Prime Minister John Key acknowledges there are pay inequalities in the residential aged care sector but says the Government doesn't have the money to improve the situation.
Draft findings from the Human Rights Commission inquiry into equal employment opportunities in the sector have been obtained by Radio New Zealand News.
The draft says thousands of mainly women are caring for older people in residential facilities and at home for barely the minimum wage.
The commission says the low wages and pay inequalities are an indignity that must be addressed.
It says carers working for District Health Boards are paid about 16% more than those doing similar work in residential facilities and in home-based community support.
The report estimates pay parity would cost about $140 million a year.
Mr Key says the Government recognises there is a disparity but is not in a position to meet the very large cost.
The head of aged care provider Bupa says there is no rational basis for pay differences between workers in rest homes and home care and those working in hospitals.
Chief executive Dr Dwayne Crombie told Morning Report the problem arose because a previous Labour Government raised the salaries of nurses and caregivers in public hospitals without altering rates in rest homes and community care.
"What we're really seeking is a recognition that this is simply unfair and a commitment to solve that problem over three or four years."
The Aged Care Association, which represents about 80% of the sector's residential providers, says it has been raising concerns about pay parity since 2005.
The Nurses Organisation says Government funding aged care facilities should be handed out on the condition providers use some of the money to increase staff wages.
Grey Power is endorsing the draft report, saying the pay inequality is inappropriate and can longer be ignored by the Government.
The Human Rights Commission plans to release its final report on 27 May.