Decades of flawed pay policy have left the Commonwealth public service with a dysfunctional remuneration system – and the latest round of enterprise bargaining looks unlikely to fix it.
For decades remuneration policy in the Commonwealth public service has been a wasteland of bad habits, willed ignorance and hypocrisy. A rational structure of pay and conditions of employment is the key to personnel management – that doesn’t exist in the Commonwealth’s administration. Happily a lot of people are responsible so the blame can be widely shared.
The rot began to set in when, during the high inflation of the 1970s, pay increases were linked, roughly speaking, to movements in the Consumer Price Index.
This morphed into the critically important Wage Accords under the Hawke-Keating governments that more or less mandated similar pay adjustments for all unless for certain occupations or groups that would be anomalous.
Then came enterprise bargaining in which, usually in mysterious ways, improvements in remuneration were linked to productivity improvements at the firm level.
As problematic as enterprise based productivity bargaining is in general, it was especially so for public sector organisations because for almost all of them it’s not possible to measure their productivity. Fair dinkum productivity bargaining can’t be made to work in the Department of the Treasury, for example.
To rub salt into the wound, in the Commonwealth public service, individual departments and agencies were defined as “the enterprise”, so off they all went negotiating their own pay and conditions where the inevitable temptation to bid one another up was likely succumbed to.
The Albanese government has, in a half-hearted way, tried to patch things up but with little success because the policy base it has used is hopelessly flawed.
To its credit, the Public Service Commission has just published the results of a public service remuneration survey for 2025. It frankly exposes a scandalous shambles of overlapping salary ranges in which, for example:
- The maximum of an Administrative Service Officer (ASO) 6 at $314,857 exceeds by $68,205 the minimum of a Senior Executive Service (SES) 2, a rank four levels up the hierarchy.
- The salary range for an Executive Level 1 stretches from $115,442 to $430,624, possibly a world record.
- An Executive Level 2 officer received a base salary of $667,231 plus bonuses of $705,854, which put that lucky individual around $700k above the Secretary of the Department of the Prime Minister and Cabinet.
- An SES 3 was fortunate enough to have snagged a base salary plus bonuses of $1,761,136 – around three times the annual take wait till i hve looked at al the of the Prime Minister.
The pay and classification structures in the Senior Executive Service, where individual agreements are the order of the day, are too distressing to describe for sensitive readers of a publication like P&I.
And so industrial relations in the public service have crumbled. It’s what can happen when setting remuneration is largely internalised and, as an act of policy, divorced from prevailing rates in the outside labour market.
The internal consequences are severe.
What integrity remains in a classification structure when junior jobs are valued in cash terms $100k and more than those several levels more senior? Answer: Next to none.
What damage is done to a promotion system when elevation from one level to another involves, at least in theory, a decrease in pay? Immense.
How easy is it to move people between positions at level when to do so implies a reduction in remuneration? Need one ask?
Does the new round of enterprise bargaining for the Commonwealth public service now kicking off give hope of any significant improvement in the present dysfunctional dogs’ breakfast? Well, no, because the government policy on which it is based remains vague and fundamentally unsound.
It talks a “model employer”, a “unified” organisation, “efficiency”, “mobility, attraction and retention”, “fairness and equity”, “competitive employee value proposition” and so on. When put beside the Public Service Commission’s remuneration survey, these words shrivel and die on the page.
Current policies are a re-run of those which have delivered a public service industrial relations landscape that is a model of disunity, inequity and inefficiency and in which it looks for all the world as if barriers to staff mobility are there by design.
As in the last round of negotiations, there’s talk about reducing “fragmentation” in pay but the policy provides no rational basis upon which to do so. That can best be done by giving primacy to adjusting rates on the basis of comparisons with rates paid for comparable work by other employers on an occupational basis, especially, but not only, in other public services.
But this would open up the possibility of negotiating different pay increases for different occupational groups. It’s hard work and there’s no evident stomach or desire for it on the part of the government or the unions. They are happier with a little arm-wrestling and posturing, looking at irrelevancies like movements in wage and price indexes and then plucking a figure from the ether that’s justified by nothing and applied uniformly to all regardless. Look, let’s make it 4% a year right now and save all the pointless and expensive fooling around.
Thus, in terms market competitiveness and the ability to fairly recruit and retain staff, the bargaining is likely to under-shoot for some and over-shoot for others. Where it under-shoots and the public service has problems recruiting various kinds of technologists, AI experts, project managers and whoever, the deficits will be made up by using, in arrangements of dubious legality and high price, outside contractors and consultants at to do public service work. Meanwhile, those whose pay increases over-shoot the market, can count their lucky stars, no matter the unfairness of that for their lower paid occupational counterparts in the general labour market whose taxes are, as it were, supporting their relative disadvantage.
These are the gloomy but realistic prospects. No wonder Angus Taylor is so crabby about the public service.
Paddy Gourley is a superannuated Commonwealth public servant.