New Treasury Secretary Steven Kennedy has declined to comment on remarks by Reserve Bank Governor Philip Lowe on the impact caps on public sector wage increases are having on wage growth more broadly.
Dr Kennedy said it was a matter for government and he wouldn't comment on public sector wages. Finance Minister Mathias Cormann said public sector wages were growing above the private sector.
"If we were to increase public sector wages by more we would have to fund that through higher taxes, which ultimately would have a negative impact on economic growth into the future," Senator Cormann said.
Earlier this year, Reserve Bank governor Philip Lowe upped pressure on governments to increase pay packets for public servants, blaming caps on public sector wage growth for suppressing wages across the board.
Dr Lowe said in August he understood why governments were constraining pay, but wage caps in the public sector were "cementing low wage norms across the country because the norm is now 1 to 1.5 per cent and partly that's coming from the decisions that are being taken by the state governments".
Dr Lowe's comments, which he acknowledged as controversial, gave heft to union claims for higher wages in the public service.
Meanwhile, Labor and the main public sector union have welcomed comments by Senator Cormann that the environment around public service staffing numbers has changed, and called for a timetable for the ASL cap to be lifted.
In Senate estimates on Tuesday Senator Cormann signalled staff numbers for the public service would increase, acknowledging that the average staffing level cap had been put in place because the budget was in deficit, but the government would be in surplus this year.
Labor's spokeswoman on the public service Katy Gallagher called for the government to put a timetable in place.
"Now Matthias Cormann must outline when the cap will be lifted and when departments and agencies will be advised of this policy about face.
"The real consequences of the arbitrary staffing cap is that departments across the APS have been left under-resourced or forced to hire expensive consultants to do the work that the community relies upon."
The main public sector union said the comments opened the doors to public sector bosses campaigning for more staff.
"With government relaxing the ASL cap rules the onus is very much on departments and agencies to now step up and make the case for more APS staff, and this is something CPSU will be campaigning to make happen," Community and Public Sector Union national secretary Melissa Donnelly said.
"There is important work not being done due to a lack of staff, and again we are calling on departments and agencies to take up Minister Cormann's offer to put a case to government. We expect APS agencies to act and are ready to assist to make that happen".
Lifting the staffing level cap would be an opportunity to convert contractors and labour hire workers to permanent public service workers and reduce the amount of insecure work in the wider economy, Ms Donnelly said.
"The federal government should be setting the right example here by getting people into secure jobs but currently the ASL cap means that thousands and thousands of jobs that could be secure jobs that people can depend on are instead filled on a casual labour hire basis."
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