Labor is backing calls to boost the pay of aged-care workers amid fears private providers could line their own pockets with taxpayer funds instead of using the cash to make life better for frail residents.

Shadow aged care minister Clare O’Neil told ABC’s Insiders a glaring omission in the federal budget was a lack of support for aged-care workers.

She said there was “absolutely no doubt” for-profit aged-care homes would pocket the billions of dollars given to them in extra funding, arguing the budget had failed to include enough safeguards to stop that from happening.

But Health Minister Greg Hunt fired back in a press conference on Sunday, telling reporters Labor must have “forgot to read” the budget as it contained clear protections against such behaviour.

In her interview with the ABC, Ms O’Neil backed calls for a 25 per cent pay increase for aged-care workers, but said the government needed to do more than just throw money at the troubled sector.

“Nothing is going to fundamentally change about the aged-care system unless we fix the issues facing the workforce,” she said on Sunday.

“They are some of the worst-paid people in Australia’s economy today.”

Tweet from @InsidersABC

The interview came two weeks after the Morrison government included in this year’s budget a $17.7 billion response to the aged care royal commission.

The package included plans for 33,800 subsidised training places for aged-care workers, as well as funding for $3700 retention payments for nurses, but made no mention of boosting wages.

Ms O’Neil, along with unions and employer groups representing the sector, claims the response didn’t do enough to entice more Australians into the aged-care workforce.

And critics also fear a new $10 daily payment – to be used on boosting food standards – may be pocketed by providers instead of helping residents.

“The government’s response was unacceptable for a whole range of reasons, but probably the most glaring omission, is that there was nothing in there for aged-care workers,” the Labor MP said.

The Health Services Union has lodged a case with the Fair Work Commission calling for a 25 per cent pay increase for aged-care workers.

Ms O’Neil said she supported “a push for a significant increase on pay” and the 25 per cent figure sounded “like about the right number, but we need to go through a Fair Work process”.

She said the government would have to pay for the wage rises, but conceded Labor was not considering an aged-care levy as recommended by the royal commission.

HSU national president Gerard Hayes told The New Daily a 25 per cent wage increase would bring aged-care workers, who he said were currently underpaid, into line with similarly skilled workers in other sectors.

The budget had new payments for better care and nutrition. Photo: Getty

“It’s important to retain and train people. The pandemic has shown us, you can’t have people working two or three jobs on minimum hours contracts, just to make ends meet,” he said.

The FWC case is expected to be heard later this year.

Meanwhile, the $10-a-day ‘Basic Daily Fee Supplement’ will be provided from July and is specified for the “basic needs of residents” and especially nutritional needs.

The government’s royal commission response says providers will have to submit regular reports detailing how they are using that fee.

But Ms O’Neil said she was worried the payment had “no strings attached” and described the situation of older Australians starving in care as a “human rights crisis”.

“There is no reason to believe that anything in the government’s response will solve the malnourishment crisis,” she said.

When asked by Insiders host David Speers if providers could simply bank the extra cash, Ms O’Neil responded: “I have absolutely no doubt … money that is given to aged-care providers for care is not always spent on care”.

The government, however, says aged-care operators could be forced to give back money received from the taxpayer if they fail to explain exactly how they are using the new payments to increase standards of care.

Mr Hunt cited those safeguards in a rejection of Ms O’Neil’s criticism on Sunday.

Greg Hunt. Photo: AAP

“I’m surprised Labor has not actually read the materials, which set out the fact very clearly that there has to be reporting on standards, so you cannot be paid unless you are reporting and meeting the standards,” he said.

National Seniors Australia chief advocate Ian Henschke said Ms O’Neil was right to call for greater transparency over aged-care funding, claiming some private providers charged customers as much as 30 per cent in management fees.

He said there was also a need for greater funding and described the package in the budget as a welcome first step, rather than a comprehensive solution to the problems plaguing the sector.

“I think one of the areas that has been overlooked is the area of home care,” Mr Henschke told TND.

“There’s been too much attention, I think, focused on where the money goes in aged care.

“But when you’ve got nearly a million people receiving home care, you’ve got to make sure that they get value for money – and that their hours of care are not being chewed up in management fees.”