John Key says the difference in pay between aged-care workers in the community and those at hospitals is a problem, but fixing it would come at a high cost to the Government.
Equal Employment Opportunities Commissioner Judy McGregor released the Caring Counts report yesterday, saying aged-care workers were paid too little compared with similar jobs in places such as hospitals.
The report recommended phasing in pay increases over three years until community-based workers were paid the same as those paid directly by district health boards.
It also recommended introducing a "five-star" ranking system to assess the quality of aged-care facilities - a step Ms McGregor said would improve consumer choice and public accountability - and making voluntary safety standards compulsory.
The Prime Minister said the issue of pay inequality between workers at privately run facilities and DHB staff was a long-standing problem. However, rectifying it would mean higher subsidies and the Government had limited resources.
He said one of the "handbrakes" on the system was that providers were limited in how much they could increase charges.
The report followed a year-long inquiry during which Ms McGregor worked undercover in aged-care facilities for a week in January.
Ms McGregor said community care workers paid by providers funded by district health boards were on average paid $3 to $5 an hour less than carers paid directly by DHBs. The commission estimated that making the pay rates equal for the 48,000 aged-care workers would cost about $140 million ayear.
"There are legal obligations relating to pay equality and for far too long we have exploited the emotional goodwill of thousands of workers, predominantly women."
Other recommendations included better travel provisions for carers, requiring providers to work on the basic qualifications of new staff, and developing best practice guidelines for migrant workers.
There was support for the report's recommendations from the Service and Food Workers' Union, Council of Trade Unions and the Green Party.
Green Party health spokesman Kevin Hague said reducing the pay gap would help to address the shortage of workers in the sector - one of the problems a joint Labour Party/Green Party review of aged care had highlighted. He also supported making safety standards compulsory.
Associate Minister of Health Jo Goodhew said the Government would carefully consider the report. She said some recommendations - including those on safety standards and staff qualifications - were consistent with the Government's current direction.
She said the Ministry of Health would work with DHBs to ensure there was better support in areas where significant travel was required to deliver home-based support.
However, she said the challenge for the Government was in balancing the competing demands for extra funding in the sector as the population aged.
The report puts further pressure on the Government over aged-care issues. Last week it was accused of trying to push through changes to the asset threshold for subsidies for rest home residents as part of the Budget. Those changes will mean the asset threshold will increase by the rate of inflation rather than the set amount of $10,000 each year.
The Caring Counts recommendations:
* Equal pay for aged-care workers in the community and those working for DHBs.
* Travel subsidies which cover the real costs and time spent travelling for home-support workers.
* Make voluntary safety standards compulsory.
* Develop a "five-star" system of ranking residential facilities for quality assurance.
* Ensure all new staff reach at least Level 2 in a basic skills qualification within six months.
* Place the minister responsible for older people in the top 10 in the Cabinet.
* DHBs to set out expectations on how providers spend money, fair pay requirements and travel policies.
* Better information for migrants coming to NZ and best practice guidelines for migrant workers.
* More effort into recruiting male carers, encouraging people to consider career changes and encouraging part-time workers to do more hours.
* Hold a stakeholder summit to increase co-operation and promote aged-care workers.