NSW government kills wages cap, links pay to productivity gains

Sweeping industrial reforms introduced by the NSW government will abolish the Coalition’s wages cap and implement a “mutual gains” model of negotiation requiring parties to find agreed improvements to the lives of essential workers.

Industrial Relations Minister Sophie Cotsis introduced the Industrial Relations Amendment Bill 2023 to parliament on Thursday afternoon, saying the reforms would rebuild the Industrial Relations Commission (IRC) into a “modern body”.

Industrial Relations Minister Sophie Cotsis said the government’s Bill would fulfill an election promise to abolish the public sector wage capCredit: Dion Georgopoulos

It follows the appointment of an industrial relations taskforce, led by former Fair Work Commission deputy commissioner Anna Booth and former IRC president Roger Boland, commissioned by the government in June to consult employees, unions and government agencies over the new IR framework.

The reforms will abolish the Coalition’s wages cap which limited public sector pay rises to 3 per cent wages cap, which included a mandatory 0.5 per cent superannuation increase.

Abolishing the cap will allow the state’s public sector unions to negotiate directly with government agencies, with the IRC empowered to bring the parties together to resolve disputes.

The reforms could see public sector wages rises above the abolished cap, if productivity gains can be found to supplement the cost to the budget.

However, the industrial court will be required to consider the fiscal position of the government when making determinations, meaning any wage offers will be restricted by the state of Treasury’s coffers at any given point.

‘There is no doubt the wages cap has had a repressive effect on public sector bargaining, modernising awards and genuine engagement between employees, unions and public sector agencies.’

Industrial Relations Minister Sophie Cotsis

In addition, the reforms will encourage agencies to attract and retain skilled staff where there are labour shortages so “as to ensure effective and efficient delivery of public services”, Cotsis said, with dozens of paramedics in the Legislative Assembly watching her address.

The dual-purpose IRC – working on arbitral matters and as an industrial court for judicial purposes – will be reinstated 12 years after the O’Farrell Coalition government began dissembling the body, with the IRC eventually abolished in 2016.

Eight months after Labor’s election victory, Cotsis said the reforms fulfilled one of the party’s major election promises to abolish the wages cap and would improve workplace safety for public sector workers.

“There is no doubt the wages cap has had a repressive effect on public sector bargaining, modernising awards and genuine engagement between employees, unions and public sector agencies,” she told parliament on Thursday.

Under the new cooperative bargaining model, coined “Mutual Gain” parties will be required to identify and communicate their needs to reach an agreement that maximises common interests and reconciles conflicted interests, aimed at cultivating good relationships.

The government will appoint specialised judges focused on occupational workplace health and safety matters and underpayments, intended to ensure safer workplaces in NSW.

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