The Australian Public Service Commissioner , Steve Sedgwick, has laid down the gauntlet on pay rises in the APS, warning that without offsetting productivity gains, any pay rise would be unaffordable.
Appearing before the Finance and Public Administration Legislation Committee, Mr Sedgwick said that was the "important message that everybody needs to get".
Mr Sedgwick was being questioned by the Chairman of the Committee, Senator Cory Bernardi, about whether the previous Government's increased efficiency dividend meant that the scope for non-staff cost cuts was limited.
The Commissioner said: "It is certainly true that the environment that we face in bargaining this time around is the toughest that I have seen for quite some time.
"The capacity of the Budget under existing rules to supplement pay rises is negligible; therefore, Agencies and the bargaining parties will face quite a large requirement to find genuine productivity offsets to fund pay rises," he said.
The committee was told that modelling showed that a 1 per cent annual pay increase for PS staff would cost about $157 million a year.
The Community and Public Sector Union (CPSU) has demanded a 12 per cent pay rise over three years.
The committee heard that successive governments had demanded that Agencies fund pay rises from within existing budgets and they must be offset by productivity gains.
It heard that if productivity offsets couldn't be found, Agencies would need to reduce staff. Estimates showed that funding a $157 million bill would equate to cutting about 1,542 APS6 staff.
Meeting the CPSU's demand for a 12 per cent rise could cost about 18,500 jobs, the committee heard.
When asked by Mr Bernardi whether the CPSU claim had put thousands of jobs at risk, the Commissioner said: "We have to be very cautious to ensure that expectations are appropriately managed.
"Unless we work very hard at it, it will be difficult to avoid job cuts," he said.
"In circumstances in which productivity improvements are not on the table, we cannot fund wage rises."
When asked by Mr Bernardi about offsets that might theoretically be available to cover the costs of a pay rise, Mr Sedgwick said rostering and changes in working hours were two options.
"I am an optimist who believes that going into a bargaining framework looking for ways to find productivity offsets is likely to be far more productive than going into an arrangement saying that they are not available to us," he said.
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