$3b saved as NSW public service pay frozen

The NSW government expects to save $3 billion after freezing pay increases for a year, offering in return job guarantees to most of the state's 410,000-strong public sector.

The pause follows a six-month freeze on Commonwealth public sector, ministerial and parliamentary wage increases. The Queensland Labor government is also pursuing a similar 12-month freeze.

The Victorian Labor government continues to hold out on any public sector pay freeze, with Treasurer Tim Pallas arguing it would only put extra stress on families and further strain on the economy.

South Australia has frozen salary increases for agency heads, ministers and their staff.

The wage freezes are the first of what is likely to be a suite of public sector austerity measures as governments face massive funding pressures to support their economies amid an expected collapse in tax and fee income.

These are likely to result in many programs being cut or trimmed in upcoming budgets as treasuries look to reduce public spending in non job-creating areas.

The NSW wages policy will be implemented by regulation and will apply prospectively. For workers with agreements already struck, the pay rise pause will apply for the first 12 months of their next agreement.

Premier Gladys Berejiklian said that while the decision was difficult, it was the fairest one for the people of NSW.

"Whilst we are recovering from the health consequences of the pandemic, we have yet to come to terms with the economic shock. Job security is essential on our path to recovery," Ms Berejiklian said.

"The only way NSW will come out of this crisis in a strong position is if we all make sacrifices, and that's what we're asking our own workforce to do because we are all in this together."

She said current pay levels would be retained, "with an unprecedented guarantee of no forced redundancies for all workers who are not senior executives across the NSW public sector for a year".

"This pause will save NSW taxpayers around $3 billion."

There are more than 110 enterprise agreements covering a vast array of employees including 120,000 health workers, 105,000 teachers and administrators and 50,000 in policing, public safety and justice.

Public sector unions condemned the decision, saying there had been no consultation and followed several months of working closely with agencies in response to COVID-19.

Freeze 'an insult'

ACTU president Michele O'Neil said the wage freeze was an insult to thousands of essential workers who had worked to get the state through the coronavirus crisis.

"That decision really does fly in the face of the very amazing work the public sector in all states has done. To think that health workers, nurses, firefighters, police, ambos and thousands of other workers are being thanked by getting a pay freeze, [this] is a terrible decision by the NSW Premier," Ms O'Neil said.

NSW Labor leader Jodie McKay said the opposition would not support the pay freeze, describing it as "a kick in the guts and slap in the face to public servants".

Ms McKay said "with conversations we have had with the [upper house] crossbench we will stop this". Greens MP David Shoebridge said the Greens would not support the freeze.

Ms Berejiklian said it was the first change to the government's public sector wages policy in nine years.

"Over that time, the NSW public sector wage has increased by just under a cumulative 25 per cent – an average annual increase of 2.6 per cent."

Treasurer Dominic Perrottet said the people of NSW were relying on the government to make job retention and creation a priority.

"Nearly 90 per cent of NSW workers are in the private sector, and many of them have already suffered forced stand-downs, leave without pay, significant pay cuts, job uncertainty or losing their livelihoods altogether. The government needs its focus squarely on rebuilding the economy and regenerating jobs.

"Pausing pay rises to save and create jobs is the right thing to do, and I think most people would agree on that – especially the people whose pay has actually gone backwards, or whose jobs are gone."

The pausing of pay rises will be applied to all positions across the government, including those within state-owned corporations, departmental secretaries and executives, and follows the government's decision to reject a pay rise for Liberal and Nationals MPs.