Aged care providers join migrant scab grab

Back in August I warned that the Morrison Government’s new Agricultural Visa would usher an “immigration scab grab”, with other sectors of the Australian economy likely to step up and demand similar access to industry-specific visas under the guise of ‘skills shortages’:

You could easily imagine a situation where the Morrison Government introduces a new ‘Serving Australia’ hospitality visa, a new ‘Building Australia’ construction and engineering visa, a new ‘Caring Australia’ health and aged care visa, or any other industry manifestation.

After all, the parliamentary migration committee this month recommended a pathway to permanent residency for all ­migrant workers who come to Australia on temporary skill visas.

So brace yourself for a flood of industry migration deals. The great immigration scab grab has begun.

Since then we have witnessed Infrastructure Partnerships Australia CEO Adrian Dwyer call on the federal government to introduce a dedicated visa for the infrastructure sector. We have also witnessed the hospitality industry demand 100,000 special visas.

Now aged care providers have joined the scab grab, demanding the federal government create a special visa to bring workers from overseas:

The Australian Aged Care Collaboration, which represents more than 1000 providers caring for a million elderly Australians, has written to Health Minister Greg Hunt and Aged Care Minister Richard Colbeck demanding a “dedicated aged care skilled migration program”.

“We need the barriers to migration to be lifted,” Aged and Community Services Australia chief executive Paul Sadler, who co-signed the letter, told The Sydney Morning Herald and The Age…

Leading Age Services Australia chief executive Sean Rooney said a targeted skilled migration program specific to the sector was needed “to enable us to recruit suitably skilled and qualified people”.

Unions have hit back, however, calling for the poor wages and conditions in the sector to be fixed to encourage local workers:

Health Service Union national president Gerard Hayes said… “providers are more interested in importing workers on temporary visas than lifting wages.”

Aged Care Workforce Industry Council chief executive Louise O’Neill agrees with the union:

“Getting the wages right is going to be fundamental to growing the sector,” Ms O’Neill said.

“Aged care suffers from a negative image, yet it’s a massive industry.”

As does Professor Kathy Eagar, director of the University of Wollongong’s Australian Health Services Research Institute:

[Eagar] said the industry’s high turnover rate was due to “poor pay and conditions” and creating a special visa “will just put a Band-Aid” on the problem.

“This is a workforce we shouldn’t have to import,” Professor Eagar said. “In the long term, we need to improve the attraction and retention of aged care workers in Australia.”

She said aged care workers earned less than they would at a supermarket checkout.

Just like the hospitality industry, aged care providers have become far too used to exploiting migrant labour through low wages. To break this cycle, first put up the wages, then see how many migrants are needed to fill “shortages”.

When industries say they need to import labour to avert “skills shortages”, it usually means those jobs are border-line slave labour.

Farming, hospitality, aged care – the story is the same. Offer decent pay and conditions, alongside some modest training, and so-called “labour shortages” will evaporate overnight.

There is no shortage of workers, only a shortage of wages. It is a labour “market” after all. Let the “market” do its job to solve shortages by bidding up wages.

Or do we only believe in the “market” when it enriches the capitalists at the expense of workers?

Unconventional Economist
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  1. Aged care is is without doubt one of the most interesting segments of the Australian Economy.
    About a dozen years ago I took a deep dive into the sector because frankly I saw it as a great investment opportunity. My mum was in aged care at the time which clearly shaped my decision, I wanted to do aged care properly.
    Well time march’s forward and frankly I wouldn’t touch the sector because the basic business case just doesn’t make sense. Due to a combination of unfunded regulatory changes, additional oversight, changed community expectations and escalating RE values, the sector will struggle to attract investment dollars. This would be all OK if not for the fact that our baby-boomer demographic bulge is just beginning to reach the aged care sector.
    My mum took about 6 years to eventually die as a result of Dementia coupled with a general decline in health. The last two years were terrible, they were terrible years for the family, terrible years for the carers and most importantly terrible years for mum.
    Our current aged care sector can’t deal with this situation today and will prove to be woefully unprepared address to the upcoming baby-boomer bulge…especially if a significant number of these boomers don’t have the decency to drop dead of something else before dementia sets in.
    One thing that I can be certain of is that increased wages for aged care staff will have a detrimental impact on aged care sector investments this will require either additional government support dollars or some other inventive funding (probably linked to boomer home ownership).
    Just another example of way that Australia has royally screwed the pooch, we can’t fund the businesses that we need to fund so we instead we pass regulations to make these sectors less attractive…way to go Australia.

