Should Australian foster carers be entitled to receive a fee/salary wage for caring?

1. Should Australian foster carers be entitled to receive a fee/salary wage for caring? Marilyn McHugh Social Policy Research Centre, UNSW Paper presented at the “ACWA 08 Strong, Safe & Sustainable: responding to children, young people and families in a civil society”, 18-20 August 2008 m.mchugh@unsw.edu.au www.sprc.unsw.edu.au

2. Outline of Presentation Discusses: • Current NSW carer payment regime • Indirect costs to carers • Importance of indirect costs • Models for estimating indirect costs • Use of time cost model • International context of foster carer wages/fees • Government savings by use of foster care • Kinship care omitted from presentation

3. Background • Fostering is seen as a voluntary service • In all States & Territories carers receive a fortnightly carer subsidy/allowance • Subsidies generally cover fostered children’s housing, health, transport, food, clothing & footwear, household goods & services, leisure & personal care costs • Carers in specialist foster programs for children with severe emotional & behavioural problems receive higher fostering rates

4. Indirect Costs • Rarely considered or accounted for are a range of indirect costs incurred by foster carers • These indirect costs include: • Income foregone by mothers (sometimes fathers) not in paid work • Time costs – leisure and activities with family/friends are foregone due to care work • Psychological & emotional costs embodied in providing care for emotionally abused and neglected children in care

5. Rational for investigating carers’ costs • Growing professionalism of foster caring with assessment training & supervision more highly regulated & rigorous • Carers are no longer simply substitute parents • Fostered children’s complex needs & challenging behaviours requires highly committed multi-skilled specialist carers • Carer recruitment & retention has become increasingly problematic here and elsewhere

6. Three models to estimate costs of caring • If carers were to be compensated for their time, commitment & professional service what models should be considered? • Three models are suggested for examining the indirect costs of carers • Opportunity costs (or foregone earnings) • Time costs of caring (i.e. market replacement value) • Psychological/emotional costs of caring (no monetary value)

7. Time Costs Model • Apractical model for valuing the time it takes care for children (or adults) is the market replacement cost (proxy good approach) • This approach values the amount of daily or weekly time spent on care giving at the labour market price for a suitable substitute • UK research indicates that most appropriate replacement costs of foster carer is wage of a residential care worker • Residential care used in Australia for children with high/complex needs when foster care not a viable option

8. Determining time in providing care • Australian time use data (ATUD) is used to determine what proportion of hours/minutes in the day are taken up by daily activities of caring and other unpaid labour associated with caring by mothers • ATUD includes time for primary activities (direct child care) & secondary activities (cooking, washing, cleaning, shopping) & supervision when child present in a household • Inclusion of secondary time is critical as research indicates that it is 4 times greater than primary time alone

9. Time Costs Model (cont’d) • Less time is required to care for older children compared to younger (Craig, 2006, Ironmonger 2004) • Ironmonger’s (2004) estimates of time (primary + secondary) taken by mothers to care for children in various age groups: • Child aged 0-4 yrs = 8.1 hrs @ dayChild aged 5-10 yrs = 5.2 hrs @ dayChild aged 11-16 yrs = 3.3 hrs @ day • Estimates take no account of economies of scale or simultaneous caring of more than one child

10. Time Costs Model (cont’d) • UK & Australian research indicate that fostering is different from ordinary caring in that extra time is required to care for most foster children (McHugh, 2007; Oldfield, 1997) • Extra time in a foster placement is required for personal care, general household activities, travel & transport, therapeutic/medical, emotional support & administration (e.g. carer training, support groups, reporting, etc)

11. Fostering’s extra time • Based on the research the estimated extra time for fostering by age groups is as follows:Children aged 0-4 yrs = 1.89 hrs @ dayChildren aged 5-10 yrs = 1.93 hrs @ dayChildren aged 11-16 yrs = 2.07 hrs @ day • Average estimates indicate that caring for fostered children can take approximately an extra two hours @ day • Consistency of extra time

12. Total time fostering

13. Applying replacement cost model • Using wage of a residential care worker • NSW Social & Community Services Employee (State) Award has 6 grades/levels of wages based on skill, experience, level of responsibility & years of service • To estimate a conservative imputed wage level for a carer use was made of lowest casual hourly rate ($15.87) for Grade 1; 1st Year worker • Wage based on estimates of time for children in various age groups and for care provided 7 days a week (not a residential worker’s 38 hour week)

14. Wage estimates for carer by age group

15. Payment (e.g. Wage) for Carers? • Implication of wage levels based on child’s age and time costs • Implication for carer wage if more than one foster child in household • Wage/fee based on a household? • Other aspects for consideration when setting a wage/fee level – level of carer qualifications, competencies, skills, experience, commitment to undertake ongoing training & mentoring ‘new’ carers

16. International context of carer payments • A small number of studies have examined countries where a foster carer wage/fee is paid (Colton & Williams, 1997, 2006; Oldfield, 1997) • Oldfield’s study (1997) discussed the situation in six countries (Denmark, France, Germany, Luxembourg, Portugal and Norway) • In no country did carer wages approximate average female wages (10-29% of F/T wages) • Low wage levels inadequate & insufficient as an alternative to labour market employment, but households with a carer wage were better off than other households with no carer wage

17. International context of carer payments • Studies by Colton & Williams (1997) covered 6 countries: Finland, France, Hungary, Israel, Sweden and the UK (England, Scotland, Wales and Northern Ireland) • In Finland, Hungary, Israel overall levels of carer remuneration were reported as inadequate • The carer fee component in Sweden ranged between 37-40% of female F/T wages. For high-needs children represented 80% of F/T wages • Hungary paid its professional carers (10% of all carers) 60% of average household income

18. International context of carer payments • Tax paid wage component: Hungary & Sweden • Tax paid on both subsidy & wage: UK • Annual leave entitlement: Finland & Hungary • Carers paid for undertaking training: France & Hungary • Retainer paid to carers (for 3 months) between placements: France • Carers regarded as agency employees: Hungary

19. Implications of a carer wage • Carer recruitment/retention • Attracting a new cohort of carers • Carer ambivalence • Reliance on income support (Parenting Payment & Age Pension) + (Health Care Card, concession card, rental assistance) • Payment of income tax on wage component • Requires support & advocacy of foster care associations

20. Cost to government • Unlikely that the concept of a carer wage would be acceptable to government • Estimates of annual expenditure, based on paying a wage to non-related foster carers (based on foster carer numbers in 2006) would add another $333.7 million annually to overall welfare spending costs • Residential care costs 7-8 times the cost of foster care (represents 5% of all OOHC services) • Fostering provides significant cost-savings to government

21. Conclusion • Several aspects would have to be considered if a carer wage was to be introduced, for example, • Quality, competency-based training for carers • Assessment of the quality of care • Wage component would have to be commensurate with other similar care work wage levels • Recruitment processes might be different different