Government(s) are the nations biggest employers and play a direct role setting pay for their public workforce but continue taking a cautious approach with caps and limits on outcomes.  Under current rules, annual wage increases under the former Morrison government for Commonwealth public servants “could no longer exceed wage rises in the private sector”, and “agencies may negotiate a lower outcome” than private sector wage increases although the new Federal Labor government has made solid commitments on re-establishing genuine bargaining and real wage rises, while tackling insecure work, and promoting better workplace relations to change this.

In each state, governments apply wage caps.

The NSW Government announced recently it will raise its 2.5% wage ceiling to 3% next financial year and up to 3.5% in 2023-24, in the
face of incomes falling behind consumer price inflation and scheduled industrial action.  The revised caps would apply to deals struck after July 1 and would apply for the next two years.

In West Australia, under the state’s public sector wages policy, workers were offered a 2.5 per cent pay rise per year, plus either an additional 0.25 per cent each year or a $1,000 sign-on bonus.  But unions say that is not enough, given annual inflation in WA hit 7.6 percent in the March quarter.

In Victoria, the wage cap was 2% when we were bargaining across the VPS in 2020 but has dropped to 1.5% since January and is woefully
inadequate.  A submission made by our State Government to the recent minimum wage adjustment case itself gives ammunition for an argument
about remedial measures being needed to counter the rising costs and inflationary impacts on the workforce while current agreements still have two years to run.  The retention payment of $3000 to health care workers was an immediate response from the Victorian Government and CPSU
has argued for a wider catchment to receive similar assistance.  CPSU has stressed that this is no time for the Government to play favorites as everyone contributed to pandemic responses.  The Treasurer has confirmed that the wage cap would be reviewed before agreements were due for renegotiation.

In Queensland, the Palaszczuk government is also under pressure after several years of 2.5% pay rises for state workers and has recently offered public sector nurses and midwives 11% in pay rises over three years with 4% increases this year and next  plus a "cost of living top-up payment" of up to 3% a year.

In South Australia the rising cost of living will also create budget pressures with the government set to open wage negotiations with doctors, nurses, teachers, and other public servants in the next year.  The budget warns those salaries make up 40 per cent of general government spending and that wage increases would need to be modest, but Treasurer Stephen Mullighan said it was unrealistic to expect that the government could limit wage rises to 1.5 per cent each year when inflation was rising at 5 per cent.

In Tasmania, budget papers forecast public sector wages will rise by 2.5 per cent, seemingly ignoring the fact that Hobart’s inflation levels are expected to rise by more than double that next year.  The forecasts, if followed through, will mean a cut to the take-home pay of Tasmania’s many public servants in real terms, when it’s already difficult to recruit workers to staff services.

In a competitive national labour market, these decisions to suppress public sector wages also indirectly place downward pressure on private sector wages as businesses compete with the bureaucracy for workers.