Abbott government halts Labor's $1.2b aged care scheme

The Abbott government has put a stop to a $1.2 billion scheme set up by the former Labor government to deliver pay rises to aged care workers.

Before the election, the Coalition portrayed the Gillard government's Aged Care Workforce Supplement as a tool to boost union membership, because providers needed to have an enterprise bargaining agreement to qualify for funding.

The Coalition promised to return the money to the general aged care funding pool and consult with the industry about another way to distribute the funds. On taking office in September, it suspended applications for the supplement.

Labor on Wednesday sought to resurrect the fund by moving a motion in the Senate to disallow the ministerial determination which prevented new applications for the supplement.

But on Thursday morning the Coalition struck back, using its numbers in the lower house to disallow Labor's original regulations which set up the supplement.

It will put in place arrangements to honour the commitments made to 12 aged care providers which are already receiving the supplement, but other providers will not be able to apply for funding.

In a statement, the Assistant Minister for Social Services Mitch Fifield said Labor's scheme was "flawed and inequitable" and the Coalition had committed to find a better way to distribute the money.

Labor's aged care spokesman Shayne Neumann said the Coalition's action was "appalling" and showed it did not value workers.

Industry body Aged and Community Services Australia said Labor's scheme had been "clumsy" and it had asked the Coalition find a way to deliver a pay rise to all aged care workers.

Michael Crosby, the president of aged care union United Voice, said the move would undermine the quality of services as workers left the sector because of low pay.

On Tuesday the Assistant Minister for Education Sussan Ley announced the government would not honour contracts the Labor government had signed with childcare service providers under a $300 million scheme to deliver higher wages to early childhood workers.

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