Tele: NSW Budget 2020: Public sector wages to be capped
NSW public servants will have their pay rises cut to save billions of dollars post-pandemic in a move the Treasurer has described as “very generous” but unions have slammed.
NSW public servants will have their pay rises capped at 1.5 per cent in a State Budget move designed to save the taxpayer billions of dollars post-pandemic.
The Daily Telegraph can reveal the government agreed last night in Cabinet to abandon the long term commitment to giving public servants a yearly pay increase of up to 2.5 per cent, and will replace the regulation with a commitment they receive “up to 1.5 per cent”.
It comes after the government this year asked public servants to accept a one-year pay freeze on their wages, and will spark a war with the unions. With the exception of this year, the government has routinely awarded 2.5 per cent.
The arrangement is a key savings measure in the November 17 Budget, where Treasurer Dominic Perrottet will prioritise jobs and the economy with record stimulus, but also map a path back to a strong budget position.
The one-year wage freeze, which the Industrial Relations Commission revised into a 0.3 per cent pay rise, already saved about $3 billion over the forward estimates. Limiting pay rises to just 1.5 per cent will save $1.8 billion over three years, it is understood.
The 1.5 per cent proposal is Treasury’s average inflation estimate, but there is a chance any pay rise could be smaller.
On Tuesday, unions slammed the cap as a move that will “strangle economic recovery.”
“The State Government is poking in the eye the very paramedics, nurses, cleaners, police and teachers who put their health on the line to get us through the pandemic,” Unions NSW Secretary Mark Morey said.
Should pay rises be capped for public servants?
But Treasurer Dominic Perrottet said abandoning a longstanding policy that sees annual pay rises of 2.5 per cent is the right call during the COVID pandemic.
“I think it’s a very generous policy,” he said.
“If you look nationwide where our wages policy sits, I believe a pay rise of up to 1.5 per cent for public sector workers in the middle of an economic crisis, when the private sector is having its wages cut (and) the unemployment rate is seven point two per cent … is fair and balanced.”
Labor Leader Jodi McKay accused the Treasurer of “economic vandalism” by capping public sector wage increases at 1.5 per cent.
Ms McKay labelled the move: “a betrayal of those who have protected us during the bushfires and pandemic”.
“It is clear this has been Dominic Perrottet’s plan all along and he has snuck it out on Melbourne Cup Day and the eve of the American election,” she said.
“Not only is this money that teachers, nurses and cleaners won’t have in their pockets, it’s money that small businesses and communities won’t have to survive.”
Mr Perrottet told the Telegraph on Monday “at a time when private sector wages are flat, when many people are taking a pay cut and losing jobs, it is most appropriate we strike the right balance”.
“Public servants are doing a fantastic job particularly during COVID but we can’t forget public sector wages are paid by private sector wages and we need to have a fair system in place,” he said.
He said politicians should also be tied to the same scheme and “they aren’t special”.
“In a pandemic you’re going to make decisions that won’t be popular. But I’m not here to be popular, I’m here to do what’s right,” he said.
It can also be revealed the government will invest in an army of hundreds of workers to install LED lights in public schools as the first in a series of small-scale infrastructure building projects to drive the economy.
The investment costs $157.8m and will be part of record stimulus in the Budget, also reducing energy bills by millions of dollars each year.
Mr Perrottet said his focus was on keeping as many people in jobs as possible.
He said discipline the state had displayed to maintain a Triple A credit rating was important to carry forward.
He said the rating was “not an end in itself” but “the discipline must be maintained”.
“It can be easy for discipline to deteriorate, that won’t happen here. We will invest for impact and reform for the future,” he said.
SMH: Unions rule out industrial action despite outrage over NSW wage cut
Unions have condemned a move by the NSW government to cut the public sector wage cap to 1.5 per cent but have ruled out industrial action during the coronavirus pandemic.
The state cabinet agreed on Monday night to reduce the cap for public servants ahead of this month’s budget in order to save billions of dollars amid the COVID-19 economic crisis.
Public sector wage rises had, for almost a decade, hovered at 2.5 per cent, though that had already been temporarily cut to just 0.3 per cent for the next 12 months.
Treasurer Dominic Perrottet defended the state government’s budgetary decision to cap public sector wage increases at 1.5 per for the next three financial years as a “generous policy”.
Mr Perrottet said the new cap struck a “fair balance” as the unemployment rate pushed past 7 per cent and private sector wages stagnated.
He said the new wages policy would allow the government to keep as many people in work as possible.
“I think if you look at our wages policy here in NSW, compared to anywhere else in the country, it’s completely fair and reasonable and very generous in the circumstances,” Mr Perrottet said on Tuesday morning.
“I think it’s a very generous policy… We don’t want to have a two-tiered society here, we’re all in this together.”
But the government’s decision was described as “economic idiocy” by Public Sector Union general secretary Stewart Little, who said Mr Perrottet was showing contempt for workers.
“The most powerful economic stimulus the Treasurer has is NSW’s own workforce. They spend what they earn directly back into their communities,” Mr Little said.
“The Treasurer has absolutely disrespected NSW public sector workers who stopped COVID-19 in its tracks.”
Unions NSW secretary Mark Morey said he was outraged by the government’s decision, but ruled out industrial action during the pandemic.
“In the current circumstances we have an ongoing commitment every public sector worker has had to make to keeping this economy open, [that] it ticks over and the people of NSW are safe,” Mr Morey said.
“We are not going to jeopardise that.”
