Unions and the government remain locked in a poisonous Australian Public Service (APS) industrial relations battle over productivity gains, despite government concessions on pay rises last week.

Public Services Minister Michaelia Cash announced on Monday last week that the government would give APS departmental and agency heads latitude to offer their staff up to 2 per cent per year in order to break the impasse on public sector enterprise bargaining. The cap was 1.5 per cent over three years under former minister Eric Abetz

But both sides remain at war over what constitutes a productivity gain, with the Community and Public Sector (CPSU) arguing that its members are more concerned about the government attacking their terms and conditions – the government’s main target to secure what it defines as a productivity gain – than scoring large pay rises.

A recent CPSU survey of 7,000 of its members revealed that its members’ top priority was protecting their existing rights and conditions during the negotiations.

As the four big banks raise interest rates, unions will also find it easier to argue that inflationary pressures and an 18-month wage freeze caused by stalled negotiations should translate into higher pay rises.

CPSU National Secretary Nadine Flood said the government’s move on pay was positive but she said: “We’ve made it clear all year – both at the negotiating table and beyond – that this dispute could be resolved if the government moved away from cutting rights, conditions and take home pay, with some move on real wages.”

She said the government should acknowledge that 17,700 public sector job cuts, major restructuring and changes to work across the public service had already delivered substantial savings and productivity gains.

“It’s deeply disappointing that the government is maintaining its less-than-credible definition that productivity consists of removing rights and conditions from enterprise agreements. There’s no economist or even business lobby group who defines productivity as solely removing or reducing workplace rights.

“We still believe there’s a way through this if the government’s willing to have a real-world conversation about fair and realistic bargaining outcomes that reflect the needs and concerns of workers, agencies and delivering for the Australian community.”

But the government does not yet appear willing to dilute its stance.

Government News contacted Ms Cash and asked if the definition of ‘productivity gains’ could be changed to include efficiencies gained through new ideas or technological innovation and was told: “the definition of productivity gains will not be broadened.”

Asked what the government expected in return for the cap being lifted to 2 per cent, she said: “The Government expects agencies to find productivity gains and efficiencies in all areas of their operations on an ongoing basis.

“Under the revised bargaining policy, wage increases up to an average of 2 per cent per annum may be offered in exchange for productivity gains from the removal of restrictive content from enterprise agreements,” Ms Cash said. “Agencies have a suite of options to choose from when bargaining. The bargaining agendas advanced will vary between agencies.”

Despite the tough talk, there are indications that the government’s stance is softening behind closed doors.

Government News understands that there is growing optimism from inside the APS that smarter ways of working and the adoption of new processes and technology could get a fair hearing, possibly signalling a shift in emphasis away from stripping out terms and conditions from enterprise agreements.

The Productivity Commission has criticised the Australian Government Public Sector Workplace Bargaining Policy for being too narrow because it insists on labour cost savings as the only evidence of productivity gains, excluding other initiatives.

The Commission’s draft Workplace Relations report says:

“Some interpretations suggest that a reduction in entitlements (such as a reduction in sick days), or agreements to work longer hours are productivity enhancements. But exchanging entitlements for cash simply trades one form of compensation for another with little gain to either party (assuming the worker is compensated exactly for the loss of the entitlement) or to productivity.

“A genuine productivity increase requires a change in the way a public sector organisation uses its resources to better perform its core activities, including improved quality of its outputs.”

The Commission notes the adoption of new processes and technologies, “rather than simply working harder or changing the mix of entitlements in a worker’s overall compensation” can achieve productivity gains.

Meanwhile, it is useful to note that the Australian Public Service Commission (APSC) – which advises agencies about bargaining policy, sets out a more imaginative approach to productivity on its website.

The APSC includes examples such as: better outcomes from government programs through intelligent policy design; reducing compliance costs to customers e.g. through the MyGov portal; the increasing prevalence of the Parliamentary Work Flow System and initiatives that develop future leaders.

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