The Community and Public Sector Union will reject the federal government's service-wide pay offer of 11.2 per cent over three years and pursue further industrial action, saying members showed only "lukewarm support" for the deal.
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In a poll of more than 15,000 union members, 48.1 per cent rejected the deal while 51.9 per cent of members voted in support of it.
CPSU national secretary Melissa Donnelly said that, while members supported the conditions package, the government's pay offer "does not have clear support from CPSU members".
"There is strong support for the conditions package that has been negotiated, including the industry leading working from home rights, increases to paid parental leave, the reintroduction of job security provisions and increased casual loading rates," Ms Donnelly said.
"But in an environment where every APS worker is feeling extreme cost-of-living pressures, the current pay offer just doesn't cut it.
"The government can and should do better - and that means making an offer that has clear support from employees."
It marks the second time that the union will reject the government's pay deal, after pushing back an offer of 10.5 per cent over three years from the Australian Public Service Commission in May.
In a statement, the union said the package had "lukewarm support at best".
But Minister for the Public Service Katy Gallagher said that the ballot showed the majority of members supported the offer.
"I welcome the outcome of the CPSU ballot which shows a majority decision to support the government's fair pay offer that was increased following negotiations," Senator Gallagher said.
"We have bargained in good faith and worked hard to improve wages and conditions for public servants after a decade of neglect under the former government."
"The government looks forward to finalising the agreements as soon as possible."
A spokesperson for the Australian Public Service Commission said it was "disappointing" to see reports that the CPSU may escalate industrial action.
"We note, this is in the context that a majority of CPSU members have voted in favour of the full package of pay and conditions on offer," the spokesperson said.
The CPSU, and all other bargaining parties, will meet with the APSC on Wednesday to provide their formal responses to the pay and conditions package.
Bargaining talks to establish a common pay rise and set of conditions for the Australian Public Service have been underway since March, in a bid to address fractured workplace conditions.
It is the first round of service-wide bargaining in more than a decade.
The CPSU will escalate industrial action in Services Australia - where staff have already successfully run a Protected Action Ballot and taken industrial action - and lodge applications for further protection action ballots in other government departments.
The Australian Services Union, a smaller union representing tax office staff, has already rejected the 11.2 per cent offer outright.
ASU branch secretary Jeff Lapidos welcomed the CPSU's decision and said the ASU would campaign alongside them for a better outcome for ATO and APS employees.
"Our approach will be to persuade the government that it is economically responsible to make a greater investment in the ATO's people and technology because this will generate increased productivity and greater revenue for the Commonwealth," he said.
The commission tabled the revised pay offer for federal public servants in August.
The commission tabled the revised pay offer for federal public servants in August. It would have meant a pay lift of 4 per cent in March 2024, 3.8 per cent in March 2025, and 3.4 per cent in March 2026.
The commission also tabled adjustments to a pay equity model, setting minimum salaries across all APS agencies to reduce pay fragmentation from 26 per cent to 18 per cent.
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The revision would have lifted the minimum salary for those at APS1 classifications, from $49,590 to $52,000, in a move the government expected would double the number of beneficiaries from 1213 to 2216.
Chief government negotiator Peter Riordan had said the government's offer was a "fair and equitable reward for the essential work APS employees do".
Meanwhile, the union has been calling for a 20 per cent pay increase, including a 9 per cent hike in the first year of the new enterprise agreement - demands that Senator Gallagher previously labelled "impossible" given budget pressures.
A contingent of CPSU members - named Democracy4CPSU - who have been advocating against the deal, welcomed today's news but criticised the union for being slow to lodge applications for industrial action.
"The leadership should have been putting in protected action ballots to their membership to a vote weeks ago - satisfying both democratic conditions for escalating industrial action while getting on the front foot," a spokesperson for the group said.
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