The New South Wales opposition leader, Chris Minns, has been forced to defend the cost of his signature wages policy after the state’s independent budget analysis agency noted “significant risks” of a blowout.
In a frantic final week of campaigning that has seen Dominic Perrottet set out on a two-day tour through the state’s south, focus has shifted to Labor’s promise to scrap the Coalition’s longstanding public sector wages cap.
Perrottet on Tuesday labelled the opposition “amateurs” after a Parliamentary Budget Office analysis raised concerns wage growth “could exceed the government’s targets” by scrapping the 3% cap and that “fully offsetting savings may not be identified”.
That insight was seized on by the Coalition, which has previously warned the removal of the cap would see the state’s budget deficit by billions of dollars.
On Tuesday Minns was forced to defend the policy, insisting that Labor had identified savings including a 25% reduction in labour hire firms that the PBO estimates could save the budget $1.6bn, as well as a $600m saving by freezing the pay of senior public servants.
“We know the government’s bloated, we know that it’s top-heavy,” he said.
The PBO found that removing the cap – put in place by former premier Barry O’Farrell after the Coalition came to power 12 years ago – could see the NSW Industrial Relations Commission award wage increases “higher or lower than the government’s target”
“In a time of higher inflation, it is more likely that the IRC would approve higher wage increases,” it found.
Using a hypothetical example of an increase of 1% above current wage growth of 4% in 2023-24 and 3.5% beyond that, the estimated cost could increase by about $2.6bn in the absence of any associated productivity gains.
Perrottet seized on that analysis on Tuesday, labelling Labor “a bunch of amateurs”.
“Under Labor there’s a giant black hole. Employee-related expenses are 40% of the budget [and] Labor can’t do basic costings,” the premier said.
But the opposition also accused the government of its own blowout over its promise of $250 energy bill rebates for people across NSW. In its budget analysis of the policy, the PBO revealed that the rebate – which the government said would cost $550m – is only costed on an estimate of 65% take-up by retail energy users.
That means some apartment or aged care residents, who live in what’s known as “on-supply” arrangements, were not costed into the policy. Labor said a full take-up of the policy, as well as those in “on-supply” arrangements, could cost the budget an extra $340m.
“It’s very clear that NSW voters should check the fine print on anything the Liberals say. It will come as a shock,” the shadow treasurer, Daniel Mookhey, said.
With the Coalition trailing in some polls ahead of Saturday’s vote, the government will hope the argument over costings will stem Labor’s momentum in an election during which debt has become a focus.
It came as Perrottet spent Monday and Tuesday campaigning in at-risk Liberal seats in Goulburn, the South Coast and Camden.
