The department, and its politically charged Australian Border Force is facing an internal revolt after official confirmation of its new wage and conditions offer to its 13,500 workers.

ACT Senator Katy Gallagher, who has more than 5000 constituents working in the merged department, says it is ironic that hundred of millions of dollars are being spent on Border Force while the people who work there are facing pay cuts.

But the department says that most of the $711 million was "capital in nature" and could not be spent on pay rises.

Senator Gallagher weighed into the issue in the wake of the pay offer, of just over 1.1 per year, well below the 1.5 per cent offers that are being rolled out across the Australian Public Service, after one workplace source said "it's gone down like a bucket of cold sick".

The former ACT Chief Minister said the treatment of the former Customs and Immigrations officials drafted into the new force was "disrespectful."

"Employees at Customs have been targeted by the sharp end of the Abbott government's knife and are facing a loss of entitlements, take-home pay all as well as being required to work an extra week a year for no additional pay," Ms Gallagher said.

"It is ironic in the extreme that the government expects customs employees to work harder to protect Australia's borders but at the same time accept cuts to pay, entitlements and longer working hours whilst at the same time as hundreds of millions of dollars are being spent to establish the new Border Force agency.

"The current pay offer is totally disrespectful of the important work being asked of Border Force staff by this government."

The 2014-2015 Budget papers confirm that $480 million is to be spent over over four years, and $711 million over six years, for "Smaller Government – consolidation of Australian border protection services measure" with much of the spending to come from existing portfolio resources.

But a departmental spokeswoman said the money was not to be spent on wages.

"This measure had many components with specific deliverables and outcomes," she said.

"It is not appropriate to use this funding for purposes other than what was agreed by government.

"Of the $711.9 million over 60 per cent was capital in nature and not available to fund pay rises."

The department says the deal offered to its workforce "delivers an affordable outcome with a range of enhancements across the integrated workforce".

The cuts to allowances and conditions, which have long been an important component of take-home pay packets in the pre-merger Customs agency, are expected to be the main flashpoint between the border guards and their bosses.

Customs officers were paid a range of allowances for duties including being at sea for weeks at a time, using firearms, meeting high fitness standards, working long hours, unusual shifts and dirty or dangerous work.

Allowances for officials transferring to the Border Force were rolled over in an attempt to facilitate a trouble-free launch of the politically charged new agency in July.

But although the draft agreement confirms that the payments are slated for the chop, a departmental spokesman said Border Force members would get a composite allowance and that the proposed deal allowed for higher salaries than the current EA.

No date has been set for a vote on the wage offer.