Victorian Treasurer Tim Pallas announced the Victorians public sector wages bill is forecast to spring over 16 percent of the forward estimates, increasing by $2 Billion this financial year, with estimates of increases to $33.1 billion by 2023.
Pallas also announced the government will withdraw just under $2 billion from the state public sector over the next four years, including a further $1.77 billion in new ‘whole of government efficiencies’. Annual wage growth in Victoria is predicted to increase by approximately 3 percent next financial year, higher than the national growth rate of 2.75 percent in the federal budget. The national and Victorian annual wage growth rates are predicted to increase to 3.25 percent and roughly 3.5 percent in the subsequent two years.
Pallas’ further remarks upon the cuts explaining that they would be successfully achieved without any job reductions and any redundancies would be considered as a ‘last resort’. An additional $200 million will be saved through the cuts to spending on consultancies and labour hire, as flagged before last year’s state election. The new enterprise agreements off the back of these budget cuts are due to be renegotiated with paramedics, police, and roughly 40,000 public sector servants potentially forcing the Andrews government to face numerous industrial battles with unions.
Repercussions of the cuts have yielded economic forecasts and indicators towards the underlying balance for the nominal gross state product to increase from $451 billion to Wages: Tipped $548.5 billion, as well as an increase in the unemployment rate from 4.5 to 5.5 percent by the year 2022-23, per Victorian budget papers. The state budget papers further indicated the government employee expenses, including superannuation, were forecast to grow from $26.52 billion last year to $28.57 billion in July. Employee expenses are forecast to grow a further $29.7 billion by July next year to $31.2 billion a year later, and a subsequent $33.1 billion by July 2023. 80 Percent of this year’s public sector wage forecasts are higher than predicted last year, with the wages bill for the 2020-21 financial year expected to increase to $500 million from 12 months ago. CPSU Victorian secretary Karen Batt said the Treasury wage forecasts “Over the forward years augurs well for bargaining next year and beyond”. Last year’s state budget saw the public sector wages bill increase 11.2 percent and the government deviating from previous forecasts by $1.5 billion to finance the pay rises and recruitment of staff ahead of the election. Treasury commented Victorian wages growth had been “below trend” over the current economic cycle, consistent with national and international movements.
Government infrastructure investment has increased just under $8 billion from the financial year 2015 per the Victorian budget papers. Treasury has said the growth reflected increases in the public sector workforce, hospitals, and schools inclusive along with pay rises flowing from renegotiations within enterprise agreements. In opposition Treasury spokeswoman, Louise Staley said public sector wages had “blown out by 42 percent under the Andrews government but critically with no real increase in frontline services”.
Despite unions accepting the government assurance that public sector spending cuts would not result in redundancies, the Greens Treasury spokesman Sam Hibbins said the budget was “built on the back of cuts to public sector jobs and wages’. He further mentioned that nearly $2 billion will be taken away from the public sector, and not being taken away from the large bank profits or property developers, the labor government has gone after public sector jobs and wages. Victorian Chamber of commerce and industry chief executive Mark Stone called for recurrent government spending to be kept in check. “Business wants to see the government commit to keeping public sector wage growth in line with the private sector.
By Alex Shambly
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