CPI Indexation for In?Home Care Subsidy Caps

Question

Senator HODGINS-MAY: It's great you mentioned the hourly rate cap. I want to turn to question on notice A0332. Other than, from my understanding, getting that current fee gap slightly wrong in that, the department confirms the in-home care hourly rate cap was originally benchmarked against actual fee data and was subsequently recalibrated in 2019 to reflect children's services award wages. Since then, however, it has only been indexed to CPI. Does the department accept that CPI is a poor measure for labour-intensive services, where wages make up the overwhelming majority of costs? Ms Crane: First of all, we might just need to correct the number in the question on notice, as I think there's been a transcription error. It's $39.80, so we'll correct that component of it. Mr Reed is coming to the table. Part of the service delivery price work I referred to earlier is a critical component for any funding reform government might consider into the future, for some of the reasons you have referred to and many others here today. I think that what it takes to deliver services in this country has changed significantly. Understanding those costs in location for cohorts in care types is critical. Whether, at the end of that, that comes out with a different methodology for how you might index or other things-I think the jury's out on what that data shows, but Mr Reed may want to add anything around the service delivery price first up. Mr Reed: The only thing I would add is that, if you're going to change settings like the indexation or the hourly rate caps, it's important that it is changed through evidence and informed through the evidence. That is exactly what the service delivery price project will tell us. It will tell us the adequacy of the various rate caps that we have, and it will tell us the adequacy of indexation arrangements. The service delivery price project is due to report by the end of this year, so we'll have a really good evidence base on the adequacy of those. Senator HODGINS-MAY: That doesn't offer relief to the 90 per cent of families in this survey today though. Going back to the answer to that question on notice, we know that the department has previously adjusted the cap to reflect actual costs and changes to award wages. Given the recent award wage increases, the five per cent gender undervaluation decision and rising employment on-costs, will the minister commit to reviewing and recalibrating the hourly rate cap imminently? Senator Walsh: The hourly rate cap is indexed by CPI. As Mr Reed has outlined, if we were going to make further changes to that, it would need to be underpinned by evidence. We are doing the service delivery prices project. It's a really important body of work to understand the costs of delivering early childhood education and care in different settings and by different provider types. We'll have more information about that towards the end of the year, and that will be available to inform any future government decisions. Senator HODGINS-MAY: I was just pointing out that there was a precedent for that happening previously. When those hourly rate caps were being determined, they had previously looked to those award wage changes. Why didn't you extend the worker retention payment to cover in-home care workers? It seems like the budget would have been the perfect opportunity to do this. Ms Crane: One of the things I would say-and I think we covered this, possibly, in the last session or the one prior to that-is that the construct of the in-home care sector is vastly different than centre based day care and outside school hours care. In the construct, it is predominantly contract driven employees. They're not in an employee model. So any policy consideration around how you might extend the worker retention payment needs to give consideration to all of the sorts of protections that currently exist under the worker retention payment about how we ensure that a payment is passed on as it's intended and that it's not used for other things. Mr Reed may have other things to add in terms of the sorts of considerations that go into that. Mr Reed: That is the main one-that people who are not employed under the award and are not employed under a workplace instrument do not have the same protections as employees that are. There are risks in extending the program to those sectors where they are predominantly employed under a contractor model. We have been working on policy options for how you could do it, but it is not easy to extend the worker retention payment in its current form to sectors where there are predominantly contractors because there are not the workplace legislation safeguards that there are- Senator HODGINS-MAY: Has the department then considered models other than a contractor employment model, if that is problematic? Is that something that you've looked at? Mr Reed: We have looked at options, yes, but none are without risk. Senator HODGINS-MAY: If there's anything more you can provide on notice on that, that would be helpful. We might explore that in a future estimates.

Answer

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Documents

• Question with answer (PDF) (opens in a new tab)
• SQ26-000692.pdf (opens in a new tab)