Rest homes have negotiated a two per cent increase in their annual funding from District Health Boards as well as a pay equity supplement to help aged care providers mitigate the effects of pay equity as the settlement enters its second year.

The New Zealand Aged Care Association (NZACA) announced the increases today with this year’s Age Related Residential Care (ARRC) Contract negotiations now complete.

The two per cent increase is the highest in recent years, and the pay equity increase on top of that is an acknowledgement of the costs many providers have absorbed as a result of the settlement.

“I think the key to it was to get the Ministry of Health to acknowledge the change in the profile of our workforce which has seen so many more caregivers transition to Level 3 and 4 because of the qualification equivalency. And that has been the cause of the problems we saw at the end of last year,” says NZACA chief executive Simon Wallace.

When the pay equity settlement was first announced 14 per cent of caregivers were on Level 4, the highest pay band. Now it is 30 per cent.

However, despite some consideration given to changing the controversial averaging formula, which determines how much rest homes are paid, the formula has not been changed, and there will continue to be winners and losers among the providers.

“There will still be some of our members who come out on the wrong side of this. Some have 40-50 per cent of staff on Level 4,” says Wallace.

The way the settlement has been structured motivates caregivers to get qualified to the highest level to attain the highest pay bracket, but deters providers from employing too many caregivers at Level 3 or 4, because they are not funded adequately.

Wallace says this has always been something the NZACA has argued against, pointing to its submission on the pay equity settlement legislation.

The silver lining is that a fund of $3 million will be set aside for transitional funding using the same methodology as last year.

“Provided they are still in deficit because of pay equity the same criteria will apply that applied last year. But I would expect there wouldn’t be nearly as many given the fact that we’ve now got recognition of the number of workers at Level 3.”

Wallace says at one point in the negotiations there was some doubt over further transitional funding, so he considers this a win.

He’s also pleased to have written commitment from the DHBs to come back and talk to the provider representatives if and when a deal is struck on the multi-employer collective agreement for nurses working in DHBs, if that deal is significantly higher than the two per cent increase.

“If there is a settlement between nurses and public hospitals we’re going to come under immediate pressure.”

On balance, Wallace thinks it is a “favourable outcome” for providers.

“I’m not suggesting this is perfect but it will be better than what happened last year when we were funded and it changed with qualification equivalency.”

He thinks this agreement has helped even things up.

The NZACA will release more information on other aspects of the ARRC agreement next week.



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