The first bid in new public sector bargaining has been knocked back. 

Over the weekend, Finance and Public Service Minister Katy Gallagher rejected the opening bid from the Community and Public Sector Union (CPSU) for a 20 per cent pay rise across the Australian Public Service, citing budget constraints. 

She labelled the 20 per cent claim, which is made up of rises of 9, 6, and 5 per cent over three years, as a non-starter. 

Gallagher stated that reasonable and affordable pay rises are desirable, but that a 20 per cent increase is impossible to deliver given the current budget constraints. 

She also acknowledged the different standpoints of the CPSU and the government and expressed hope that a middle ground could be found through the negotiating process.

Gallagher expressed her desire for the bargaining round to focus on increasing the efficiency of the APS through reform and mobility. 

She noted that mobility is crucial to potentially save the government billions in redundancies and to keep people in the APS if the government needs to adjust the machinery of government down the track.

Despite her hopes for a smooth bargaining round, Gallagher admitted that there will ultimately be a showdown over the money. 

She stated that the government wants to bring pay rates together and address discrepancies, but a protracted bargaining process is not desirable. 

She said she expects there to be some conflict during the bargaining round, but hopes to get through it with minimal issues.