    • So privatisation of aged care (combined with underfunding) has been somewhat of a disaster?
      For the residents and their families at least.

      • I don’t see this as a Public healthcare / Private healthcare (aged care) issue, because frankly neither the Public nor the Private sector have a hope in hell of ramping their operations to meet the Baby Boomer bulge.

        In situations like this, one would hope for public sector legislation which would encouraged private sector investment, instead what we got was additional regulations that have even well established private aged care facilities questioning their ongoing commitment to this sector. The situation is best described as a complete cluster F.

    • Good post dodgy. Yep, it’s a minefield. I know a couple of very very experienced commercial property types – seriously smart w serious money – who did similar analysis, same conclusions as yours.
      I hope I never have to step in one again – fkn depressing, just not my thing.

      • Yep it’s pointless making regulations that improve worker conditions when the underlying business economics make no sense at all.
        Reminds me somewhat of the death throes of the Australian Automobile industry. None of it really made economic sense yet it continued until one day Abbott decided to remove some trivial subsidies and then they were surprised when all the car makers in Australia decide to call it quits.
        A similar thing could easily happen to the aged care sector. What would the government do if a lot of private aged care providers started to just exit the business and sell off the underlying RE assets?

        • Probably respond with sufficient direct subsidy, increased incentives for in-home care through subsidy is already big and growing..

    • Jumping jack flash

      “this will require either additional government support dollars or some other inventive funding (probably linked to boomer home ownership).”

      I think you hit the nail on the head.
      This could be one way to claw back all that debt that has been siloed into that demographic.

    • They can already force the sale of your house to pay for your aged care. There have been complaints about how they can’t do this if the spouse or an actual dependant, such as a disabled adult child, is still living in the house.

      • As a problem at the moment we’re only seeing the tip of the iceberg
        wait a few years and I suspect we’ll see legislation making the disposal of assets (including the family home) compulsory
        Sucks if the first partner to die chews through all their combined assets in the process. But something like this needs to happen.

        • They have something similar in the US. It is common for people to get divorced just before one of them has to enter a nursing home, so that the judge can divide the assets. There was a documentary on this some years ago, and I recall a bewildered old man with Alzheimers or some other dementia who couldn’t understand why his wife was divorcing him.

    • C'est de la folieMEMBER

      Dodgy I had a not dissimilar experience back circa 2014. My grandmothers brother and his wife (my great uncle and aunt)

      They owned a place in Essendon (inner Northern suburbs of Melbourne). They had lived there 50+ years, were then in their early 90s. One day I called them and didnt get a response which was very unusual. Their son called me to let me know he had had a fall, she of course couldnt lift him up. Not long after they went into an aged care facility out Keilor way. I go to visit them on saturday afternoon not long after.

      Within moments of getting there it is obvious they were unhappy. They say they feel like they are in prison, dont like the food, hardly understand the staff and think they couldnt give a toss about them, dont like the group activities and a load of rules about the place, dont think the medical care is credible. Place has circa 100 old punters in it.

      I ask ‘why dont you just go back home?’. There were tears in their eyes as they tell me they cant. It transpires they have sold their place to pay a 500k bond to get into this place they dislike. The facility (run by a large healthcare insurer) takes a large chunk of his pension (he was a TPI pensioner from WW2 with the gold card). I go home shocked.

      I do a lot of work for investment banks. A day or so later I am chatting with an economist about aged care in UK, and relate the circumstances. He points out the obvious…..

      ‘If theres a hundred of them and they are shelling out a 500k bond a pop, that is a pool of 50 million. No matter what ‘facility’ they are in the management of that 50 million is going to be more important than the care of the residents. It is effectively an investment fund with a residential facility attached as a branding mechanism. The investors dont actually pay too much attention to the real returns, and those supposed to be taking care of the investors generally couldnt give a toss about them and just want them out of their hair.’

