McKell Institute report finds Tasmania’s public servants earning almost $5700 less than mainland counterparts

The state’s public servants are earning thousands of dollars less than their mainland counterparts, with the wage gap being described as “dangerous”.

Edward Cavanough, McKell Institute CEO. Picture: Supplied

Tasmanian public servants are earning almost $6000 less per year than their mainland counterparts, with the gap widening by more than 35 per cent over the last decade, damning new analysis has revealed.

On the eve of the 2024-25 state budget, a report from Labor-linked think tank, the McKell Institute, obtained exclusively by the Mercury, has found that the state’s average public sector salaries come in at nearly $5700 less per year (or $109 less per week) than the national average.

The difference has increased by 37 per cent since 2013, McKell Institute chief executive Edward Cavanough said.

The Executive Building on Murray St, Hobart, where many public servants work. Picture: NCA NewsWire / Richard Jupe

Tasmania has also seen the fastest growth in public sector vacancies since 2012, rising by 450 per cent and leading to “dangerous” understaffing of key services, such as hospitals, prisons, schools, and child protection.

“Our research paints a grim picture of the situation facing Tasmanian public sector workers,” Mr Cavanough said.

“Tasmanian public sector wages began to fall in real terms back in September 2017. So this isn’t just about post-Covid inflation – it’s the result of years of wage austerity by the state government.”

The report, entitled Breaking the Cycle: Public Sector Austerity and its Consequences in Tasmania, found that the state’s 34,000 public servants had lost 13 years’ worth of wage growth since 2020, with real wages now sitting below March 2011 levels.

Mr Cavanough said the state’s public sector wages grew at the second-lowest rate of all states between 2022 and 2023 at just 2.99 per cent, which was worsened by the fact that Tasmania’s public sector salaries also started from the second-lowest base in the country.

Economist Saul Eslake recently produced a report detailing the state of Tasmania’s finances.

“We’re seeing a vicious cycle where low wages lead to high vacancy rates, which in turn results in declining service quality. This affects all Tasmanians, not just public sector workers,” he said.

“This report points to the need for the Tasmanian government to implement meaningful wage increases for public sector workers, which will deliver much-needed economic stimulus.”

An independent report into the state’s finances released last month and prepared by economist Saul Eslake predicted that net debt would rise to more than $16bn by the end of the 2034-35 financial year and interest payments would increase to about $730m.

Last year’s state budget contained an “efficiency dividend” of 0.75 per cent on public sector agencies, to be implemented this financial year, with a goal of cutting spending by $300m over four years.