An addendum has been added to this article. See below.

Bryan Gould's recent article (Our workers squeezed on bottom line) is not only a thinly disguised attack on foreign investment but also fails to lay the blame where it ought to lie - at the door of this and previous governments.

Mr Gould's assertions about wages in the sector, the consequent industrial action, and the negative impact of overseas investment cannot be upheld.

To begin with, the level of union agitation within the aged-care sector appears not to be a true reflection of the negotiations between the parties.


Oceania Group, which is a member of the NZACA, has offered staff a 3 per cent pay rise over the next 14 months, but that hasn't stopped Mr Gould from repeating the union mantra that the company has offered 1 per cent. The fact the union itself is seeking 3.5 per cent suggests the parties are not miles apart in their discussions. Oceania has also improved on its original offer to the unions and that should bring the parties even closer together.

Despite that, the unions seem intent on continuing with strike action.

It warrants further consideration that continuing strike action by aged-care workers is more to do with a wider union attack on the policies and direction of the current National-led government.

The 300 striking workers from Ports of Auckland are being backed up by unions from overseas and locally. As well as POAL and Oceania union members, meat workers from AFFCO plants are also on strike. Coupled with this, the umbrella organisation, the Council of Trade Unions, is re-litigating last year's election by organising a petition for a referendum on asset sales.

Given that Oceania staff and the company are not miles apart over a collective contract, there is a legitimate view that the aged-care sector is being used as a high-profile case to advance the political strategy of the wider union movement.

The New Zealand Aged Care Association acknowledges that wages within the sector are low despite having increased by almost 30 per cent in the six years. But everyone needs to remember wages are directly related to the level of government funding the sector receives.

Government funding is a reflection of how we as a country value those elderly who have contributed to New Zealand through their own hard work and endeavours, and who now need full-time care. In 2005, at the height of the then Labour Government's power, the median hourly wage for aged carers was $11.20. The median caregiver hourly rate as at October 2011 was $14.50, while the overall range for caregivers was from $13.00 to $21.00.

Unfortunately, in 2005 at a time when this country was achieving large government surpluses, Labour did not fund the sector to vastly improve the pay of caregivers. Instead, they delivered on a promise to Grey Power to increase asset testing thresholds from $15,000 to $150,000, a move that cost $300 million. If that money had been put into subsidy rates then wages would likely be 30 percent higher again right now.

Oceania has promised the unions that it will pass on the increase that it receives from the government directly to staff through a wage increase. But government increases have been less than the rate of inflation over many years. Even passing this onto staff doesn't help each facility to match the increasing costs they face in other areas of their business. Yet, unions continue to demand that privately run aged-care facilities must give more to staff.

Mr Gould puts the wage crisis facing the sector down to foreign investors demanding a greater return on their investment. He makes the point that if it wasn't for these overseas investors, and if the government took over financial responsibility for care of the elderly again, there wouldn't be any industrial action.

It's difficult to understand why this could even be considered a rational argument in the 21st century. Does Mr Gould not remember the large aged-care wards in government-run hospitals? It's easy enough to compare when you consider the single-room accommodation that residents of privately run facilities generally receive now.

It would also help if Mr Gould could provide some evidence for his assertion that government-run facilities provide a better level of care than private providers. And how much profit does Mr Gould believe is acceptable? Clearly he doesn't even want to put his money in a term deposit because profit is bad and the bank is likely to be foreign-owned.

It's time the government faced up to the wider economic reality, and that is the growing demand for aged care facilities as the Baby Boomer Generation reaches retirement age. Over the next 20 years, New Zealand's investment in the aged-care sector will need to increase by around $6 billion to replace old facilities and meet new demand. When you put that next to the current financial results being made by operators, as disclosed in the Grant Thornton research of 2010, the future looks less than certain for the sector.

The disturbing evidence from the report was that three-quarters of providers were making less than a 12 per cent return required for future investment, while 25 per cent were in fact making a loss. To ensure a sustainable future to meet the needs of Baby Boomers, the government is going to have to commit more to the sector.

Presently, the New Zealand public continues to have a good level of confidence in residential care for the aged. But with less-than-inflation increases in funding from the government over the last three years, it should be no stretch to the imagination that such confidence could soon be undermined as services and facilities strain to meet the demand. It's time the Nurses Organisation and the Service and Food Workers' Union face up to that fact.

* Martin Taylor is Chief Executive New Zealand Aged Care Association
Addendum, March 21

Dear Editor,
Martin Taylor's article (Why Bryan Gould Was Wrong) contained serious errors about Oceania's pay offer to 1500 members of the Service and Food Workers Union and New Zealand Nurses Organisation.

Mr Taylor states Oceania has offered a three per cent rise over 14 months. In fact the pay offer extends across three calendar years and two rounds of DHB funding that will give Oceania in excess of five per cent - money that should go to staff, not into Oceania's bank account. 600 Oceania staff receive $13.61 an hour, a shockingly low pay rate for any job, let alone the work of caring for our elderly.

Mr Taylor says Oceania has promised to pass on DHB funding. In fact Oceania received a government funding increase in June 2011 but is only offering to pass on the increase to staff from February 2012. Another funding increase, in June this year, is being offered on the condition that workers don't get the increase until February 2013.

We agree with Mr Taylor that government funding is miserable. It is even more miserable to pocket that government funding and fail to pass it on to the very people who provide the hands-on care in aged care - our members.

Alastair Duncan,
Service and Food Workers Union Ng? Ringa Tota,