document is titled Guidance. Is it right to assume that it should guide providers only?

Again the increase to the awards is where the legal requirement is. The guidance sets out the Government’s expectations about how providers should treat the funding they’re receiving through the AN-ACC increases, the hotelling supplement and the increases to the Home Care Packages subsidies. So we’re asking that providers do the right thing with the money that the Government’s invested and that there’s obviously been a hard fought claim in front of the Fair Work Commission and we would like the money to go into workers’ pockets in response to that.

Obviously we’ll be monitoring the situation through the accountability measures that I’ve described. We will also follow up any complaints we get from workers.

That does I think – this is one for you Russell.

Q:        Does the 15% increase include admin workers that are covered under SCHADS Award or is it only care workers?

Russell Herald:

It’s those who are classified as direct care workers under the Fair Work Commission decisions. So providers will need to have a close look at what is and isn’t in scope for the award increase based on that Fair Work Commission advice and determine which workers are impacted or affected. And I note that if you need further detailed advice around that you could engage the Fair Work Ombudsman for specific views in that space. But my understanding and Emma can correct me if I’m wrong here, is if you have an admin assistant working in head office that wouldn’t be in scope as a direct care worker. But there is fine lines in the boundaries and that’s where the Fair Work Ombudsman can provide advice if it’s needed.

Emma Gleeson:

Thanks Russell.

Q:        Is there going to be a separate grants program for leave provisions for residential and home care as flagged by the Government?

Yes is the answer to that. We’re working through the details of the eligibility requirements at the moment and we hope to get that grant opportunity out in the coming months so that providers can apply.

Q:        Will CHSP contracted funding be increased and if so how much will it be increased by?

Russell Herald:

So CHSP contracts for the coming financial year were increased on average by around 6.35% plus or minus which covers ordinary indexation and the annual wage review. Beyond that the contracted amounts will be increased by the grant application process for the 15% and then that will be rolled into the base for the next extension in 24-25. So the answer is yes. One has already occurred in the extension process to date. One will come over the next few months.

Emma Gleeson:

Thanks Russell. One for me.

Q:        Can you confirm that the 15% increase is applied first and then the 5.75% on top?

Yes. I’m pretty certain that that’s how it’s going to work given the 15% is on the 30th of June and the 5.75% is on the 1st of July. So I’d expect that there would be a cumulative effect from the 5.75% increasing that 15% wage base. Again we’re awaiting the final wage tables as well. The Fair Work Commission has issued draft determinations. So all that really fine detail and calculation will be available on the Fair Work website going forward.

Q:        As we are currently on an Enterprise Agreement that has passed its nominal expiry date is there an obligation to provide an increase from 1/7 as long as we are meeting or above award rates?

Well I think this goes back to the Government’s expectations that the funding provided for the wage increase is for the purposes of passing on that funding for workers in the form of wages and on costs. So we would encourage you to talk with your employees and your employee representatives including unions about how those pay increases might be structured going forward including taking into account the guidance that we’ve provided today.

Q:        Does the wage increase apply to enrolled and registered nurses employed under the Nurses Award who work in home care working with aged care clients?

Yes. The answer to that is yes it does.

One for you Russell.

Q:        How will we fund the wages for new employees in CHSP who join after the assessment of wages on 1 July 2023?

Russell Herald:

Yep. So I’ve had that come through a couple of channels. We’re just mulling over how to treat that at the moment but what is likely I think subject to us actually figuring out how to do it is allowing for a workforce projection to be included in the grant application. So that will allow us to say on 29 June the day before the 15% hits that you have say 100 staff but with vacancies and what not we expect that to be 120. So we will fund essentially the progression to that higher workforce number. Where you are doing that we will just need some additional documentation to say what your workforce strategy is so that we can just justify it being higher than the current base. So we recognise obviously that we’re trying to fund a future cost that hasn’t occurred and there are some estimates and some issues to work through in that space. But the work we’re doing at the moment is just to try and identify a way of doing that effectively and in a way that doesn’t slow down the grant assessment process.

Emma Gleeson:

Thanks Russell. One for you Mark. We might have covered this a bit already.

Q:        Can you please break down the funding as to what is to support the 15% wage increase and what is to support the shortfall on existing AN-ACC pricing?

