More than 250,000 aged care workers are in for a record 15 per cent pay rise under a $11.3 billion boost in the federal budget. 

The Albanese government on Thursday announced the funding to meet a Fair Work Commission ruling that a 15 per cent wage hike for the sector’s workers needs to come into effect in one hit from July.

The government argued that due to significant fiscal challenges, it should be allowed to space out the 15 per cent wage increase across two years – 10 per cent in 2023 and then five per cent more in mid-2024.

Unions argued against splitting the payments.

The biggest ever pay rise for workers including registered nurses, head chefs and cooks, and home care workers is in response to recommendations made by the Royal Commission into Aged Care Quality and Safety calling for wages for aged care staff to be lifted.

A registered nurse on a level 2.3 award will pocket an extra $196.08 a week, or more than $10,000 a year.

A personal care worker on a level four aged care award will take home $141.10 more a week, or more than $7300 a year.

The Australian National Aged Care Classification price for residential care will be increased to $243.10 from July and is based on advice from the Independent Health and Aged Care Pricing Authority.

Treasurer Jim Chalmers said every worker deserved a fair day’s pay for a fair day’s work.

“This investment recognises the incredible contribution that aged care workers make to our economy and community and will help to create a bigger incentive for young Australians looking for a rewarding career to pick aged care in the future,” he said.

Peak aged care body COTA Australia chief Patricia Sparrow said the workforce had been undervalued for too long.

“This funding boost will, among many things, help ease the workforce pressures and ensure we have nurses available 24/7, which was a key recommendation of the royal commission and something older Australians have long advocated for,” she said.

But she said transparency was needed to ensure the money went directly to workers and was not simply going to the providers’ bottom lines.

United Workers Union aged care director Carolyn Smith said many people had worked double and triple shifts during the COVID-19 pandemic to keep residents safe and facilities operating.

“The 15 per cent pay rise is a major step towards recognising the incredible sacrifices aged care workers have made,” she said.

The Aged and Community Care Providers Association said it would help stem the exodus from the sector, which was under increasing pressure to deliver more services.

“We know that the demand for workers in aged care will double by 2050, so we are grateful the government has recognised that we need to do all we can now to reward aged care staff for the important work they do every day,” association CEO Tom Symondson said.

Meanwhile, the government will set aside $1 million to the Constitution Education Fund Australia and $475,000 to the Museum of Australian Democracy to deliver an information program for voters ahead of the Indigenous voice to parliament referendum later this year. 

By Tess Ikonomou and Paul Osborne in Canberra