Politicians, judges and top public servants to gain 2% pay rise after wage freeze

Most of the office holders have not received a raise for 2½ years.

On January 1, the base salary of a parliamentary backbencher will rise to $199,040 a year, while Prime Minister Malcolm Turnbull's will climb to $517,504, up from just over $507,000.

However, the incoming head of his department, Martin Parkinson, will earn more: the top public servant's salary will be about $603,000, though his total remuneration package, including superannuation and other benefits, will reach $861,700.

The independent Remuneration Tribunal announced on Wednesday it was time to end the salary freeze first mooted by then prime minister Tony Abbott in May 2014.

The pay rise had been widely anticipated after the tribunal warned in May that, despite its decision at the time to extend the freeze, significant salary increases were warranted for senior officials.

In October, the Turnbull government also increased the maximum pay rise the bureaucracy could offer its staff, most of whom have also gone without a raise since July 2013.

Agencies can now offer public servants a wage increase of up to 2 per cent a year, up from the previous cap of 1.5 per cent. However, few public service workplaces have yet struck a deal.

The tribunal's three-member panel, led by president John Conde, said it had examined recent changes in pay across business and government workplaces.

It noted that senior government officials "do not expect or require that monetary compensation be set at private sector levels".

"Rather, in the true sense of the phrase 'public service', office holders serve for the public good. This means that, in setting remuneration, the tribunal has traditionally set rates below those of the private sector," it said in a statement.

The tribunal added that wage movements in other sectors suggested awarding an increase higher than 2 per cent could be justified.

"This is especially the case when set against a background of no general increase having been determined by the tribunal since July 1, 2013," it said.

"However, the tribunal has moderated its assessment because of the latest economic and wages data, projections and trends combined with the downside risks for the Australian economy ...

"The tribunal has also noted the, albeit slowed, upward movement in the various measures of cost of living expenses."

The salaries of government agency heads began to increase significantly in 2011 as a result of a review of their responsibilities, which found they had been dramatically underpaid.

The latest Australian Bureau of Statistics data says average full-time earnings for private sector workers rose 2 per cent over the year to May, and 1.7 per cent for public sector employees.

The tribunal also warned on Wednesday it was important that the pay for parliamentarians and senior government officials "is maintained at appropriate levels over the longer term to attract and retain people of the calibre required for these important high-level offices".

"The tribunal is generally conservative in its approach to annual increases and, in this case, is conscious of the government's continuing policy of wage restraint for the [Australian Public Service] and non-APS government agencies.

"Ideally, the tribunal is concerned to avoid, in the future, any need for significant one-off increases to restore proper relativities and to recognise fully ongoing changes in work requirements."