Government funding boost for aged care a good start

New Zealand Aged Care Association Media Release
26 August 2014

For immediate release

Government funding boost for aged care a good start

Yesterday Health Minister Tony Ryall announced a 5% funding boost for the elderly in rest home level care starting from 1 October 2014. New Zealand Aged Care Association Chief Executive Martin Taylor says it is a good injection of funding for the sector.

The aged care sector welcomes the announcement of a 5% increase in the rest home subsidy rate as at 1 October 2014. This means the average subsidy of $107.70 (GST exclusive) per day for full time 24 hour care will increase to $113.09 per day.

“Confirmation from Health Minister Tony Ryall that some of the funding from the 2014 Budget is going towards the aged care sector is a positive start towards achieving pay parity for our caregivers,” says Taylor.

Ryall announced an additional funding boost of $7.5 million per year and $10 million each year following for rest home level care. The increase does not cover the cost for elderly receiving dementia, psychogeriatric or hospital level care. Of the 32,000 residents currently in aged care about 49% are at rest home level, 38% at hospital level and 13% in dementia/psychogeriatric beds.

“While the funding is certainly a good and positive step, the New Zealand Aged Care Association says more work and more funding will be needed to achieve pay parity over the next three years,” says Taylor.

“However, to ensure caregivers, Unions and employers are on the same page we all need to understand that a 5% increase in rest home level care funding does not equate to a 5% increase in average caregiver wages, not even close,” says Taylor.

For example, a facility providing hospital and dementia level care will receive no additional funding which means their caregivers will receive no wage increase from this latest Government initiative. Also, for those caregivers who work in facilities providing rest home and hospital level care (about half) the increase will vary greatly depending on the bed mix between rest home care and hospital level care.

“For some providers this will result in a good increase, but for many others it will mean no increase at all or just cover their latest increases in wages. Many members decided to give more than a 1% wage increase this year despite only receiving a 1% funding inflation adjustment in July. If those operators do get an increase on 1 October then it is likely to be used to cover existing wage bills,” says Taylor.

While it is up to providers how to spend this funding, the New Zealand Aged Care Association expects many will choose to increase staff wages.

Currently, residential aged care workers are paid lower wages than their DHB counterparts due to low Government funding.

“This is a good step in the right direction. But it is not enough to achieve pay parity just yet,” he says.

ENDS

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