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Bureaucrats beat the Budget blues


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Some federal public servants were securing hefty pay rises just weeks before May federal budget revealed savage job cuts.

The public sector was settling on enterprise bargaining agreements in the March quarter well above the rate of inflation, and higher than those for private business employees.

Public sector average annualised wage increases from agreements finalised in the first three months of the year rose by 3.9 per cent, government figures show.

The private sector average was unchanged at 3.6 per cent.

These compare with an inflation rate of 2.9 per cent and the Reserve Bank of Australia’s preferred measure of wages growth – the wage price index – which showed annual growth at a lowly 2.6 per cent as of the March quarter.

The May budget confirmed 16,500 public sector jobs would be scrapped in the next few years as the government attempts to cut back on spending to bring federal finances under control.

The tough budget sparked a negative reaction that continues to linger among consumers, as well as the public sector.

The Westpac-Melbourne Institute consumer sentiment index rose just 1.9 per cent in July.

It’s only two per cent above its low in May, when it dropped by seven per cent in reaction to the budget.

It has left the index below its 100-point mark, indicating there are still more pessimists than optimists.

Westpac chief economist Bill Evans said this was disappointing and that consumer uncertainty is likely to linger for a while yet.

A significant number of unpopular savings measures are opposed by the Labor opposition and the minority parties in the Senate where the government does not have a majority.

“It may be some time before households get some clarity around the final state of the budget,” Mr Evans said.

Shadow treasurer Chris Bowen described the budget as a “wrecking ball” through confidence which has already had an impact on retail spending.

Other government data on Wednesday suggested employment is likely to grow below its long term trend over coming months.

Its leading indicator of employment fell for a ninth straight month in July.

Official labour force figures for June are released on Thursday.


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