NSW sets up new $3.6 billion Essential Services Fund to cover wage rises for public sector workers

NSW sets up new $3.6 billion Essential Services Fund to cover wage rises for public sector workers

The Essential Services Fund is designed to provide certainty to public sector workers, according to the NSW government.(Facebook: NSW Ambulance)

The New South Wales government will set up a new fund worth $3.6 billion over the next four years to lift wages for public sector workers and help fill critical shortages.

The Essential Services Fund will cover the wage rises for nurses, paramedics, firefighters, teachers and other frontline workers.

Treasurer Daniel Mookhey said the fund would help provide certainty for workers and aim to boost their ranks.

"This is an investment New South Wales must make to deliver vital public services to the standard people expect," Mr Mookhey said.

"It has been carefully budgeted for, it will commence from 24 onwards.

"It's there to support the introduction of a new bargaining system that we are introducing as we go about establishing a cooperative framework of industrial relations with our critical workers."

Labor's promise to abolish the 2.5 per cent wage cap was central to its successful election campaign, and it has reached an agreement with some key unions on pay rises — including the state's nurses and teachers.

But some sectors including paramedics and police have yet to agree to a pay deal, and the Coalition has accused the government of losing control of its industrial relations policy.

There are also ongoing questions about how the government will fund the wage rises.

Areas that have already been identified for cuts include pay freezes for MPs and senior executives — expected to net $745 million — and reducing the public sector's reliance on consultants and labour hire, which the government says will save $537 million.

Five billion dollars in savings have also been identified in major water infrastructure projects, with the government axing the wall raising of the Warragamba and Wyangala dams, as well as abandoning the proposed Dungowan Dam near Tamworth.

From July 2024, coal royalties will increase adding $2.7 billion to government coffers.

Mr Mookhey said further savings will be released between now and budget day on Tuesday.

"We look forward to introducing further savings measures that demonstrate how we've been able to get the balance right between fixing the budget and fixing our states essential services."

But shadow treasurer Damien Tudehope said it was still unclear where else the savings would come from, with the government's announcement raising more questions.

"Where is this money coming from? What cost of living measures are we going to have to cut for the purposes of actually funding this? How is this fund going to be administered going into the future?," Mr Tudehope said.

"When he [treasurer] went to the parliamentary budget office, he told the people of New South Wales as part of that process that all unfunded wage rises and commitment to public sector workers would be met from productivity savings.

The government also revealed on Sunday an estimated 720,000 toll account owners would qualify for new toll relief set to begin on January 1.

When Labor promised before the election to bring in $60 weekly toll cap, it said 51,000 motorists would benefit from the plan.

More than $500 million over two years will be allocated to the scheme in the budget, an increase from the initial projection of $151 million.