Politicians receive pay rise, with Prime Minister Anthony Albanese's salary jumping over $600,000

A composite image of Anthony Albanese, Peter Dutton and Adam Bandt. (ABC News: Nick Haggarty, Matt Roberts)

Federal politicians will receive a pay rise of 3.5 per cent from July 1, bringing the base salary of an MP to $233,650.

The independent Remuneration Tribunal's decision means Prime Minister Anthony Albanese will receive a base salary of roughly $607,500, and Opposition Leader Peter Dutton $432,250.

The ruling follows a recent decision by the Fair Work Commission to lift the minimum wage by 3.75 per cent, and the tribunal's decision last year to lift MP pay by 4 per cent, the two largest increases to politicians' pay in a decade.

But it amounts to a small pay cut in real terms, with inflation over the year to March sitting at 3.6 per cent.

In a statement, the tribunal noted pay rises for politicians had been smaller than average wage improvements.

"The tribunal is aware the remuneration increases it has awarded to offices in its jurisdiction over the past decade have been modest," it said.

"Including the current decision, the cumulative total of remuneration increases awarded by the Tribunal since 2015 amounts to 18.25 per cent. In contrast, remuneration increases more generally in the public and private sectors ... have equated to 24.4 per cent."

In its decision, the tribunal said the domestic economy was returning to balance, but inflation had run high through 2023 and was moderating more slowly than expected.

It noted the public sector workplace agreement for 2023 provided a 4 per cent pay increase from March this year to public servants, as well as 3.8 per cent and 3.4 per cent increases in 2025 and 2026.

Meanwhile, the wage price index rose 4.1 per cent over the year to March.

The tribunal said in its reasoning that pay for politicians must be "competitive and equitable", and "sufficient to attract and retain people of calibre.

"Many of these office holders do not expect or require that monetary compensation for their roles in the public sector be set at private sector levels," it said.

"Rather, office holders serve for the public good and the opportunity to influence economic and social policy initiatives."