NSW Labor to scrap cap on govt pay rises

By Laura Polson

AAP: The NSW opposition leader has defended Labor's plan to boost wages for public sector workers including nurses, teachers and police officers after the government argued it would cost the state billions.

Opposition leader Michael Daley on Wednesday said a Labor government would scrap the 2.5 per cent cap on wage growth for government workers and instead have the Industrial Relations Commission set wages on the basis of productivity gains.

"They should be able to stand in front of an independent umpire and say 'We deserve a better deal'," the Labor leader told the National Press Club in Sydney.

"We can only do as a government what we can do for the workers that fall within our power."

Opposition treasury spokesman Ryan Park said in a statement: "Labor will have a fair and balanced wages policy that restores the link between wages and productivity."

The Sydney Morning Herald reported on Wednesday that Mr Park wanted public sector wage growth “with a three in front of it”.

The party's industrial relations spokesman, Adam Searle, told AAP in a statement: “Labor will replace the legislated 2.5 per cent wage cap with a productivity based framework that is both fair to workers and economically responsible.”

NSW Treasurer Dominic Perrottet told reporters in Sydney that scrapping the cap could cost the state budget $5.1 billion if public sector wages jumped 3.5 per cent.

"That is not financial responsibility, they are a clear and present danger to our state's finances and that has real ramifications for people of our state," he said.

"This type of response from the Labor party is irresponsible, reckless and will drive the budget into deficit."

He praised Victoria's Labor treasurer, Tim Pallas, for last week suggesting a two per cent cap in light of the housing market slump.