industry & reform aged care workers , personal care workers and those on and around the ward . That comes in from 1 July .
The Superannuation Guarantee Levy has gone up by 0.5 per cent and there ’ s a significant increase in insurance and workers comp premiums , well over 20 per cent , to do with the pandemic .
Now , that is not related to aged care , but they ’ ve got to pick up the bill . With inflation now running over 5 per cent and we have a build-up really from before , I think the 1.7 per cent is clearly inadequate .
What would you suggest the government should do to address these issues ? I think the government has got a number of very positive reforms come through . The government , through the AN-ACC funding , is increasing the number of direct care minutes . That ’ s registered nurses , enrolled nurses , in PCA and personal care workers . That will obviously be quite good for the residents by increasing that direct care redirection . AN-ACC will be a positive initiative , particularly in the sense of the rural and very remote communities because it has a weighting towards AN-ACC .
We still think there ’ s areas that that government needs to consider . We think there should be more co-contribution from the consumers , not so much contribution for direct care , but for the everyday living and for their accommodation .
We think that in the interim , because these things will take time to wash through , to get the benefits of it we think that there needs to be some emergency funding . I ’ ve suggested emergency funding say from July or August , of about $ 3,000 a bed and a similar amount in January , February based on where the sector is performing financially .
Because we ’ ve had five years of losses , and are likely to have losses in 2023 clearly , emergency funding would allow the sector to retain its viability while some of the aged care funding initiatives start to be a benefit for both the providers and consumers .
You do anticipate further losses up until 2023 ? Oh clearly , because 1.7 per cent will certainly compare to what the costs are . The AN-ACC funding will come in , and there will be winners and losers like any new funding arrangement .
I think that the costs of implementing AN-ACC into the homes , changing their software and their processes , there is a cost of implementation and moving through it . I think that unless any additional funding comes to light , there ’ ll clearly be a loss making again as a sector in the ‘ 23 financial year .
Staffing hours also declined compared to the previous report . Do you think these will continue to decrease ? They ’ re mandated from 1 October 2023 , but the star rating system comes in in December 2022 so staffing hours or minutes per resident per day are going to be very important , but the cost is a thing that ’ s higher .
Because we don ’ t have sufficient staff , providers are going to have to have significant overtime . Employees have significantly more overtime , which causes a higher cost and also from an employee point of view , it ’ s not a good thing to be having to work longer shifts and more hours , or there ’ s significantly more agency costs .
Even though the hours or minutes might increase courtesy of some of the funding , because of the significant staffing shortages that many sectors have as well , the real cost of giving those hours is going to be much greater because of the overtime or the agency costs .
The Fair Work Commission increased the minimum wage by up to 5.2 per cent . How do you think this will affect the sector ? I made reference at 4.6 per cent because that ’ s probably the average percentage that it will increase by for aged care . At the moment , that ’ s not funded . That ’ ll be a significant burden on the sector . The Albanese government promised during the election that they were going to fund not the Fair Work Commission award increase , but the increase that ’ s going through at the moment , which could be theoretically 25 per cent over five years .
If that comes through , whatever percentage it is , I think everyone agrees that aged care workers deserve more remuneration . I think that ’ s a given . They certainly do , but whatever increase that is , the effect on aged care is 4.6 – that ’ s added to the award .
The data also shows a fall in profit margins for the home care package providers , where unspent funds are likely to exceed $ 1.9 billion . Could you explain what the drivers are behind this ? In home care , they ’ ve got four levels of funding : level one being the lower level of funding and level four being the higher level . Now , under the current home care regime , if a person ’ s funded , just assuming , for level four , they get $ 52,000-odd a year worth of funding . But the provider only gets reimbursed for how much services they ’ ve given to that consumer .
In a simple example , if we ’ ve got $ 52,000 worth of funding in a year , the providers are only providing $ 42,000 worth of services , that $ 10,000 differential sits as unspent funds . That ’ s funds that theoretically can be used by that consumer sometime in the future , but they ’ re accumulating more unspent funds all the time .
Of that unspent funds balance , only 4 per cent is used later by the consumer and the other 96 per cent gets returned to the government because it ’ s funds that haven ’ t been utilised .
It ’ s increasing all the time . In an ideal world , the provider would like to provide close to 100 per cent of the funding and provide services for it . There ’ s always going to be a certain amount that ’ ll probably push back for later needs , but that ’ s in the ideal world . But the funding and the way it is at the moment is that individual consumers are , in a sense , overfunded .
We continue to hear of aged care homes closing down . What do you think we can do now to prevent more homes from closing in the short term ? There ’ s a distinct possibility of there being more home closures . It ’ s not because providers might go out of business . Some may , but it ’ s more likely that providers who ’ ve got numbers of homes , because of the strain on all of the homes ’ funding , they ’ re going to have to start to make some not pleasant , but business decisions , ‘ Can we keep these particular homes open in certain areas ?’
Particularly those homes that require significant capital refurbishment . Therefore , it ’ s not just the cost of keeping them open and losing money , but it ’ s having the funds aside to do necessary refurbishment and redevelopment of the homes .
I think that we are in this area where we ’ re going to see many more homes at risk of closure . ■
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