State finance minister Damien Tudehope declares Commonwealth should pay back taxes taken from pandemic bonus

That's the view of the state's finance minister, Damien Tudehope.

Mr Tudehope, who also serves as the leader of the government in the upper house, visited the north west on the weekend.

In an exclusive interview with the Leader, the finance minister argued that the Commonwealth should refund thousands of dollars taken in federal tax out of a $3000 bonus paid to the state's nurses in appreciation of their efforts during the pandemic.

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"What we ought be doing, and I'm encouraging the treasurer to do this, is write to the federal treasurer and say that money ought be tax free," he said.

"If a nurse has received the benefit of a pandemic bonus, then we should not be taxing it."

But Mr Tudehope signalled the government was not one for turning with regard to the decade-old limit to pay increases in the public service.

Virtually every public sector union has taken some form of industrial action this year, many of them several times. Nurses, teachers, paramedics and other public servants have demanded an end to the policy, which had limited pay rises to a maximum of 2.5 per cent per year, in net terms. The state will raise the cap to 3.5 per cent next year.

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The policy has come in for criticism, in the context of economy with inflation sitting above 5 per cent, because it forces public servants to take a pay cut in real terms.

The finance minister said it was nonetheless to keep public sector wages within "viable limits" and wages "have got to be constrained".

"The wages policy was never linked to the inflation rate," he said.

"The wages policy was set in terms of making sure we had a sustainable economy and it has worked for potentially 10 of the 11 years [it has existed for].

"We're now in a high-inflationary environment and I get the pressures which are currently on wages.

"We have increased the wages policy though in the budget ... we are moving [to compromise], but it would a perilous situation if the government contributed to inflation by matching its wages policy to the inflation rate. All that would be doing would be entrenching inflation."

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Tamworth-based Teachers' Federation regional organiser Katie Sullivan said the union still wanted an end to the wages cap policy.

She said the low wages in teaching made it hard to attract new employees to a profession that had been marred by understaffing.

"Teachers need to be paid what they're worth. At the moment teachers are working two jobs, they've got their teaching job and their administration job," she said.

"The workload is just incredible. Under the current pay cap, we've got teachers walking away because they just can't physically and mentally cope with the workload ... and the pay that they're getting for the work that they're doing."

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