The government announced on Tuesday it would increase the maximum wage rise its agencies can offer to 2 per cent a year, up from the previous cap of 1.5 per cent.

The new Employment Minister, Michaelia Cash, said the change would help government agencies finalise staff wage agreements "quickly and efficiently".

But apart from slightly higher potential pay rises, the Coalition's tough bargaining policy remains in place, including the main sticking point: that the costs of any wage increases be funded by "productivity offsets" sourced from within existing budgets.

The Australian Services Union's Jeff Lapidos, who represents Tax Office workers, said staff were more concerned about keeping hard-won conditions than receiving a small pay increase.

"Unless we're allowed to keep our workplace rights and we can negotiate changes in our rights, so the Tax Office can meet its genuine obligations to provide an effective and efficient service, no pay rises would compensate for the loss of rights," he said on Wednesday.

Professionals Australia director David Smith, who represents engineers, scientists and managers, mostly in Defence agencies, also said an extra 0.5 per cent pay a year was unlikely to sway staff who had opposed previous proposals.

"It's a step in the right direction but it's a step that should have occurred more than 12 months ago," he said.

Like many other Australian Public Service employers, the Defence Department had proposed to fund wage rises by increasing working hours, cutting days off and slowing the progress of performance-based pay increases.

Mr Smith said: "If Defence changes [its offer] to 2 per cent a year but does nothing about the conditions problems, there's no way the agreement will get up."

The vast majority of public servants who have voted on pay offers have strongly rejected any proposed increases worth 1.5 per cent a year or less, though a handful of agencies, including the Treasury, sealed wage deals earlier this year.

ACT Labor senator Katy Gallagher also criticised Tuesday's announcement, saying a small potential pay rise meant little unless the government provided extra funds.

"We have seen agency after agency reject the pay offer, the last one being the Prime Minister's own department, which rejected the wage offer with 78 per cent voting no and 76 per cent participating in that ballot, so I think that is a very strong message that the wage offer is unpalatable ..." she said.

"So I am not sure it is any kind of substantial change from the government because some of the issues for public servants have been the fact that they are being asked to lose conditions of employment that are important to them."

However, ACT Liberal senator Zed Seselja was "really pleased to see this change".

"I've urged the minister [Senator Cash] to do everything possible in the fiscal circumstances to make sure that our hard-working public servants get the pay and conditions they deserve," he said.