The Australian Taxation Office says it can save $184 million from reducing sickies among its public servants, having them work longer hours and "reinventing the ATO".
The "productivity" drive will be used to offset a wage offer of 4.5 per cent over three years, the Office's 18,000 public servants were told on Tuesday morning.
Another $184 million will be found in "affordability" initiatives, such as stripping workplace allowances and off-loading empty office space around Australia.
The pay deal will be front-loaded, with a 2.5 per cent pay rise paid on commencement, in a bid to win support among a workforce that has not had a pay rise in more than two years.
But despite being almost double a previous offer of 0.8 per cent, the new proposal faces opposition from unions who say the pay rise is not enough and that the proposed enterprise agreement contains conditions that will destroy the workplace rights of tax officials.
The official bulletin sent out to all staff on Tuesday morning says the ATO was able to boost the offer after a slight softening in April of the Abbott government's tough public sector workplace bargaining framework that allowed a wider interpretation of "productivity".
The main workplace union, the Community and Public Sector Union, marked out its opposition last week before the offer had been finalised saying the "the status quo is a better deal".
The smaller Australian Service Union will also oppose the deal, saying it is "totally inadequate" and with a date yet to be set for an all-staff ballot, both unions will campaign hard for a no-vote with the result to be watched keenly across the 160,000-strong Australian Public Service.
CPSU national president Alistair Waters said the deal was "insulting" and predicted it would be defeated.
"Feedback to date suggests is likely to be overwhelming," he said.
"Why would you vote for a deal that leaves you significantly and demonstrably worse off?"
ASU official Jeff Lapidos also gave the agreement no chance of success.
"There's going to be a no-vote, I've got no doubt about that," he said. "The only question is what the percentage will be."
An official ATO spokeswoman declined to publicly comment on Monday on the unions' attitude.
But in his bulletin to staff, second Commissioner Geoff Leeper confirmed that the offer had been made possible by the more flexible productivity rules announced in April.
"As a result, we have reassessed our productivity and affordability measures and in doing so have been able to address some of the issues raised by employees in February 2015."
Mr Leeper said the ATO wanted to push ahead with the "de-layering" of its management structure and wanted to scrap the executive level 2.1 and 2.2 classifications as part of the enterprise agreement and have just one EL2 classification.