The aged care advisory firm has predicated the index used to increase ACFI, home care and other aged care subsidies will grow by just 1.53% in the next financial year – without taking into account the impact of COVID-19 on the Government’s bottom line.
In their latest newsletter, James Underwood says there may be federal treasury projections for 2020/21 that have confidential considerations of changed economic growth and wage movements next year which may impact on the 2020/21 Commonwealth Own Purpose Expenditure (COPE), but they have not attempted to work out these impacts – relying on the latest CPI and wages movement figures.
The COPE is based on 75% wages and 25% CPI.
Based on the Annual Weekly Earnings (AWE) at November 2019 of $1,658.70 a week – and the increase in the minimum wage on 30 May 2019 by $21.60 a week to $740.80 – the firm says wages are only expected to grow 1.3% while the latest CPI from March 2020 was just 2.2%.
James Underwood adds that the COVID-19 temporary additional amount of 1.2% above 2019/20 rates for the period from 1 March to 31 August 2020 is not included in these projections.
If their prediction proves right, it will mark yet another year in which indexation has failed to keep up with wage costs.
In 2019, indexation increased by just 1.4% while in 2018, it only grew by 1.4% in the ‘Activities of Daily Living’ and ‘Behaviour’ domains and 0.7% in ‘Complex Health Care’.
At the same time, wages have increased by 3 to 4% per year.
We continue to hear of aged care operators shopping around for buyers or seeking advice on insolvency.
How many more will join them by the end of the year?
