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Warning on public sector wages angers unions

THE state government has delivered a blunt warning to unions over wage claims, releasing figures showing their demands would inflict a $21 billion financial hit that would drag the budget deeply into the red.

THE state government has delivered a blunt warning to unions over wage claims, releasing figures showing their demands would inflict a $21 billion financial hit that would drag the budget deeply into the red.

In a move that has infuriated Victoria's most powerful unions, government calculations provided to The Age reveal Victoria would need to set aside $68.7 billion for public sector wages and entitlements over four years if it were to agree to the demands of five key unions, compared with an estimated $48 billion bill over four years based on current terms and conditions.

That suggests the government would need to find an extra $20.7 billion over four years to meet the claims equivalent to about 45 per cent of the state budget in 2011-12.

Finance Minister Robert Clark said the "extraordinary" log of union demands would represent an unsustainable impost on the state budget, which is expected to be in surplus by $140 million this financial year.

"Some union representatives in Victoria appear to be oblivious to the current international climate and the pressures placed on Victoria by the Commonwealth government," Mr Clark said.

"We are facing an increasingly difficult and uncertain international climate. Victoria needs to be careful, particularly at this time, to maintain a sound budgetary and fiscal position."

The figures set the scene for what is increasingly likely to be an acrimonious battle over wages between the state government and unions representing tens of thousands of state government workers.

The Baillieu government which until now has avoided commenting on specific wage negotiations has vowed that police, teachers, nurses and other public sector workers will only get more than a basic 2.5 per cent if the extra amount is offset by bankable and negotiated productivity gains.

The Liberal O'Farrell government in New South Wales, which is also refusing to budge from a 2.5 per cent basic pay offer, is already locked in a stoush with its public sector workers over pay, with unions preparing for a "day of chaos" in September.

The analysis, provided to The Age this week, shows the biggest hit to the budget would come from the Australian Education Union's claim costed at $9 billion for a 10 per cent wage increase for teachers, reduced class sizes and time allowances away from classes.

The Community and Public Sector Union's claim for a 6 per cent annual pay rise for public servants, a 35-hour week, six weeks annual leave and a 1.75 percentage point increase to the superannuation guarantee would be likely to cost an extra $2.9 billion.

The Police Association's demand for a 4.5 per cent annual pay increase, with better allowances and leave entitlements, would cost an extra $1.6 billion. Victorian branch of the Australian Nurses Federation demands for an 18.5 per cent wage increase plus extra allowances and lower nurse-to-patient ratios were estimated to cost an extra $5.2 billion. Allied Health demands were costed at $2 billion. The state government is facing the prospect of bitter pay disputes with tens of thousands of public sector workers. Australian Education Union Victorian branch president Mary Bluett called the government's tactics offensive as negotiations had only just begun.

"They are clearly not interested in good faith negotiations," Ms Bluett said. "They started off with an offer of 2.5 per cent, we have a claim and then we negotiate in good faith to try to get an outcome."

Police Association secretary Greg Davies said the government was clearly "being advised by nine-year-olds". "We asked exactly to the penny what the Premier promised he would give us," he said.

Australian Nursing Federation state secretary Lisa Fitzpatrick said it had been an "excruciating process" trying to get the government even to sit down and negotiate.


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