Labor hits back at claims plans to abolish wage cap could will lead to ‘black hole’

Labor leader Chris Minns has conceded public sector workers’ pay cannot be raised to meet inflation— but denied claims he misled workers by promising higher wages.

NSW Labor leader Chris Minns has dismissed claims he misled public sector workers by promising better pay despite admitting inflation-level wage increases are out of the realm of possibility.

Facing increasing pressure to outline how much it would cost to increase public sector pay, Mr Minns on Tuesday revealed that he does not know if Labor’s policy to scrap the wages cap has been costed by the independent parliamentary budget office.

Mr Minns ruled out a zero per cent wage increase for public sector workers - a threat he said there’s “every chance of” under a re-elected Coalition government - but confirmed under a government led by him wages would not increase in line with inflation.

“We can’t offer inflation-level increases, but given that fact that we’re 40 days from the NSW election, we’re being upfront about he constraints that we’re in.

“We do want to sit down with public sector workers and look at wages and conditions, but within a strict economic framework.”

NSW Labor Leader Chris Minns. Picture: NCA Newswire / Gaye Gerard

Any increases beyond what has already been budgeted for would be contingent upon savings from productivity gains, he said.

Premier Dominic Perrottet has condemned Labor’s plan to scrap the wage cap, calling it a “secret plan that will blow the budget”.

However, the Premier himself was grilled over revelations the modelling he used to claim Labor’s plan would cost $9 billion was not official Treasury analysis, because the Treasury have not provided analysis of opposition policies.

Mr Perrottet doubled down, saying the evidence provided were “factual scenarios ... which show the impact of increased inflation and increased wages”.

“You often ask Treasury to provide you with factual information.

“Treasury provides modelling in relation to factual scenarios.”

LABOR HITS BACK AT ‘BUDGET BLACK HOLE’ CLAIMS

Labor has hit back at the Coalition’s claim that scrapping the public sector wage cap would blow an $11 billion hole in the budget, saying the modelling wasn’t based on their election pledge.

NSW Labor also fired up over Treasury analysis being used to forecast the budget blowing out by $11b if wages were increased by December’s inflation rate of 8.4 per cent over four years.

Opposition leader Chris Minns and Shadow Treasurer Daniel Mookhey on Monday defended Labor’s policy , with Mr Minns saying the party has “never promised a (inflation-sized) wage increase in NSW for public sector workers”.

”I don’t know what they’re modelling but it’s not Labor’s policy,” he said.

“Labor has not committed to anything like a (inflation) wage increase,” Mr Mookhey added.

NSW Labor's aspiring Treasurer Daniel Mookhey. Picture - Chris Pavlich for The Australian

“No employer in the country has offered that, no state government has offered that and that’s not our policy.

“We just want to do what every other employer in this country is required to do, which is to sit down with our workforce and negotiate about our precisely we can deliver better public services.”

Mr Mookhey added that the Treasury department had appeared “to put itself in the middle of a political debate” by conducting analysis of Labor’s policy.

“It’s the role (of) Treasury to stay out of it. It’s the role of the independent budget office to cost election policies,” he said.

Opposition leader Chris Minns said no other state in the country is issuing pay rises in line with inflation, with NSW the only one to have a wage cap in place.

“All we’re saying is we want to be able to sit around the table to speak with public sector workers and we’ll go into those negotiations with strict economic principles,” he said.

“New South Wales is the only state with the wages cap in place, but no other state - the majority of which are Labor administrations - are paying to inflation.”

Kevin Morton, President of the Police Association of NSW, backed in Labor’s move.

“We just want to ensure that we have a fair playing field…we’re seeing at the moment, all my police officers in New South Wales, leaving this state and joining other police forces in other states,” he said.

LABOR PAY RISE PLEDGE COULD PUT NSW BILLIONS IN THE RED

Labor’s plans to abolish the cap on public sector wages could cost as much as $11 billion and create a colossal black hole in the budget if Chris Minns wins the election.

NSW Treasury analysis seen by The Daily Telegraph reveals that it would cost $8.6 billion over four years to increase public sector wages in-line with inflation rates forecast in last week’s Half-Yearly review.

Increasing wages for 2023-24 in line with December’s 8.4 per cent inflation rate would cost even more, bringing the total wage bill to $11 billion, the analysis shows.

Premier Dominic Perrottet is expected to seize on the Treasury analysis to launch a fresh salvo against Labor on Monday, arguing Labor Leader Chris Minns will not be able to pay for his election promises.

It comes after Mr Minns repeatedly promised to abolish the cap on public sector wages if he wins the March election.

NSW Labor Leader Chris Minns’ pledge to scrap the cap on public sector wages could cost up to $11b, treasury analysis has revealed. Picture: Gaye Gerard

The Labor leader has vowed to negotiate directly with workers over pay and conditions in a bid to stop workers getting what he has described a “real wage cut”.

Last year, Mr Minns criticised the wage cap for keeping wages increasing below the rate of inflation.

“We’re now in a situation where for hundreds of thousands of public servants, they’re being told to expect a real wage cut for the work they do on behalf of the state,” he said.

But the NSW Treasury analysis shows that if Labor was to increase public sector wages in line with CPI, it would blow a massive hole in the budget – requiring more borrowing or spending cuts.

Labor’s Treasury spokesman Daniel Mookhey has already ruled out borrowing more, or increasing taxes.

“We will not be increasing the state’s borrowing,” he told Channel 10 earlier this month.

It comes as nurses and teachers went on strike in 2022 calling for better pay. Picture: Jenny Evans

Mr Mookhey also said if his party wins office, there will be “no reckless spending”.

Mr Perrottet yesterday warned that Labor would need to cut spending from projects like the $12.4 billion Sydney Metro West, the $8.4 billion Sydney Metro to Western Sydney Airport line, or the $5.1 billion Sydney Metro South West.

“NSW Labor are putting our record infrastructure pipeline at risk because they have multi-billion budget black hole,” he told the Telegraph.

“NSW Labor will need to cut metros, motorways and our cost of living relief measures to pay for their public sector wage increase.”

“The NSW Labor plan to unleash public sector wages is a recipe for economic disaster that will stall our economy and take NSW backwards,” he said.

It comes after Mr Minns declared he would rely on the $1.5 billion per year in dividends from state owned corporations to pay for new infrastructure.

Treasurer Matt Kean called on Labor to subject its plan of scrapping the public sector wages cap to the independent Parliamentary Budget Office.

“If Labor is true to its word then it will have submitted its policy of CPI wage increases to the parliamentary budget office and it should come clean on how it plans to fund the billions of dollars it will cost,” he said.

“If Labor has backflipped on its promise then it needs to be truthful and explain why.”