The funding formula for the pay equity settlement agreement for residential aged care providers was calculated with the knowledge that there would be “winners and losers”. As JUDE BARBACK reports, the “losers” are concerned that this pay equity deal could spell the end for them.

A small survey of residential aged care providers has revealed that the extra funding will not cover the increased wage costs for 90 per cent of the 30 providers who responded. And of the 10 per cent who said funding would cover their increased costs, one said this was on the proviso they ran at 100 per cent occupancy.

For most, such high occupancy levels are unlikely.

“We are a small residential rest home and I doubt we can absorb any extra wage costs without it having a huge impact. We have not had 100 per cent occupancy for four years. This is a very frightening time for my staff and myself,” said one provider.

“We will lose by $363,000. Can’t survive that,” states another.

The comments from other respondents were similarly distressing, with one stating that the changes were likely to result in “battery hen housing for the elderly”.

For some of the smaller ‘Ma and Pa’ providers – this could be the final nail in their coffin!” responded one. “The corporates will continue to get fatter and bigger and be the ‘Pike in the Pond!’”

There are concerns that there has been no thought given to funding the extra hours needed to accommodate staff meetings, in-service meetings, holiday pay, sick leave owing, and staff hours to attend external training.

One provider has done the maths:

“On a weekly basis my increase from the settlement will be $795.76. My additional wages will be $726.00.This does not cover lieu day payments. I have staff with holidays and lieu days owing and will have to pay them at the higher rate when they take leave. Once others are qualified and move to the higher bands there will be a greater deficit.”

The flow-on effect of the caregiver pay increase will mean that many providers are left with no choice but to move all their staff, including cooks, cleaners and nurses, onto higher wages.

“The big problem will be maintaining the pay differences between well qualified caregivers and

Registered Nurses (RNs). We could have a situation where, unless we grant RNs a similar pay increase, there will be massive discontent. There are also cooks and cleaners to appease,” said one provider.

Another provider has worked out that they will be between $100 and $200 per day worse off, which does not take into account the need to increase their RN and Enrolled Nurse hourly rates, which will further exacerbate their loss.

The survey was conducted by Peter Mathyssen, owner and manager of Glenbrook Rest Home in Waiuku. Based on the survey’s findings, he concludes that the “government’s claim of fully funding the settlement is propaganda”.

One respondent summed the situation up like this.

“Pay equity is good for caregivers, not for providers. It creates another nightmare for them, leading to lower standard resident care. Despite the windfall for caregivers, the aged care sector as a whole, and its residents, will lose out. We are way out of pocket. Why no full funding? Unfair and unsustainable.”


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