Mark Richardson:

Okay. Thanks Emma. Look I think the best way of answering that isn’t necessarily talking about funding amounts but breaking down the AN-ACC price. So, you’re right. We did touch on this in the presentation but there’s been an increase of $36.30 or 17.6%. As I think I mentioned $22.76 is for the Fair Work Commission 15% increase that we’ve been discussing today and $13.54 is for I think what the question referred to as a shortfall. I’d identify it as indexation for inflation and other I guess increases such as the superannuation guarantee and other wage increases outside of the Fair Work Commission increase. We then have the $10.80 hotelling supplement. To break that down into a little bit more detail over and above what I did in the presentation $10 is from the former basic daily fee supplement, 36 cents is for that Fair Work Commission component for head chefs and cooks, and 44 cents is for indexation, once again inflation and those sorts of things.

So, look I think I should probably add actually Emma, if facilities or providers want to understand the exact impact or at least an estimate they should jump online and have a look at our care minutes and AN-ACC funding estimator. We provided that before we went live with AN-ACC on 1October last year. We’ve rebirthed that. It’s now available again based upon the new price and also the hotelling supplement. So, you can get on there and you can estimate what your funding increases will be as well as I said the care minute changes that come into effect from 1 October 2023. Thanks Emma.

Emma Gleeson:

Thanks Mark.

One for you Rusty.

Q:        Will CHSP providers still have to submit DEX monthly from July to December 2023?

Russell Herald:

Yes. The reporting arrangements don’t change. It’s just the funding being provided in July that will change.

Emma Gleeson:

Another one for you Russell.

Q:        To recover the increased subsidy for HCP clients to pay direct care workers will home care providers be able to increase care and package management fees or only hourly fees for direct services to clients?

Russell Herald:

So the Department updated the caps for package management and care management at the end of May. So if you haven’t seen those yet it would be good to look them up. Nevertheless if providers have a reasonable requirement to increase the care management and package management fees as long as it’s done in consultation with the care recipient and it’s reasonable then that is okay. As long as obviously we don’t want you to go above the revised caps.

Emma Gleeson:

Q:        The Fair Work website states the increase in minimum pay rates only applies to three awards however the slides illustrate that aged care providers on an Enterprise Agreement that the difference between the EA base rate and the rate of the 15% on the award rate would be applied. Is that correct?

Yes. That’s what we’re trying to do here is guide you in terms of how much we expect you to pay over and above what you’re currently paying according to your Enterprise Agreement. Noting you’ll always have to make sure that you are keeping up with your legal obligations in terms of paying the award. So given there’s been some pretty substantial increases with the 15% plus the 5.75% some Enterprise Agreements might find that they’ve dropped below the legal award rate. And so you need to meet that obligation first and then look to passing on all your additional funding in terms of that dollar amount.

Again asking when that CHSP grant opportunity will be available to providers. I think Russell you indicated around August. Was that - - -

Russell Herald:

So I can’t give an exact date because there’s relevant administrative processes to go through. But just so everyone understands where it is at the moment and the likely timing we are looking to provide just one grant opportunity hopefully by early August which will cover the Home Care Package grant for those heavily exposed to care, the CHSP uplift for 23-24 and for the leave liabilities for aged care providers across multiple aged care programs. So through one application process to minimise the amount of administration that providers will have to go through. We are doing a bit of testing of how that will all work at the moment and the teams are having some discussions with a few providers just to make sure that the information that we collect, the way in which we do the assessment, all that stuff, is as seamless as possible. Because what we actually want at the end of the day is a process where you apply and it’s essentially we have a look at it quickly and give you the money out the door. So we just want to minimise back and forth. That takes a little bit of time and then we need to work through and finalise those details with Government. And once Government says yes we will then publish the grant guidelines for everyone to apply and we’ll look at providing as part of all of that in advance some more detailed information including examples of how to work out the obligations, all that sort of stuff. So work out the application values and all that sort of stuff so that we’re stepping everyone through bit by bit again to minimise errors and maximise administrative efficiency. All in all I would expect more detail to come out during July with the opportunity in August.

Emma Gleeson:

Thanks Russell. One again getting quite a lot of votes is:

Q:        Is this a guidance or a set of rules? It is spoken to as a guidance to consider not rules to follow.

