ACT Government Treasurer, Andrew Barr.

ACT Government Treasurer, Andrew Barr. Photo: Rohan Thomson

The ACT government's plans to turn around its $381 million budget deficit within four years could be heading off the rails as the public sector union prepares to take a hard line on wage demands in 2013.

The public service union, the CPSU, has warned it believes the government's pay offer to its 21,000 public servants will be "unreasonable" and bordering on "unrealistic".

But Treasurer Andrew Barr said that a 2.5 per cent pay rise was in line with official figures and the territory's budget position allowed "limited" scope for it to pay its public servants more.

The latest Treasury figures predict a record $381 million deficit at the end of the financial year and Mr Barr and Chief Minister Katy Gallagher say they can return the territory's finances to surplus by the 2015-16 financial year.

But the plan depends on continued cost-cutting in the service with efficiency dividends and the reining in of wage demands.

With government negotiators due to sit down with their union counterparts in February, CPSU regional director Vince McDevitt indicated he would be taking a tough negotiating position.

"We will be fronting up to the bargaining table in February in challenging circumstances and seeking to ensure our members get a decent pay outcome in keeping with the rising cost of living, in a reasonable time frame," Mr McDevitt said.

"The forward estimates in the 2012-13 seek to unreasonably restrain wages and I think the [government's] 2.5 per cent target was always ambitious and bordering on unrealistic."

The ACT's public servants secured annual wage increases of 3.5 per cent in the last pay round and Mr McDevitt indicated he would be seeking a similar outcome next year

Salary increases worth a combined $350,000 were handed to 14 of the ACT's top public office-holders this month, including a $47,000 wage top-up to the Director of Public Prosecutions, and big increases for the Human Rights, Children's and Health Services commissioners.

But Mr McDevitt said the increases at the top had no bearing on his wage claim on behalf of his members.

"I think those pay rises are appropriate and I don't see a correlation between those and the broader whole-of-service claim," the union official said.

"The DPP's rise in particular, is long overdue to maintain any competitive edge with other jurisdictions.

"The rapidly rising workload of the commissioners needs to be acknowledged along with the

increased responsibility and workload and complexity should come more remuneration."

Mr Barr said the government would be offering pay rises in line with cost of living increases.

"It is reasonable to presume ACT public service wages keeping pace with the consumer price index," he said.

"CPI in Canberra was 2.5 per cent in 2011-12.

"CPI dropped to an annualised rate of 1.6 per cent in the September 2012 quarter."

Mr Barr warned the straitened circumstances of the territory budget meant the capacity for pay rises was decreased.

"The ACT budget is in deficit so there is limited capacity for wage increases above the CPI," he said.

''Employee expenses account for nearly 50 per cent of the Territory budget so EBA [enterprise bargaining agreement] outcomes will have a significant impact on the overall budget position."