High Court challenge threat to public sector pay caps

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High Court challenge threat to public sector pay caps

The NSW Government’s 2.5% cap on wage rises for public servants is being challenged in the High Court today, with the outcome crucial for other state governments that have also put a limit on raises awarded by industrial tribunals.

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The NSW Government’s 2.5% cap on wage rises for public servants is being challenged in the High Court today, with the outcome crucial for other State Governments that have also put a limit on raises awarded by industrial tribunals.

The NSW Public Service Association (PSA) is challenging the Industrial Relations Amendment (Public Sector Conditions of Employment) Act 2011, passed last year, which sets the cap.

The PSA will argue before a Full Bench that the cap overrules the independence of the NSW Industrial Court.

Dangerous precedent
 
PSA general secretary John Cahill said the O’Farrell Government’s laws set the dangerous precedent of directing the NSW Industrial Relations Commission (IRC) to set pay rates according to political ‘whim’.

‘We believe the laws are unconstitutional and we look forward to challenging them today in the High Court, on behalf of all public sector workers,’ said Cahill.

‘Public sector workers rely on the independence and fairness of the IRC to resolve industrial disputes and set fair wages.

Political agenda
 
‘The removal of the IRC’s independence leaves the fox in charge of the henhouse — putting service jobs, conditions and wages at the mercy of the political agenda of the day.’

‘The industrial court has the same status as the Supreme Court of NSW and should not be hobbled by political leaders acting in their own interests.’

The IRC granted a 2.5% pay rise to the 80,000 employees covered by the Crown Employees Award in August 2011, in line with the new IR laws.

A successful challenge to the laws would pave the way for the PSA to win a bigger pay rise for these workers and would flow across the public sector.

However, the NSW government believes the cap is just under the current budget circumstances and is fighting the challenge.

Queensland, Victoria and Tasmania have also capped public sector wage rises at 2.5% and would be subject to any ruling by the High Court.

Constitutional power
 
State Governments have power under their own constitutions to set wages in the public sector, and press their arguments in state tribunal hearings on union claims for wage increases.

Ultimately, State Governments have the power to rein in their wage costs by dismissing public servants, as the Campbell Newman Government in Queensland has been doing since its election this year.

Public sector unions could be placed in the invidious position of trading off the jobs of some members in return for wage rises for the rest.

This is often an implicit threat made by State Governments in response to ‘ambit’ claims by unions, but a High Court decision preventing State Governments from setting public sector wage caps could see it become an overt bargaining tactic.
 
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