End to industrial relations stalemate beckons for APS agencies, Katy Gallagher says Labor won't tear up consultancy contracts

Three of the Commonwealth's major employers - Services Australia, the Tax Office and Defence - will be in a position to begin bargaining later this year, while the Department of Agriculture, Water and the Environment is due for a new deal before the end of 2022.

The agencies were among many public service employers wracked with industrial strife in the round of negotiations that followed the Coalition government's tough restrictions on bargaining, which included a cap on pay rises and a ban on overall enhancements to conditions.

Labor has promised to negotiate with public servants in good faith and overhaul the Coalition's restrictive bargaining rules after years of industrial conflict followed by a growing number of agencies avoiding negotiations for new agreements.

Finance Minister Katy Gallagher has also indicated Labor would not cancel pre-existing consultancy contracts, saying the private sector needed assurances the Commonwealth "is a reasonable authority to engage with".

Labor is targeting spending on contracting, and plans new industrial relations settings, as it looks to reverse Coalition-era policies on the public service.

The Australian Public Service Commission recently advised agencies already bargaining with staff to consider pausing any major decisions or talks until after the caretaker period, in case of a new policy on bargaining.

"No new instruments will be assessed or approved by the Public Service Commissioner at this stage," it told the agencies.

"We recommend that you consider pausing any substantial negotiations or significant actions, until after further details emerge about any new policy."

The Australian Securities and Investments Commission, Geoscience Australia, the National Gallery of Australia and Airservices Australia had started bargaining when they received the advice.

Two of the largest APS employers - Defence and the Tax Office - will be able to negotiate new workplaces deals after August, while Services Australia will also be able to start negotiations after November.

The workplace deals for these agencies each expired in 2020, however they have agreed to pay rises without negotiating new enterprise agreements.

The Home Affairs Department, whose last negotiations broke into industrial strife leading to a Fair Work determination, will also be in a position to negotiate a new workplace agreement after delivering a final pay rise in February next year.

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The Community and Public Sector Union's national secretary Melissa Donnelly said the union was looking forward to a more collaborative and consultative approach to APS bargaining under Labor.

"We welcome Labor's commitments on APS bargaining - to remove the no-enhancements rule and the inflexible wages cap, and to genuinely negotiate pay increases with workers, including the capacity to negotiate back pay," she said.

"We will work with the incoming government to make sure that APS employees have access to these improved bargaining arrangements."

Senator Gallagher has said the Albanese government would negotiate in good faith with public servants on "reasonable" wage rises based on productivity gains.

Labor has also set a target of saving $3 billion over the forward estimates in labour hire, consultants and contractors. Senator Gallagher on Wednesday said the new government would look to trim 10 per cent from the roughly $5 billion doled out each year to consultants and private labour hire companies, and look at how to reinvest it back into the public service.

"It is definitely trimming spending, but it's also about rebalancing and building up capability in the APS," she said on Wednesday.

But Senator Gallagher poured cold water on the prospect of tearing up pre-existing contracts, saying that doing so would not give the private sector assurances the Commonwealth was a reasonable authority to engage with.