Perrottet government: One thing that will ‘destroy the economy’

The Perrottet government has issued an urgent warning against a Labor policy it says will cost taxpayers billions of dollars.

The Perrottet government says a Labor policy will destroy the economy. Picture: NCA NewsWire / Nicholas Eagar

The Perrottet government has come out swinging against a major Labor campaign promise to abolish the public sector wage cap and listen to essential workers’ demands for more pay.

The cap on public sector wages is legislated in NSW to prevent workers from receiving more than a 3.5 per cent increase to their salary each year.

It is one of the major issues that has prompted essential workers – including nurses, midwives, teachers, paramedics and transport workers – to strike in the past year.

“It will destroy the budget, it will destroy the economy and it will destroy the opportunity we’ve created for the next generation for Australians,” NSW Treasurer Matt Kean said.

Treasurer Matt Kean said scrapping the wage cap would destroy the NSW economy. Picture: NCA NewsWire / Simon Bullard.

Premier Dominic Perrottet and Mr Kean displayed a 10-page power point outlining analysis undertaken by NSW Treasury to forecast how wage increases would impact the state budget.

The modelling is based on public sector wages matching inflation forecasts of 8.4 per cent.

It found that increases to public sector wages in line with these rates would cost the state budget a whopping $11bn.

NSW Labor Treasury spokesman Daniel Mookhey issued a statement on Monday morning stating it has never been Labor’s policy to lift wages in line with inflation.

Nurses striking in Sydney in November. Picture: NCA NewsWire / David Swift

He said Labor had proposed a policy to remove the wage cap and collaborate with essential workers to improve the public sector.

“The budget is better off when the government collaborates with its workforce about reform instead of refusing to even listen to their suggestions,” he said.

“I’d rather partner with our essential workers to reform our vital public services than agree to another massive pay rise for iCare executives.”

Mr Mookhey said if elected in the upcoming state election, Labor would sit down with workers to discuss how to deliver better public services.

“All we’re proposing to do is to sit down with our essential workers and talk about how we deliver better public services by generating productivity gains,” he said.

Dominic Perrottet claimed that scrapping the wage cap would put major infrastructure projects at risk. Picture: NCA NewsWire / Gaye Gerard

“We would then look to reinvest some of those savings to make sure they (essential workers) stay.”

When questioned over how the government would continue to attract people to essential sectors including nursing and teaching, Mr Perrottet said he was open to having a “discussion”.

“That has been our policy all our time in government, we govern for everyone,” he said.

Mr Perrottet claimed that scrapping the wage cap would create a “black hole” in the budget and put the state’s major infrastructure pipeline at risk, including the $12.4bn investment in the Sydney Metro West line and the $8.4bn Sydney Metro to Western Sydney airport line.