State Budget: Unions slam public sector pay slowdown

Victoria’s public sector workers will get pay rises of just 1.5 per cent a year in a move Treasurer Tim Pallas has defended as being for the “overall wellbeing of the community”.

Public sector workers have been told to tighten their belts with pay rises of just 1.5 per cent a year as the Andrews government tries to claw back money for its battered budget.

Treasurer Tim Pallas made the announcement on Saturday while pledging to cut bureaucratic costs by $3.6bn over four years and introduce new taxes and fees worth $2.7bn.

With just four days to go until he unveils his seventh state budget, Mr Pallas was slammed for the new slash-and-grab policies, but he defended the moves as necessary for the “overall wellbeing of the community”.

Community and Public Sector Union boss Karen Batt said the new wages policy was “shortsighted”.

“This is counter to Reserve Bank governor’s statements and won’t help the economy grow if people don’t have money to spend,” she said.

The government is already on a collision course over a new workplace deal for teachers, who are calling for a 7 per cent a year pay rise due to exhaustion and workloads.

Mental health nurses are also calling for new deals above wages policy due to demand.

Mr Pallas said public service cuts would largely be to “back office” staff, while consultancy use would be slashed and some units in departments merged. He said it was needed to keep spending on services and infrastructure.

“This is a focus on things Victorians rate as being important,” he said.

“This is about fiscal repair. We will see a moderation in growth of the public service going forward.”

Treasurer Tim Pallas said the cuts would largely be to ‘back office’ staff. Picture: Sarah Matray

Opposition Leader Michael O’Brien said Victorians were copping it in the neck because the government had mismanaged the economy and major projects, and any cuts to frontline services would be disastrous when some were already struggling to meet demand.

He said land tax increases, which will add $5000 to properties worth $1.8m that are “not mansions” would lead to rent increases that could cripple more small businesses at a time shops in the CBD and high streets were being shuttered.

“When this economy is on its knees the government is taking a baseball bat to it with new taxes and charges,” he said.

The Housing Industry Association and other property groups were stunned by the tax rises announced on Saturday, including extra stamp duty worth $20,000 more on $2m homes.

“New taxes like these are passed on in higher land prices for all, and stamp duty inhibits people from selling properties to allow for new homes to be built – it has direct impact on new housing affordability,” executive director Fiona Nield said.

“It is unfair to be taxing land owners further on property when Victoria already has the highest stamp duty rates in the country.”

Real Estate Institute of Victoria president Leah Calnan warned that the industry was “considering its position” over the changes to property taxes and warned federal Labor had already learned a tough lesson about adverse policy moves in the sector.