Unions livid with Labor over public servant pay offer

The offer includes a 3.2 per cent rise from March 2027, followed by three per cent the year following and 2.8 per cent in 2029. 

It's above projected inflation of 2.8 per cent in 2026/27 and 2.4 per cent in 2027/28, according to the latest forecasts by the Reserve Bank of Australia.

But the offer failed to meet claims of a five per cent rise annually, the Community and Public Sector Union national secretary Rebecca Fawcett said. 

"CPSU members have been clear from the beginning of these negotiations: they want to see pay that keeps up with the cost of living, which recognises the essential work they do every day," she said. 

The union, which is the largest for the public service, wanted a 15 per cent pay increase and was willing to forgo some conditions for it, which was ruled out by the government as being unrealistic. 

Australian Services Union branch secretary Jeff Lapidos, who represents Australian Taxation Office workers, said employees would overwhelmingly vote to reject the pay offer.

"This is a pay offer that holds ATO employees in contempt," he told AAP.

Mr Lapidos said the union would ask the Fair Work Commission to determine the pay rise if the government did not come back with a "realistic" pay offer, but ruled out taking industrial action.

The proposal includes realigning salary advancement increments across the public service so that, when an eligible employee progresses to the next salary point in their range, that increase will be at least three per cent on top of the annual pay rises. 

Chief negotiator Alison Stott, who has been meeting with union representatives since July, said the offer would increase pay consistency across the public service. 

"This pay is part of an overall package of conditions. These are preliminary positions within this package, not agreed outcomes," she said. 

"Bargaining is continuing and we will keep working with unions and individual."

Finance Minister Katy Gallagher said the offer would deliver fairer and more consistent pay and conditions across the public service.

"In a constrained fiscal environment, this is a fair and affordable offer that provides pay rises totalling nine per cent over three years, with additional increases of up to 1.5 per cent for some employees in lower paying agencies," she said in a statement.

Agencies will have to finance the pay rise from within their existing budgets, which are indexed to inflation each year.