The Health Services Union (HSU) has launched a proposal to increase the Medicare levy from 2% to 2.65% to fund the improvements needed for the aged-care system.
In the proposal, which was sent to the aged-care royal commission, HSU said that, between $2 billion and $27 billion in additional costs were necessary to deliver high-quality residential care for Australia’s aging population in a span of four years, depending on the policy options.
The majority of the amount will be used to boost workforce salary to attract and retain high-quality staff, which the union said were key for turning around the aged-care sector.
The HSU said that labour spending accounted for the largest proportion of aged-care costs, with an estimated 100,000 full-time equivalent staff employed across the country. However, full-time personal care workers on award rates of pay earn between $20.73 and $25.18 per hour, only slightly above the minimum hourly wage of $19.49 set by the Fair Work Commission.
“Paying aged-care workers such low wages undermines quality because it makes attracting and retaining high quality and well-trained staff difficult,” HSU said in the report. “Increasing rates of pay for personal care workers would further help address the quality of aged-care provision.”
The union added that to get an estimation on the costs of improving the system, they used combination models of staff wage increases and rising care hours “to align Australian aged-care standards with a star rating system that exists in the US.”
Depending on the level of salary increase and rising number of staff caring for aged-care residents, a jump of 0.1% to 0.65% in the Medicare levy is required.
The last time the federal government raised the levy was in 2019, increasing it by 0.5% from 2% to 2.5% of taxable income to help fund the National Disability Insurance Scheme (NDIS).
“Increasing taxation is always challenging,” the union wrote in the report. “However, there is evidence that the public is prepared to support higher taxation where the revenue is being applied to clear areas of need, with costs and benefits broadly shared across the community.”
