The Turnbull Government is poised to scrap public service pensions in favour in one year of a cut to company tax, with a proposal expected to be tabled next week.
The proposed cut would see public service pay cut from about $1.7 million a year to $1 million a couple of years, according to the department of finance.
The proposed pay cut comes after a year of uncertainty as the Coalition promised to scrap all state and territory public service entitlements.
In a statement, the department said the change would be in place on March 1, 2020.
“The changes to public service employee pay arrangements will be announced by the Treasurer and Cabinet on the date of the next meeting of the Government’s Joint Committee on Taxation (JCT),” it said.
The department said it planned to announce the details of the cut, and its effect on future entitlements in the budget.
However, it did not provide a timeline on when the cut would be introduced.
A change to pension arrangements is expected to occur as early as next year, with the Government planning to announce a cut of more than $500 million in pay for public service employees over the next five years, which would affect about 1.4 million Australians.
Earlier this year, the ABC revealed the Government planned to scrap about $400 million of public service support for families with children, which was meant to help reduce the number of children living on fixed incomes.
The changes, announced in March, were to be implemented by July 2020, after which a one off cut would begin.
But Labor has said it is unlikely the cuts will occur before 2020.
In the meantime, there are fears the Government is planning a more aggressive move on public service workers’ entitlements, and the introduction of a “renegotiated” pension system.
Under the proposed changes, an employee’s salary would be reduced by an amount based on the length of their service.
There is a cap on how much the employee can expect to receive.
If the employee’s current salary falls below that cap, they would lose their job.
An increase in pay would be announced in the Budget on February 16.
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