Reserve Bank boss Phil Lowe dodged making judgement on the government's decision to tie public sector wages to private wages, but accepted that Commonwealth wages were not growing as fast as they should.
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Asked if the wage policy for public servants, announced by Assistant Minister Ben Morton late last year, was acting as a deterrent to wages growth across the economy, Mr Lowe said he understood the government's reasoning.
"It depends which way you think the causation runs here," Mr Lowe told reporters at the National Press Club on Wednesday.
"So long as you think the relativity between public sector public sector wages are OK, as a principle I can understand where they're coming from. My aspiration is for both public and private sector wages to be growing faster than they currently are."
"Get strong demand for labour and then both government and private businesses have to pay higher wages to get the good workers they want. The better - the quicker that happens, the better. It's going to take some time, isn't it?"
The government's public sector wages policy also removed the previous 2 per cent cap, but the Wage Price Index to which public wages are now tied rose just 0.1 per cent in the most recent update.
National wages will not rise to the level the nation needs if public sector wages are stifled, says CPSU national secretary Melissa Donnelly.
"At a time when the government should be helping workers spend in their local communities, it is effectively cutting wages and the pay rises on offer in the public sector," Ms Donnelly said. "It's bad economics and nonsensical industrial relations policy."
"So nonsensical in fact, that on Christmas Eve government staffers returned a resounding no vote to their own bosses' bargaining policy. The enterprise agreement on offer under the Government's policy could have seen pay rates decrease, with absolutely no improvements to any conditions.
"Rather than being a model employer and driving broader economic growth by improving public sector workers' wages, this government has chosen to lock APS employees into a race to the bottom on wages with the private sector."
The union said the implications of the decision will be felt for years to come.
When announcing the decision the government said the previous unlinked wages policy with the 2 per cent cap was not sustainable in the medium or long term, nor was it in line with community expectations.
"This new policy means Commonwealth public sector employees will directly benefit from ensuring the government's plan to strengthen the economy, create jobs and deliver private sector wages growth succeeds," Mr Morton said.
Harley Dennett
Former federal politics bureau chief for the Canberra Times, via a career that's taken me from rural Victoria to Washington DC. Telling the stories of my local LGBTI community brought me to political journalism, where I've covered eight budgets, four national elections in two countries, Defence, public service and international governance.
Former federal politics bureau chief for the Canberra Times, via a career that's taken me from rural Victoria to Washington DC. Telling the stories of my local LGBTI community brought me to political journalism, where I've covered eight budgets, four national elections in two countries, Defence, public service and international governance.
