Public sector unions fuel inflation
The stranglehold of public sector unions over the Palaszczuk government in Queensland, and therefore the state’s taxpayers, is evident in recent wage rises. Deals such as that secured by the Queensland Teachers Union, which will make the state’s teachers and principals the highest-paid in Australia, eclipse the claims being pursued nationally by metal workers and other unions whose members mainly work in the private sector. In addition to an 11 per cent pay rise across three years, backdated to July 1 with a 4 per cent rise for the current financial year, the teachers have won a 3 per cent cost-of-living bonus for each year if inflation in Brisbane outstrips the pay rise. Under the agreement, lead teachers would get a $5001 pay rise plus an inflation bonus of $3900, boosting their pay to $133,926 this year – the highest teacher salary in Australia. With the inflation bonus, beginning teachers would receive $78,783 a year, better than the starting wage for many newly graduated doctors, lawyers or engineers. Teachers who move to regional or remote schools will receive extra bonuses.
Queensland nurses have won a similar boost, with an increase in Sunday penalty rates from 175 per cent to 200 per cent, which will increase pay for an eight-hour Sunday shift by about $100 or more. From April, nurses’ base rate pay rates have ranged from $61,454 (without the inflation bonus) for the most junior nurses to $233,241 for senior executives.
The nation faces a serious shortage of teachers and nurses. The size of the latest pay rises, however, will put significant pressure on public sector payrolls in other fields, such as police, ambulance officers, firefighters, hospital workers, paramedics and administrators. As The Australian reported recently, the debt-laden Queensland government faces a yearly hit of hundreds of millions of dollars to its budget bottom line as this year’s public sector wage negotiations result in increases well beyond the 2.5 per cent pay rises seen in recent years. The fine print of the June budget papers noted “a one-percentage-point increase in wage rates above (the 2.5 per cent) expectation would increase employee expenses by around $300m per annum”. The size of the public service has increased by more than 40,000 full-time equivalent workers, or 20 per cent, since 2014-15. Many, but by no means all, are frontline staff.
The wage increases also will feed public sector wage pressures in other states and the private sector, in which many small-business owners would be unable to afford similar increases for their staff or for themselves. Hefty public sector wage rises in Queensland also will fuel inflation and add to the risk of wages breakouts. Reserve Bank governor Philip Lowe warned last month that across-the-board wage rises of 5 per cent or more would make it harder to tame inflation without sinking the economy. “In the 1970s wages growth responded mechanically to the higher inflation rate,” Dr Lowe said. “I’m hopeful we can avoid that, but it’s an important issue. (So) 3.5 per cent (wage growth) is better than 2, and it’s better than 5.”