Struggling aged care providers ask for 'please explain' from government

Warning that the crisis will continue to worsen without urgent action to adequately cover the costs of care and pay increases, Aged & Community Care Providers Association interim chief executive Paul Sadler said the announcement was dire news for providers.

"This figure is patently inadequate particularly as we know that two thirds of aged care facilities are currently operating in deficit," he said.

"We have had positive engagement with the new government on the problems facing the sector, and the Prime Minister has nominated fixing aged care as key priority, so we are perplexed by this news.

"We understand that the indexation figure was part of the Budget prepared by the previous government so we are keen to hear the new government's plan to fix this issue consistent with its commitment to implement the recommendations of the Royal Commission.

"The gap between indexation and cost increases is enormous - with inflation at 5.1 per cent, award wages for most employee classifications increasing by 4.6 per cent, plus a 0.5 increase in the superannuation guarantee.

"This year's gap adds to the gap from previous years, and is further compounded by Award changes due to take effect in home care from 1 July and the ongoing costs of COVID-19.

"The inadequacy of aged care indexation is further illustrated by the fact that NDIS subsidies have been increased by nine per cent with a further supplement to provider funding for COVID-19 costs.

"We are deeply concerned that the aged care crisis will continue to worsen without urgent action to adequately cover the costs of care and well-deserved pay increases for hard working staff."