      That branding mechanism is backed by government taxation concessions and the ability to offer visas to those who staff it – which attracts them because they earn peanuts – who are mainly from SE Asia, China and India (and no disrespect to them because they would be fairly crappy jobs). The ‘depreciation’ on the bonds tends to wipe them out before long, if you think about it it isnt actually in the interests of the facility to have their residents live that long.

      • Exactly the only valid business case is to view this as a way to manage $50M plus in direct investment capital which can be very highly leveraged due to the lack of direct regulatory oversight for this type of “investing”. If it all goes down the gurgler than F’it the investors will never figure it out why and even if they do they have no recourse. In the mean time you provide the lowest level of service possible while ensuring that the penalties for withdrawal are just plain staggering
        …”sucks to be you” should be the new aged care motto

    • Experienced similar, unplanned admission, hence, need to demand that one’s parents talk about future plans and what ifs; waiting till something happens is a recipe for sub-optimal outcomes.

      Aged care also reflects something that is ignored or avoided by the MB editorial line, like elsewhere, the increasing dependency ratio trends due to aging in the permanent population (tracking elsewhere).

      Australia is not unique in using temporary workers but holding onto an annual modest cohort of new skilled migrants (while similar i.e. Oz nurses may work offshore like UK); future planning in anticipation of further increases in dependency ratios.

      If working in the state sector e.g. Victoria, they are paid award rates whether aged carers, nurses or physios etc., not ‘peanuts’; but the federal regulated private care maybe not….

      This is due to an ageing permanent population ex. NOM churn over, hence, we have a proportionately smaller working age tax paying cohort versus increasing numbers of retirees (starting to dominate electoral rolls), who are catered to e.g. no or low taxes.

      While blaming ‘immigrants’ it misses the issue of solutions e.g. potential need for tax increases and/or less state support for services.

  2. Jumping jack flash

    Perhaps a lot of it comes down to the general attitudes of business owners and society? Business owners are people, just like everyone else.

    We should all know by now that people need as much debt as they can get, but the problem starts when people want “too much” debt and then resort to things like wage theft to obtain more than their “fair share” of debt by boosting their wages above what they ordinarily could be without requiring slaves working for them.

    The other problem is, by continuously cutting wages to feed extra into the business owners’ hands, who will be left to afford aged care? People on low wages will not be eligible for the debt required to buy property to liquidate at the end of their lives to pay for aged care.

    Aged care will continue to operate on impossibly thin margins using the total amount of whatever super is left that they can wrest from the frail hands of their clients, plus the pension. Of course to be able to make this work, it will require the continued use of cheaper and cheaper slaves.

  3. There’s been plenty of cheap import slaves working in the homes around here for the last few years. Any extra & the ratio of old locals will be Less than the Imports. Any local young’uns use this job as a path to EN/RN & only hang around long enough to get their ticket, & off to the Hospital they go. They all care & seem nice people, but to even someone who’s tuned to their accents it’s hard to understand quite a few, let alone someone who’s half deaf & never heard anything but Strine all their life. In the 90’s the nurses used to spend quite a lot of the day with the residents helping fill their day in & add to their quality. Over the last 5 years quality of service has declined Massively. Everyone from top to bottom is stretched too thin & the regulation box ticking takes half their day, that could be put to better interpersonal use. No one want’s to be there, but maybe much less so now Gordon Gekko is running it through blind Government regulations & their financial support withdrawal ~5 years ago.

    5 years ago asking price for Dads bed was $350K deposit & (~$42?) per day upkeep.
    Current pricing ranges from $400K – $540K deposit & ~$53per day upkeep. There’s dearer ones around…….

    Mum was stretching it with her account shrinking with just Dad in there as she had to make up an interest shortfall for his undershot deposit. He died recently, so currently, if she sold their Unit (providing it holds the recent upswing) & Dad’s 3/4 deposit returned, she’ll manage, just – if she actually wanted to go there after the quality decline she witnessed with Dad’s sortie…….

    They’ve been poor all their lives & were left some money just in time, otherwise they’d be part of the 90% who Can’t even near pay around here.

    There’s volunteers that help considerably, but even with them, cheap labour isn’t enough for this to work to a humane level!