Victorian public servants score $5600 cost of living bonus

Victorian public servants, including those earning up to $240,000 a year, are set to share in $300m of one-off cost-of-living payments as businesses and households brace for the prospect of increased taxes.

Victorian public servants are set to share in $300m of one-off cost-of-living payments as businesses and households brace for the prospect of increased taxes.

Individual payments of $5600 are set to be made to the state’s 54,000 Victorian Public Service employees, including those earning up to $240,000 a year, after the Fair Work Commission this week formally approved a new wages deal.

The Herald Sun can reveal the bonus payments will also be made to former employees who have left the public service since June 28 including senior executives who scored up to $100,000 in redundancy payments.

However a government spokesperson refused to say how many former employees would receive the payment.

Senior insiders said some of those had already regained employment within the public service.

“It’s like the wild west,” one bureaucrat said.

“The perversity is that we’re in a budget crisis and we have a situation where many public servants are exiting with packages, and then starting in another role the next week.”

Victorian Treasurer Tim Pallas has refused to rule out hiking taxes. Picture: David Caird

The new cost-of-living bonus formed part of a new wages deal that also included a 3 per cent annual salary increase, extra leave provisions, and increased requirements for employers to consider flexible work requests.

Currently, Victorian public servants are expected to work from the office at least three days a week under a “flexible work policy”, which has been in place since March 2021.

The payments are expected to be made from next week, with employees warned it could take up to eight weeks for all payments to be made.

“Given the number of employees and the complexity of the back-payments involved, it is likely to take at least three to four pay periods after the Agreement commences to process all payments,” a memo to staff said.

It comes as senior government sources warn the state budget remains in dire straits, with treasurer Tim Pallas putting his ministerial colleagues on notice over spending.

In his most recent budget Mr Pallas warned net debt was forecast to hit $187.8bn by 2027-28 — of $67,000 for every household — with a $26m-a-day interest bill.

Victorian public servants are expected to work from the office at least three days a week under a “flexible work policy”.

By that time the state would be spending $40bn a year on its public sector wages.

After boosting the health budget by $1.5bn last week to curb outrage among the sector and community polling showed was hurting Labor, Mr Pallas left the door open to hiking taxes further to tackle Victoria’s skyrocketing debt.

Refusing to rule out new taxes for Victorians or cuts to services, Mr Pallas said he could “give no assurances about where the government is going with this matter”.

“I’m not ruling anything in or out at the moment,” he said.

Mr Pallas’ comments prompted anger among some members of the Labor caucus amid concerns the electorate wouldn’t tolerate the threat of further cuts.

Latest polling shows Labor and the Coalition are now tied 50-50 on a two party preferred basis.

The Coalition’s primary vote now sits at 40 per cent while Labor’s vote has dropped to 31 per cent, six points lower than the 37 it recorded at the 2022 election.

Pollsters say cost of living continues to rate among the top concern of Victorians.

A government spokesperson defended the payment saying it was fully compliant with the Victorian government’s wages policy.

“Given the delay between in-principle agreement and the Fair Work Commission approving the agreement, a small number of people who ended their employment with the VPS after 28 June 2024 will receive the payment,” he said.

Shadow Minister for Finance, Jess Wilson, said debt funded bonus payments were “simply unsustainable and unfair on Victorian taxpayers.”

“This payment is cold comfort to Victorian businesses and families paying higher taxes while health, education, community safety and infrastructure outcomes continue to deteriorate,” she said.

“Labor cannot manage money and Victorians are paying the price.”

Originally published as Victorian public servants score $5600 cost of living bonus