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There’s a problem with that landmark pay equity deal

The announcement that the female-dominated aged care work force would have its pay equalised with similar male-dominated industries seemed like a huge cause for celebration. But now, says Home and Community Health’s Julie Haggie, it’s clear the government will be underfunding the deal while still requiring employers to pay. And the effect on an already underfunded sector could be ruinous.

We all celebrated when the historic pay equity deal was announced. As an industry, we fully support care workers being paid more. The problem is that we were banking on this change being fully funded. Why? Because we’d been promised it would.

Celebrations were cut short when we realised that we’d been misled. We realised we were facing an estimated $250 million funding gap – which would at best lead to cuts in services for those who need them and at worst lead to the demise of the home care industry as we know it.

The problem is that many in our sector are teetering on the edge already, operating at or close to losses (within 1-2%) which means we don’t have a spare $250 million lying around to cover that funding gap.

This is not news to the government. The minister of health has ignored the many letters, representations and independent reports he and the ministry of health have received about the dire financial state of our services.

The government’s shortfall in Pay Equity funding will see those who rely on our services the most suffer. Services will be cut to our clients who need our services to stay safely at home, including older people and those with disabilities. And with just over a week until the the start of pay equity payments, ACC still hasn’t told providers what it will fund. If its funding isn’t enough to cover costs, then New Zealanders who are injured will also be at risk of losing home support services.

Unfortunately, many of our 22,000 employees will face job losses this year and businesses will be left with no choice but to close down.

Those organisations that survive will only be able to do so by reducing quality, choice and responsiveness and turning down the lowest paying contracts or services for clients with high needs. Clients are going to miss out, especially those who cannot afford to pay for their own support or don’t have family to care for them.

While the government is happy to take the glory for the Pay Equity deal, it’s less interested in having the tough conversations around funding health funding and finding lasting solutions. This simply has to change. We understand politicians want to get political advantage from improving wages in the sector, but this cannot be at the cost of losing these valuable services that are relied on to keep people safe in their home while improving health and community outcomes.

The funding shortfall will result in more clients going into institutional care instead of being cared for at home.

This doesn’t deliver improved health outcomes, costs taxpayers more in the long run and it’s at odds with the Government’s own health goals.

Aged caregiver Kristine Bartlett, left, who fronted the legal challenge, celebrates yesterday’s victory with an E tū union colleague

It’s worth noting that acute and aged residential services are about four to nine times more expensive compared to home-based care services (depending on the complexity of the client’s needs). Putting extreme pressure on an essential health service that keeps people safely in their homes and at less expense to the taxpayer makes absolutely no sense.

Minister Coleman has commented that the implementation of guaranteed hours is going very well. This could not be further from the truth and his officials are very aware of the problems. Guaranteed hours was not fully funded either and 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.

I do not believe our communities or voters want this – the Government needs to honour its promises and fully fund the Pay Equity deal otherwise clients, communities and our industry will suffer the consequences.

HCHA is advocating for the Government to fully fund the Pay Equity deal as promised, moving towards a sustainable home and community funding model in the long term. Achieving national consistency with national baselines for home and community health contracts needs to be a priority.

Without the Government’s promised full funding we will see those who rely on our services the most suffer. Services will be cut, jobs will be lost and businesses will close down. Providers will be sure to give clients as much notice as they can if they are going to stop providing services. But without full funding we just can’t give any assurances about ongoing support.

Julie Haggie is CEO of Home and Community Health. HCHA’s members provide more than 95 percent of government-contracted home and community support services in New Zealand.


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