Aged care bodies and unions demand Coalition match Labor’s pledge to fund potential wage rises

Aged care industry bodies and unions have criticised the Morrison government for failing to commit to fully fund any pay increases ordered as a result of the sector's work value case.

Aged and Community Services Australia (ACSA) and Leading Age Services Australia (Lasa) have both warned that providers would not be able to pay the increase meaning the industrial tribunal would need to order a smaller rise - or operators could be forced to close.

The stoush over pay in the sector comes as Labor announces the next plank of its aged care policy - which would attempt to stop rorting of home care users by capping administration fees and requiring monthly reporting on where fees are spent.

In his budget reply speech last week, the opposition leader, Anthony Albanese, pledged a Labor government would fully fund any pay rise ordered by the Fair Work Commission in the work value case. Unions are seeking pay rises of $5 an hour for aged care workers.

On Friday, Scott Morrison said the Coalition would ensure the decision, expected in the second half of 2022, was "honoured" but stopped short of committing to fund any pay rises ordered.

The federal treasurer, Josh Frydenberg, said on Sunday that the Coalition would "take responsibility" for pay increases in government-run aged care but when it came to the private sector its contribution would be determined with input from the independent pricing authority.

The ACSA chief executive, Paul Sadler, told Guardian Australia that "residential aged care services are not in a position to cover a wage increase" because 60% are running at a loss and most of the remainder only break even or run a small profit.

Profitability has declined "significantly" in the past three years due to falling occupancy, despite an increase of $10 a resident a day in the 2021 budget, he said.

Sadler said it was "deeply disappointing" Frydenberg had cited advice from the independent pricing authority as an excuse, noting legislation to establish the body, due to begin by July 2023, hasn't passed parliament yet.

"The Fair Work Commission has to consider the capacity of the employer to pay.

"There is a risk if there is no guarantee of funding from the government, the commission would be forced to consider a smaller pay increase. That's not what we want for our workforce."

The Lasa chief executive, Sean Rooney, said operators were "experiencing financial pressure due to increased operating costs and the chronic underfunding identified by the royal commission".

"[The pay rise] must be fully funded by government," he said.

"In other sectors, the providers can increase prices but in aged care, they can't, that's the way the sector is structured and regulated. If the government doesn't fund it, it will push more services to the brink, resulting in more and more services closing.

"Look at the human cost: people missing out on services or receiving services not consistently to standard; and workers frustrated because they are overworked and leaving the sector."

Carolyn Smith, the aged care director of the United Workers Union, said if the government didn't fund the increase it "can't happen".

"What they're saying is they don't want aged care workers to have a pay rise," she said.

"They're happy to call them the heroes of the pandemic, pat them on head and say what a lovely, fantastic job they've done - but they're essentially saying they don't deserve a pay rise.

"That's the message they're sending to thousands of workers who worked through the pandemic, through double and triple shifts during the Omicron wave."

Smith noted that more than 10,000 workers for seven large providers had filed to take protected industrial action, meaning if the government continued to "sit on its hands" aged care staff could go on strike by early May - just weeks before the election.

Lloyd Williams, the national secretary of the Health Services Union, said funding aged care was a commonwealth responsibility regardless of whether care was provided by state-run centres, not-for-profit or for-profit providers.

"If the commonwealth refuses to provide funding to aged care providers as a consequence of the FWC decision, they will cause the aged care system to fail."

Williams accused the government of "ducking and weaving" to avoid a clear commitment on funding and "obfuscating" the funding arrangement.

On Monday, Labor will announce a policy on capping home care administration fees and price transparency to ensure more home care fees are spent on care.

It cited a Grattan Institute report that 25% of home care fees are taken up by administration and management costs - or as high as 50% according to evidence to the royal commission.

Albanese said "whether you are in residential care or home care, Australians should have confidence the money they are paying is going where it should - towards their care".

The shadow minister for aged care, Claire O'Neil, said it was "time users of home care packages got better value for money".