There will be no pay rises for 160,000 federal public servants in the next three years, unless their departments can prove wage increases are linked to productivity gains.
Cash-strapped agencies and departments will also have to show they can fit any pay increases into their dwindling budgets under the new bargaining rules released by the Abbott government on Friday.
Public Service Minister Eric Abetz unveiled a hard-nosed bargaining approach that included banning back-pay and sign-on bonuses and ordering his departmental chiefs to crack down on union presences in Commonwealth workplaces.
The government is insisting on a tougher performance management regime that makes it easier for line bosses to take disciplinary action against poor performers.
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Any pay rises would have to go through an elaborate approvals process, signed by the Public Service Commissioner, the Department of Finance, the relevant portfolio minister and then Senator Abetz himself.
Agency chiefs will not be allowed to use savings and cuts already imposed after years of efficiency dividends to justify pay rises under tougher "affordability" tests .
The bargaining policy makes the union's claim for an annual pay rise of 4 per cent for three years look like a remote prospect.
The end of the requirement for co-ordinated end-dates for agreements looks likely to sweep away the last vestiges of agency-wide bargaining in the bureaucracy.
"The government will reverse Labor's union-driven move towards APS-wide bargaining," Senator Abetz said on Friday afternoon while launching his policy.
"Agency heads will continue to be responsible for negotiating their own agency's agreements within the new framework."
The release of the policy allows 117 departments and agencies to sit with their workforces to agree on pay deals, but Senator Abetz has instructed that the only time limit on the new agreements is they must be at least three years long, ending the tradition of common end dates.
The removal of barriers on performance management also has the potential to be a cultural watershed for the public service.
The service's main union, the Community and Public Sector Union, said the policy represented an aggressive stance by the minister. Its national secretary, Nadine Flood, who has been sparring with him for months over the delayed bargaining talks, accused him of misleading the public service workforce.
"Public sector workers will be dismayed there is no minimum pay rise in this policy, so it could be zero per cent unless you trade off your rights and conditions," she said. "Minister Abetz is being deliberately misleading when he talks about productivity.''