M2007-12 NSW Public Sector Wages Policy 2007

Ministers are requested to bring this Memorandum to the attention of all public sector organisations and services coming within or associated with their portfolios, including State Owned Corporations.

The NSW Public Sector Wages Policy 2007 is attached to this Memorandum. The policy provides a process to ensure that all NSW public sector organisations meet the objectives of section 13 of the Fiscal Responsibility Act (NSW) 2005. It is intended to maintain real wages by allowing for increases of 2.5 per cent per annum. Additional increases are available where employee-related cost savings are achieved. 

Since wage agreements are set in a forward looking manner, forecasts for inflation need to be utilised to maintain the real value of wages.  The Reserve Bank of Australia (RBA) has an agreement with the Federal Government to maintain CPI increases within a range of 2-3 per cent.  That is, on average, the CPI will increase by 2.5 per cent.  While increases in the CPI may exceed, or be less than 2.5 per cent in the short-term, the RBA actively pursues monetary policy to achieve the target range.  Therefore, in multi-year wage agreements, a 2.5 per cent Sydney CPI inflation rate is the best available forecast.  This is also NSW Treasury's medium-term inflation parameter as published in the Budget papers.

The Policy applies to Public Service Departments, the Government Service, independent statutory bodies, any other public sector service within the meaning of the Public Sector Employment and Management Act 2002 and State Owned Corporations. 

The Policy applies to all negotiations, variations, claims or offers by management that impact on wages, salaries and employment conditions (e.g. increases in wages, allowances, superannuation, etc), whether or not they are formalised in an award, agreement or any other arrangement.  Local agreements made pursuant to clause 10 of the Crown Employees (Public Service Conditions of Employment) Reviewed Award 2006 must also comply with these arrangements.

The Public Sector Workforce Office (PSWO) and NSW Treasury will work with agencies to develop negotiating parameters, including reforms and cost savings.  All offers to increase wages and/or conditions by more than 2.5% per annum and the associated reforms and savings must be approved by the Budget Committee before an offer is made.  Further information is available from your agency's PSWO client contact officer or Treasury Analyst.

Morris Iemma MP
Premier

Attachments: M2007-12 Wages Policy Schedule 1 and M2007-12 Wages and Savings Table Schedule 2