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”, August

Outline of Presentation Discusses: 1.Current NSW carer payment regime 2.Indirect costs to carers 3.Importance of indirect costs 4.Models for estimating indirect costs 5.Use of time cost model 6.International context of foster carer wages/fees 7.Government savings by use of foster care 8.Kinship care omitted from presentation 2

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 1.Opportunity costs (or foregone earnings) 2.Time costs of caring (i.e. market replacement value) 3.Psychological/emotional costs of caring (no monetary value)

Time Costs Model  A practical 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 7

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

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 day Child aged 5-10 yrs= 5.2 day Child aged yrs= 3.3 day  Estimates take no account of economies of scale or simultaneous caring of more than one child 9

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)

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 day Children aged 5-10 yrs= 1.93 day Children aged yrs= 2.07 day  Average estimates indicate that caring for fostered children can take approximately an extra two day  Consistency of extra time

Total time fostering Child Care Time 0-4 years 5-10 years years All Ages (Average) (Hours per day) Non- Fostering Fostering (extra time) Total Care

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; 1 st 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)

Wage estimates for carer by age group Panel A 0-4 yrs5-10 yrs11-16 yrsAll ages Hours per day Fostering hours Hourly rate $15.87 Panel BRates of daily/weekly wage Daily$158.54$113.15$85.22$ Weekly$1,109.79$792.07$596.55$832.80

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

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 18

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 19

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 20

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 21