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Summerset CEO says government funding key for caregiver wages

"Without any government funding to match increased wage costs you are going to see significant issues."

Paul McBeth
Mon, 15 Aug 2016

Rest home hospitals nationwide will have to close if the government doesn't pony up more money to cover rising wage costs in the sector, Summerset Group chief executive Julian Cook says.

A landmark court ruling last year that female-dominated work "requires equal pay for work of equal value (pay equity), not simply the same pay for the same work" is seen as increasing the aged care sector's collective wage bill by as much as $500 million a year. Summerset's employee costs rose 24% to $19.4 million in the half, outpacing the 22% increase in revenue from care fees and village services to $26.9 million but Mr Cook says the outcome of the care worker decision will largely be borne by operators with a skew to care facilities, whereas his company's main business is in villages.

"Without any government funding to match increased wage costs you are going to see significant issues and I would predict a number of closures of rest home hospitals around the country," he said. "The government funds district health boards at a level such they can pay the equivalent of caregivers something like $2-3 an hour more than what they fund the sector to do the same or arguably more difficult work. To my mind, that's simply not right and this is a legacy issue that the government does need to address."

A working group set up in response to court rulings in favour of the workers recommended the government adopt a series principles to facilitate "good faith" bargaining, though ministers Paula Bennett and Michael Woodhouse are still formulating their response after almost three months.

Last month, the Ministry of Health put out a draft consultation paper on its 'Health of Older People' strategy which identified "significant workforce challenges" facing the health sector, and projecting difficulties in maintaining the necessary number of medical specialists such as geriatricians, and registered and enrolled aged care nurses. As at March 31, there were 237,400 people working in the health sector, accounting for about 10% of people employed, up 15% from 2011 when the sector accounted for about 9.5% of the workforce.

Summerset, New Zealand's third-biggest retirement village operator and developer, today lifted first-half earnings 44 percent to $24.7 million and lifted its interim dividend after enjoying a record second quarter of unit sales. Mr Cook said the expanding village footprint helped generate the increase in sales but the company's high customer satisfaction rate is key in attracting new residents and it relies heavily on attracting and retaining good staff.

"These businesses are all about people – it's about helping residents have the best of life that they can and a huge part of that is the staff on site, " Cook said. "There is going to have to be some thinking by business, government and society on how we attract people into this sector and give them a career and something they enjoy.

"Having said that, right here and now we don't have any issues in attracting staff but we're certainly doing a lot of work about lifting our proposition and getting employee retention."

The company will launch its first dementia centre at its Levin village in the second half of the year, which Cook says is part of Summerset's plans to provide "that complete package of care and support" and is intended to be rolled out to other villages.

Summerset shares rose 4% to $5.16, having gained 22% so far this year.

(BusinessDesk)

Paul McBeth
Mon, 15 Aug 2016
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Summerset CEO says government funding key for caregiver wages
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