Abolition of NSW public service salary cap now looks a hollow promise

Premier Chris Minns’ election promise to scrap the public service wage cap has come back to bite him, with unions rejecting his government’s new pay offer as little more than a variation on the Coalition’s controversial wages cap.

Salary negotiations stalled with NSW teachers last week after the government withdrew a deal proposing one-year pay rises and instead tendered a new four-year agreement which, in part, would include a 2.5 per cent cap on wages from the second year.

Now the state’s top union leader, Unions NSW secretary Mark Morey, has gone public, telling the Herald’s Michael McGowan the offer looked like a reboot of the Coalition’s salary cap and warned the government would lose support among people who voted Labor.

“It’s not just about teachers, it’s all the workers who stood out on polling booths or voted for Labor because they wanted change,” Morey said. “It’s an issue of trust, and being brave enough to lead and stand up for the mandate that they were elected on.”

While it is not unprecedented for unions to take a swipe at Labor, what is extraordinary is that the attack came just over four months after Minns won office. And the condemnation was not the usual firebrand stuff.

Health Services Union secretary Gerard Hayes has been vocal in his criticism of the pace of wage reform and the NSW Teachers Federation president Angelo Gavrielatos accused the government of an “act of betrayal” following last week’s breakdown in pay negotiations. But, this latest salvo, coming from the usually measured Morey, sends a fairly calculated message that the government ignores at its own peril.

Removing the cap was a key campaign promise by Minns in opposition, and the government has made much of its one-year 4 per cent offer to public sector unions. During the campaign, Labor evoked essential services workers who had endured huge stresses during the pandemic – teachers, nurses, paramedics and police – as worthy recipients of pay rises. In fact, some 400,000 state employees will be eligible for salary increases. Marking his first 100 days in office in late June, Minns announced that the public sector wage cap will be scrapped in September, but NSW is really none the wiser as to how he intends to pay the estimated $618 million cost.

Now the impasse between the government and the teachers has reminded all how public sector wages were always going to be a problem for Minns. It was he who inflated union expectations before the election, effectively suggesting pay hikes should be more aligned to inflation. But he never said how he proposed to pay for them in a tough budget environment. He was speaking out of both sides of his mouth.