Opposition Leader Jodi McKay said Mr Perrottet’s decision was an act of economic vandalism and a betrayal of public sector workers.
“The Treasurer is picking the pockets of workers to pay for his economic mismanagement,” Ms McKay said.
Mr Perrottet said the cap was based off Treasury forecasts of inflation over the forward estimates, but added he wanted to get wages back to 2.5 per cent “as quickly as possible”.
Earlier this year, the NSW government attempted to implement a 12-month public sector wage freeze to save about $3 billion during the coronavirus crisis.
That was blocked by the opposition in the state’s upper house, with the government then referring the matter to the NSW Industrial Relations Commission.
The commission ruled that wages should be capped at 0.3 per cent for 12 months, ending nine years of 2.5 per cent pay increases.
The decision by the industrial umpire also emboldened the government to walk back from the 2.5 per cent cap after it ruled public sector workers did not have “entitlement to a particular wage increase”.
7 News: NSW public servants hit with reduced annual pay rise
Unions and the NSW opposition have condemned a move by the government to cap public servants’ pay rises to 1.5 per cent in the state budget.
In a bid to save billions in the November 17 budget, the NSW cabinet decided on Monday night to ditch its commitment to give public servants an annual pay rise of up to 2.5 per cent, and instead agreed they would get up to 1.5 per cent, The Daily Telegraph reported on Tuesday.
At the beginning of the pandemic in March, the government asked public sector workers to accept a 12-month pay freeze, but the Industrial Relations Commission recently ruled there would instead be a 0.3 per cent pay rise.
NSW Treasurer Dominic Perrottet told the Telegraph “at a time when private sector wages are flat, when many people are taking a pay cut and losing jobs, it is most appropriate we strike the right balance”.
Unions NSW Secretary Mark Morey said the government move would starve the state of economic growth and lock in a low-wage, low-growth future.
The NSW government was the nation’s largest employer, responsible for one-in-ten jobs in the state, he said.
“If it won’t invest in wage rises how will we ever stoke the economic demand needed to get this state moving,” he said.
“The state government is poking in the eye the very paramedics, nurses, cleaners, police and teachers who put their health on the line to get us through the pandemic. These people sacrificed their own well-being for the public, but now they are being told their contribution is not worthwhile.”
NSW Labor leader Jodi McKay described the move as a “budget betrayal” and “a low act”.
“Once again workers are being ripped off by a government that’s sending them the bill for its economic mismanagement, slashing their promised pay rise by one per cent,” she tweeted.
“This government is plagued by cost blowouts, but is robbing the heroes of the pandemic of hard-earned cash they would have spent in local communities,” she said.
The best way to stimulate the economy was to encourage people to spend, not tighten their belts, she said.
The Public Service Association said the treasurer had “absolutely disrespected NSW public sector workers who stopped COVID-19 in its tracks”.
PSA General Secretary Stewart Little said it was NSW Health contact tracers who worked round the clock to stop COVID-19 spreading, prison officers kept it out of jails and school support staff made sure children got an education from home.
“The Treasurer has shown contempt to NSW public sector workers, but he’s also showing economic idiocy,” he said.
AAP: Public sector cap ‘condemns’ NSW economy
Unions say a NSW government cap on public servants’ annual pay rises will blunt their spending and delay the economy’s recovery from recession.
With the state budget two weeks away, the NSW cabinet on Monday ditched its commitment to give public servants an annual pay rise of up to 2.5 per cent and instead agreed they would get up to 1.5 per cent.
The government argued it needed to strike “the right balance” amid the COVID-19 pandemic as private-sector employees take pay cuts or lose their jobs.
“We think that’s fair and reasonable,” Treasurer Dominic Perrottet said.
But Unions NSW Secretary Mark Morey said the government was “swimming against the tide” on stimulating economic growth, given low interest rates and federal government tax cuts.
The state government was responsible for one in ten NSW jobs, he said.
“What we know is that if you cut the wages and conditions of public-sector workers, you are condemning the economy more broadly to lower growth and also baking in a wage freeze for all workers in the economy,” Mr Morey told reporters on Tuesday.
“This is a small but significant stimulus measure which puts money in the pockets of average workers… who will spend it in their communities and will contribute to growing the economy.”
Mr Morey said NSW unions would stick to their promise to avoid industrial action amid the pandemic. However, they would now begin a “three-year battle” before the 2023 state election to change public sentiment on the issue.
The move to lower public sector wage rises comes after the NSW government asked the same workers in May to accept a 12-month pay freeze, which would be reinvested in job-creating projects.
Unions and the NSW Labor opposition fought that measure, and the Industrial Relations Commission recently deemed there would be a 0.3 per cent pay rise.
Opposition Leader Jodi McKay said the treasurer was guilty of “terrible deception”, adding that public-sector wages influenced private-sector demand.
“He would argue that’s a stimulus measure but it’s not. He’s done this under the cover of COVID and the recession and this is his longer-term plan … he’s had every intention of doing this from the beginning,” Ms McKay said.
“We need a strong public sector to get us through this difficult time but we also need a public sector who knows that they are valued.
“Make no mistake, this is actually a pay cut.”
The Public Service Association said in a statement the treasurer had “absolutely disrespected NSW public sector workers who stopped COVID-19 in its tracks”.
The government will outline its plan to limit public-sector wage increases in its November 17 budget. The state’s unemployment rate is currently 7.2 per cent.
ABC: NSW Government slashes 2.5 per cent pay rise for public servants due to coronavirus pandemic
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