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Strong editorial from The Australian on Shorten's taxpayer funded wage subsidies for Labor's friends

Shorten has a real chance here - to send Australia broke.

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However much ambit was involved in Bill Shorten’s vague suggestion that a Labor government might extend its taxpayer-funded wage increases beyond childcare workers to “underpaid” aged-care workers, it has already sent expectations soaring. As Joe Kelly reported yesterday, Council on the Ageing chief executive Ian Yates has written to the Labor Party demanding immediate pay rises for aged-care workers, rejecting the Opposition Leader’s plan to wait until after the royal commission into the sector. On Sunday, without setting out any details of how it would work, Mr Shorten promised to use taxpayers’ funds to boost childcare workers’ wages by $11,300, on top of the award rate, over eight years. Over a decade, the move would cost taxpayers $10 billion.

On Monday, Mr Shorten left the door open to extending taxpayers’ largesse to other sectors, declaring “we have picked childcare workers to go first’’. He gave himself an out, though, insisting the proposed funding model was a “template which we will only use in childcare”. But Deputy Opposition Leader Tanya Plibersek also signalled Labor could support aged-care workers’ pay hikes: “To be honest, I think down the track when we see the outcome of the royal commission into aged care that there’ll be other areas where we will have to more appropriately pay highly skilled, highly competent workers that are underpaid — frankly, largely because they’re women.’’

For the sake of taxpayers, such rises, and those of childcare workers and workers in other sectors, should not come from the public purse. For good reason, Australian Chamber of Commerce and Industry chief executive James Pearson is concerned the wages subsidy “genie is out of the bottle and it won’t be easy to put it back in”. In practice, the cost to taxpayers of funding pay rises for aged-care workers would be exorbitant and open ended.

Scott Morrison has flagged a goal of 475,000 aged-care workers in Australia by 2025. Already more than 1.3 million Australians are using some form of aged care, with that number expected to grow to an ­estimated 3.5 million by 2050. In June 2017, a Senate report found that the sector’s workforce will need to grow from about 366,000 staff to 980,000 by 2050 to care for increasing numbers of older Australians. About 40 per cent of aged-care facilities and a third of home care support outlets already face staffing shortfalls, it noted, with the National Disability Insurance Scheme also competing for staff. A Labor government would need to be wary of unintended consequences. If the pay rates of childcare workers soared above those of staff earning comparable money in aged-care centres, it would create an incentive for aged-care and other personal care workers, especially those with basic qualifications, to change sectors for better pay.

As Business Council of Australia chief executive Jennifer Westacott has warned, taxpayer-funded wage subsidies should not be allowed to undermine the workplace relations system. Political leaders who want to boost wages need to make the enterprise bargaining system stronger and get policy settings right to boost investment and productivity across the economy. Appealing to childcare workers and others who hope to benefit, by making taxpayers subsidise wages, would set a bad precedent contrary to the national interest.