Mooted public service wage freeze would cripple NSW economy

The Public Service Association says today’s Sun-Herald report of a possible wage freeze for New South Wales’ public servants would cripple the state’s economy, after a horror summer.

Stewart Little, General Secretary of the PSA, said as the country’s biggest employer, public sector wages set the standard for broader wage growth because of their spillover effect into the private sector.

“The NSW government is the biggest employer in the country – it’s responsible for one in 10 jobs across the state. After a summer of catastrophic bushfires and floods, and now the looming impact of COVID-19, Premier Berejikilian has the power to breathe life into the state’s economy and help insulate families from further economic shocks.

“As it is NSW public sector wages are already capped at 2.5 per cent, which the Reserve Bank Governor has repeatedly said is well below the needed wage growth of 3.5 per cent to stimulate growth. In the 2019 budget, we saw devastating cuts to public services across the state – this mooted wage freeze would be like trying to get blood from a stone, there is simply nothing left to squeeze out.”

In 2019, as well as wage growth capped at 2.5 per cent, the NSW government cut departmental budgets. This included:
  • the Office of the NSW Rural Fire Service cut by 4.8 per cent ($26.7 million) 
  • Fire and Rescue NSW cut by 1.6 per cent ($12.9 million)
  • Judicial Commission cut by 18 per cent ($1.5 million) 
  • Legal Aid cut by 2.6 per cent ($9.7 million)
  • NSW Education Standards Authority cut by 15.3 per cent ($26.5 million) 
  • Environmental Trust cut by 26 per cent* ($20 million)
  • Service NSW cut by 8.3 per cent ($44.5 million)
  • ICAC cut by 10.3 per cent ($2.9 million)
  • Crown Finance Entity cut by 19.4 per cent ($2.358 billion)
“A freeze in wages will put even more pressure on workers and their families, at a time when we need more money flowing through the economy. The impact of the bushfires and floods has already sent deep shocks through our regions in particular, now COVID-19 is causing further pain.

“I believe we can find a way to work with the Premier and Treasurer to help bolster the economy, but suppressing wages is not the way.”

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