Budget 2023: Aged care sector pay rise to cost budget $11.3bn

A cornerstone election promise of the Albanese government, backed up by the Fair Work Commission, the “historic” 15 per cent pay rise for hundreds of thousands of aged care workers across the country will come into effect on July 1, with the full cost contained in next week’s budget.

Aged Care Minister Anika Wells said the pay rise marked a “seismic shift” in the sector and would drive 10,000 more workers to the sector.

The significant boost will mean registered nurses could earn more than $10,000 a year extra.

“Today, we turn a corner for aged care in Australia … long deserved, long-awaited for, and now with the Labor government it is here,” she said on Thursday.

“That is life-changing money for people.”

Dr Chalmers said ensuring the national budget was more “responsible and sustainable” made funding the pay rise possible.

“We have gone out of our way here to make sure that we can afford and that we can work through in a responsible and methodical way this historic pay rise for aged care workers today,” he said.

The pay rise will boost the wages of registered nurses, enrolled nurses, assistants in nursing, personal care workers, home care workers, lifestyle workers, and head chefs and cooks.

A registered nurse on level 2.3 of their industry award will receive a more than $10,000 pay rise – an additional $196.08 a week.

An enrolled nurse on a level 2 award wage will be paid an additional $145.54 a week, totalling more than $7500 a year.

Personal care staff on level 4 of their award, and head chefs/ cooks on level 4 aged care award will receive a $7300 yearly top-up, or $141 a week.

Ms Wells said the pay boost was a “deserved pay rise for a workforce undervalued for far too long”.

“Fair wages play a major role in attracting and retaining workers to provide around the clock care for some of Australia’s most vulnerable people,” she said.

“This wage decision will help more women and families to make ends meet, and ensure that quality aged care workers are less likely to contemplate leaving the sector because of pay concerns.”

The national aged care classification model price will be increased to $243.10 to cover the wages of direct care staff, including lifestyle workers.

A new $10.80 per day hotelling supplement will be established to cover the cost of pay rises for head chefs and cooks.

The value of Home Care packages will also be increased to ensure those workers can be paid the 15 per cent extra.

Dr Chalmers said the funding would deliver a “fair day’s pay for a fair day’s work” for the industry but acknowledged the move would place further pressure on next week’s budget.

“For too long, those working in aged care have been asked to work harder for longer without enough reward but with this Budget, that changes,” he said.

“This investment recognises the incredible contribution that aged care workers make to our economy and community and will help to create a bigger incentive for young Australians looking for a rewarding career to pick aged care in the future.”

The United Workers Union praised the federal government for “living up to its promise” to fully fund the pay increase.

“The 15 per cent pay rise is a major step towards recognising the incredible sacrifices aged care workers have made and gives comfort that the terrible years of Coalition government underfunding and understaffing are coming to an end,” the UWU’s Carolyn Smith said.

Meanwhile, the Health Care Union says 15 per cent is still not enough, wanting a further 10 per cent.

Originally published as ‘Historic’ pay rise for struggling aged care sector to cost budget $11.3bn