NSW Labor’s repeal of public sector pay cap creates headache for Minns government

It was a promise that helped the Labor Party get elected. But the removal of the public sector pay cap has created a headache for the Minns government – and by extension for Sydneysiders who rely on trains.

Chris Minns narrowly avoided a shutdown of the city’s train services after negotiating a two-week reprieve from industrial action during a period of “intensive negotiations”.

However, the prime minister admits he may not reach a deal in the next two weeks, saying “detailed work” remains to be done.

Given that the government has set the bar high for pay rises in advance, it is not surprising that the Rail, Tram and Bus Union (RTBU) is refusing to accept the government’s offer of an 11 per cent pay rise over three years (including super).

He reached an agreement with the Health Services Union (HSU) that would see workers such as hospital cleaners receive a pay rise of up to 8.5 percent for one year.

A “once-in-a-generation” agreement was then struck to immediately raise public school teachers’ pay to 12 percent.

Paramedics saw a record increase, up 29 percent in four years.

Police were offered a 39 per cent pay rise over the same time period, although the government says this was fully offset by savings within the force.

Asked about Labor’s handling of successive industrial disputes, Mr Minns blamed the former coalition government.

“Members opposite should not forget that during its previous term in office, the then government set the NSW wage cap at 2.5 per cent,” he told Parliament this week.

But the fact is that labor policy was once about limiting public sector wage growth.

Michael Costa of the Labor Party served as Treasurer from 2006 to 2008. When he was in power, public sector wage growth was capped at 2.5 percent – plus any productivity gains.

Mr Costa told the ABC the O’Farrell government passed the Labor Party policy bill in 2011.

He said the Minns government’s labor relations problems were rooted in its decision to do away with the base pay rise cap.

“While we did not support the (O’Farrell) government’s legislation because it was not necessary, it was a rational basis for fair pay,” he said.

It should be noted that inflation was lower when Mr Costa was Treasurer, fluctuating between 1.9 and 5 per cent.

When Labor was elected last March, inflation was 7 percent. Now this figure has fallen to 2.8%.

A former treasurer said Labour’s pre-election pledge to substantially increase teachers’ pay, while understandable, was a “tactical mistake”.

“This government inherited a dire financial position that the Coalition tried to mask through creative budgeting. It is not able to provide such an increase in wages, but there are expectations.”

The government has also reached an impasse with nurses and midwives, who have walked off the job several times in recent months as they fight for a 15 percent pay rise.

The Prime Minister is adamant that there is no more money for railway workers and that any additional payments must be made up from savings.

But with the RTBU taking a hardline approach, the government will have to make sacrifices to avert the threat of strikes.

“Transport unions will tell you they are tough. They are very tough negotiators,” Mr. Minns said on Thursday.

“They’ve been doing this for a very long time. They know what they’re doing.”

As the busy build-up to Advent approaches, Sydney commuters are hoping the Premier also knows what he’s doing to keep trains running.