Flat White

Finally: a long-overdue reality check on public sector pay – but more is needed

15 November 2020

1:13 PM

15 November 2020

1:13 PM

The federal government has announced a new wages policy for the Australian government employees and a review of performance bonuses for Commonwealth senior executives.

Wage increases will now not be allowed to exceed wage rises in the private sector. However public sector wage rises will follow private sector wage growth when it exceeds the current two per cent wages cap.

Assistant Minister to the Prime Minister and Cabinet, Ben Morton, said the scheme “will ensure that wage increases for Commonwealth public sector employees will be in step with their fellow Australians.”

This is a long-overdue commitment.

“These changes will be made as current arrangements by departments and agencies finish and need to be renegotiated. Existing arrangements, agreed with employees in good faith, will run their course, and not be impacted”, Morton said in his media statement.

“By removing the existing 2 per cent cap, the wages of Australian Government employees can grow as private sector wages grow – even when private sector wages growth exceeds 2 per cent, but importantly it won’t be able to exceed it, even when it dips below 2 per cent.

“In the past, the Government setting a cap on Commonwealth public sector wage growth can send the wrong signal to the private sector. Commonwealth wages policy should not be used as an excuse or signal to restrain private sector wages growth. This policy will address that.”

Morton also announced a review of performance bonuses for the Senior Executive Service and equivalent employees in the Commonwealth public sector.

The review will consider existing performance bonus arrangements and inform the development of a consistent principles based approach to the payment of bonuses across all Commonwealth agencies, providing clear guidance to the Boards and Accountable Authorities of Commonwealth entities and companies, ensuring a consistent approach across all Commonwealth agencies.

The Sydney Morning Herald and The Age recently conducted an analysis of 142 government “entities – including departments, statutory authorities and government businesses – that published annual reports for 2019-20 showing a quarter of them paid bonuses to their top executive teams, for a total of more than $12.8 million”

This is likely to be the tip of the iceberg when it comes to bonuses.

It is hard to understand or even justify why employees in the public sector, particularly those who are not running government business enterprises, should receive a bonus for simply doing the job they are employed to do.

The public sector after all is not an income-generating business that has to be self-sustaining such as Australia Post. It simply spends taxpayer funds to carry out their public service obligations.

Morton said “The Government considers it appropriate to carefully consider the payment of bonuses to these employees.”

Yes, well so they should. But it is hard to find any reason why members of the SES or other members of the public sector should be receiving bonuses.

The Minister did not say when the review would be completed, but it will make fascinating reading.

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