NSW Budget 2020: Public sector wages to be capped
NSW public servants will have their pay rises cut to save billions of dollars post-pandemic in a move the Treasurer has described as “very generous” but unions have slammed.
NSW
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NSW public servants will have their pay rises capped at 1.5 per cent in a State Budget move designed to save the taxpayer billions of dollars post-pandemic.
The Daily Telegraph can reveal the government agreed last night in Cabinet to abandon the long term commitment to giving public servants a yearly pay increase of up to 2.5 per cent, and will replace the regulation with a commitment they receive “up to 1.5 per cent”.
It comes after the government this year asked public servants to accept a one-year pay freeze on their wages, and will spark a war with the unions. With the exception of this year, the government has routinely awarded 2.5 per cent.
The arrangement is a key savings measure in the November 17 Budget, where Treasurer Dominic Perrottet will prioritise jobs and the economy with record stimulus, but also map a path back to a strong budget position.
The one-year wage freeze, which the Industrial Relations Commission revised into a 0.3 per cent pay rise, already saved about $3 billion over the forward estimates. Limiting pay rises to just 1.5 per cent will save $1.8 billion over three years, it is understood.
The 1.5 per cent proposal is Treasury’s average inflation estimate, but there is a chance any pay rise could be smaller.
On Tuesday, unions slammed the cap as a move that will “strangle economic recovery.”
“The State Government is poking in the eye the very paramedics, nurses, cleaners, police and teachers who put their health on the line to get us through the pandemic,” Unions NSW Secretary Mark Morey said.
But Treasurer Dominic Perrottet said abandoning a longstanding policy that sees annual pay rises of 2.5 per cent is the right call during the COVID pandemic.
“I think it’s a very generous policy,” he said.
“If you look nationwide where our wages policy sits, I believe a pay rise of up to 1.5 per cent for public sector workers in the middle of an economic crisis, when the private sector is having its wages cut (and) the unemployment rate is seven point two per cent … is fair and balanced.”
Labor Leader Jodi McKay accused the Treasurer of “economic vandalism” by capping public sector wage increases at 1.5 per cent.
Ms McKay labelled the move: “a betrayal of those who have protected us during the bushfires and pandemic”.
“It is clear this has been Dominic Perrottet’s plan all along and he has snuck it out on Melbourne Cup Day and the eve of the American election,” she said.
“Not only is this money that teachers, nurses and cleaners won’t have in their pockets, it’s money that small businesses and communities won’t have to survive.”
Mr Perrottet told the Telegraph on Monday “at a time when private sector wages are flat, when many people are taking a pay cut and losing jobs, it is most appropriate we strike the right balance”.
“Public servants are doing a fantastic job particularly during COVID but we can’t forget public sector wages are paid by private sector wages and we need to have a fair system in place,” he said.
He said politicians should also be tied to the same scheme and “they aren’t special”.
“In a pandemic you’re going to make decisions that won’t be popular. But I’m not here to be popular, I’m here to do what’s right,” he said.
It can also be revealed the government will invest in an army of hundreds of workers to install LED lights in public schools as the first in a series of small-scale infrastructure building projects to drive the economy.
The investment costs $157.8m and will be part of record stimulus in the Budget, also reducing energy bills by millions of dollars each year.
Mr Perrottet said his focus was on keeping as many people in jobs as possible.
He said discipline the state had displayed to maintain a Triple A credit rating was important to carry forward.
He said the rating was “not an end in itself” but “the discipline must be maintained”.
“It can be easy for discipline to deteriorate, that won’t happen here. We will invest for impact and reform for the future,” he said.