The home and community support services (HCSS) sector is on the edge of crisis as it becomes clear that some businesses will need to close, services cut and redundancies made following the Government’s failure to deliver on its promise to fully fund both the pay equity settlement and the implementation of guaranteed hours. By JUDE BARBACK.

The Care and Support Worker (Pay Equity) Settlement Bill was passed into law yesterday after being fast-tracked through Parliament to ensure providers of aged and disability residential care, and home and community support services pass on the new wage rates to their workers from 1 July.

While the sectors are pleased to see support workers recognized, there is deep concern among providers about how this pay increase will be funded. As the funding formula for the settlement have been decided for the sectors, it has become clear that the Government will not fully fund the cost of increasing staff’s wages.

Chief executive of Nurse Maude, Jim Magee says it is very worrying.

“It is fantastic that support workers are getting the recognition they deserve. It is great progress,” he says. “The real problem is the cost of it and who is going to meet that cost.

“The Government now appears to be suggesting that it intends to push some of that cost back onto providers and we are simply not in a position to absorb these costs.”

Home and Community Health Association (HCHA) chief executive Julie Haggie says there is an estimated $250 million funding gap, which will mean service cuts to clients, including older people and those with disabilities.

“As a direct result of the Government’s shortfall in Pay Equity funding, we will see those who rely on our services the most suffer. Services will be cut, care workers will unfortunately lose their jobs and businesses will close down.”

“Those organisations that survive will only be able to do so on the basis of reducing quality, choice and responsiveness and turning down the lowest paying contracts or services for clients with high needs,” says Haggie.

HCSS providers, like their counterparts in residential aged care, feel let down by the way the settlement has been handled.

What began as a tripartite negotiation between Government, providers and unions has dwindled to a bilateral decision made by Government and unions.

“It started off as a negotiation – but now we are just invited to meetings at which we are briefed,” says Haggie.

Magee says providers have been “sidelined”. Consequently, he says some “really bizarre decisions” have been made around qualification steps and progression that would have benefited from provider input.

The problem is that many providers in the HCSS sector are already struggling. Guaranteed hours are not fully funded either and the net effect will be crippling for the sector.

Guaranteed hours represent the second part of the In-Between Travel Time Settlement. The unions agreed to forgo six years of backpay on travel time on the basis that the workforce would be regularised – which essentially means guaranteed hours and workloads, and workers paid by wages based on the required level of training of the worker, with that training consistent with the service needs of the population.

Health Minister Dr Jonathan Coleman reported earlier this week that the implementation of guaranteed hours was “going well” – but Haggie denies this and the union, E Tu, deny this.

E Tu’s John Ryall says the implementation of guaranteed hours is like “moving from a broken down car with no wheels to a car with a functioning engine in it but still not having wheels”.

He acknowledges that while some major things have been achieved in terms of Part B of the settlement, they still don’t have an adequate system in place for qualification attainment – although the pay equity settlement may resolve these issues.

While the Government has made piecemeal attempts to help the sector, the HCHA feels that these “fixes” ultimately do not resolve the underlying problems related to funding and business sustainability.

“It appears the Ministry is trying to minutely manage what should be a normal market situation,” says Magee. “History shows this doesn’t work.”

Haggie says the sector should be relatively simple to cost out and fund. But instead, employees will be on different rates for travel time, guaranteed hours and pay equity – which has the potential for huge administrative problems.

“Guaranteed hours was not fully funded either. The combination of travel time payments, guaranteed hours and pay equity have added 100 million additional client transactions to a sector struggling to cope. It’s not sustainable and we’re at breaking point.”

Her words echo the findings of a report conducted by Deloitte last year which revealed the sector was not financially sustainable under the current funding levels and structure.

These concerns are shared by the union.

“We have still not got a proper national funding system in place and the recommendations from the Director-General of Health’s Reference Group about moving to nationally consistent funding through the 20 DHBs for home support contracts is still not in place and we believe is being actively resisted by the DHBs,” says Ryall.

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