The document is clearly titled guidance. It is very much based on the consultation we’ve had with IHACPA and the unions about what we think is reasonable for providers to pay above award, above their Enterprise Agreement rates. We would encourage you to work with your employees, your employee representatives including unions to set out what your pay rates for your workers will be going forward. So I hope that’s as clear as I can make it.

We’re starting to get just more repeats of questions. I’m just scanning through. Again Russell probably worth reiterating the answer to this question.

Q:        How will CHSP providers remain solvent given that their increases will be received in December but they need to pay the increases in 15 days?

Russell Herald:

Yep. So that’s why we will give six months so half of the contract value for 23-24 to providers in July. We’re just working through the mechanisms to pay that with our colleagues in the Grants Hub. But we anticipate some time around mid to late July that you’ll get half of the contract funding. That will allow providers to draw upon that cash reserve to pay the extra entitlements until such time as the Department pays for the top up by the end of the calendar year.

So solvency should not be an issue given the size of the funding being deposited into bank accounts in July. There will be a small bridge from 30 June to that point noting that I think the June payment will be paid in early July so there will be probably one payroll that supplementation isn’t there for. But thereafter there will be a lot of cash coming into the bank accounts for half the contract value.

Emma Gleeson:

Okay. We might just do a couple more then we’ll wrap up. I think this is for me.

Q:        To confirm the increases are also applicable to State Government employees governed by separate awards and agreements.

I think the answer varies a little bit. Certainly for residential aged care and the Home Care Packages Program the increased funding applies to those programs and to those subsidies regardless whether your workers are employed under a State award. It is different for CHSP whereas the funding is based on the actual workers who are employed under the awards that were in scope for the Fair Work Commission decision.

And sorry I think just one more for you Russell.

Q:        Will Local Government CHSP providers who already pay more than 15% above the award be eligible for the grants program?

You’re on mute.

Russell Herald:

Sorry. My bad. So councils workforce is ordinarily funded under the Local Government Award as I understand it which are outside of the 3awards in scope for the Fair Work decision which means the new grant opportunity that comes out by all expectations councils will not be able to apply for additional funding through that. That being said that does not preclude through ordinary ad hoc grant applications which are available now the ability for providers to look at their cost base and seek to negotiate unit prices to ensure ongoing service delivery. So if as a result of everything that’s going on there is a risk to service delivery and risks to attracting appropriate workforce then you can come to us and ask for additional funding to ensure service availability. So there’s that process available but strictly speaking with the grant opportunity coming out if they’re on the Local Government Award then no, additional funding won’t be provided through the new grant.

Emma Gleeson:

Thanks Russell. Okay. Now we’ll bring the webinar to a close in a minute but I just want to mention that a short survey will pop up in your browser. It takes about one minute to answer the three questions and we would appreciate it if you could take a moment to help us improve our webinars.

So just in wrapping up I would like to thank you all for your attendance today and thanks to my co-hosts Mark and Russell. And as we’ve indicated we will send out the answers to all the questions including the ones we haven’t got to today. So thank you all.

[Closing visual of slide with text saying ‘For more information’, ‘Fair Work Commission decision’, with image of QR code, ‘Better and fairer wages for aged care workers’, with image of QR code, ‘Department of Veterans’ Affairs Programs’, with image of QR code, ‘health.gov.au/aged-care-workforce’, ’15 June 2023’]

[End of Transcript]

About the webinar

The webinar includes information on:

Presenters

  • Emma Gleeson, Assistant Secretary, Workforce Branch, Department of Health and Aged Care
  • Mark Richardson, Assistant Secretary, Residential Care Funding Reform Branch, Department of Health and Aged Care
  • Russell Herald, Assistant Secretary, Home Support Operations Branch, Department of Health and Aged Care.

Slides

Aged care wage increase – Webinar slides

This webinar will provide information about the Australian Government’s $11.3 billion investment to fund the Fair Work Commission’s decision of a 15 per cent increase to the award wages of many aged care workers.

Resources

Thank you to everyone who submitted a question to the webinar. We are preparing answers to the many questions received. Here are answers to some questions from the session. Further answers will be published shortly.

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