Further to the previous Union notice of 19 May concerning back pay, we can now confirm that July 13 will be the date on and from which the new Award rates for permanent members (3% increase) will be paid, backdated to 24 February. Whilst many members will remain unhappy with this delay, a far greater number of members have advised us that they would in fact prefer this because it means that all of the back pay will fall into the new financial year, and will therefore become taxable at the lower marginal tax rates applying from July 1.
The Union’s view was that our members should be paid at the earliest possible opportunity. However, faced with the option of either today – or possibly even as late 29 June – it has now been agreed that the payment will be made on the first pay period in the new financial year, being 13 July.
The real dollar savings resulting from this will of course vary according to each individual member’s rank and overall annual earnings for the 99-2000 year. However, taking Senior Firefighters (the largest single rank) as an example, the 3% increase resulted in a $25.53 per week increase in the weekly base rate of pay. The period from 24 February to 13 July is 20 weeks, which equates to a minimum back pay amount for SF’s (excluding km’s, qualification payments and overtime, etc.) of $510.60. The current marginal tax rate for the $38,801 to $50,000 bracket is 43%, but this will drop from 1 July to 30% for the new $20,001 to $50,000 bracket (all supposedly to help offset the GST – see below). The bottom line is a saving of 13 cents in the dollar, or at least $66.38 on the minimum back pay amount of $510.60.
Union Dues and the GST
Because Union membership dues are directly linked to firefighters’ wage increases, Union membership dues will also increase by 17% over the next three years. The State Committee has decided to delay the first 3% increase in membership dues until 10 August to coincide with the 2nd 2% wage increase due on that day. Union dues will therefore increase by 5% (ie, the 24 February 3% increase and the 10 August 2% increase combined) on 10 August.
Like almost everything else, Union dues will also be subject to the GST from 1 July. The State Committee attempted to absorb as much of the GST as possible, but it will still be necessary to pass on a 9% (not 10%) increase to help offset this new cost. It’s important to understand that this isn’t an increase for the Union – we will actually be $1000’s worse off each year – it is simply a new tax that we will be forced to collect for Howard and Costello. The Union will also absorb this extra GST cost until 10 August, after which a 9% GST levy will apply.
Union dues before the new Award were $6.53 per week (or $1.31 per week for retained members). The first 3% wage increase combined with the second 2% wage increase due on 10 August means that the Union dues will be increased by 5% from that date to $6.86 per week before the GST, and $7.48 week ($1.50 per week for retained members) after the GST.
Is it fair? Of course not! The GST means that all members will be forced to pay more in Union dues, even though the Union itself will actually have less income than it did before the GST began. At least Union dues will remain tax-deductible as a legitimate work-related expense.
Thursday 15th June, 2000