NSW public sector workers will get a 4.5 per cent wage increase, as the state government announced it has established a taskforce to abolish the wages cap.

NSW Treasurer Daniel Mookhey says the pay rise, effective from July 1, will include a one-year, 4 per cent wage increase and 0.5 percentage point increase in superannuation.

“This will be the biggest pay increase the NSW public sector has gotten in more than a decade,” Mr Mookhey said on Monday.

He said the Industrial Relations Taskforce, to be headed by former Fair Work Commission Deputy President Anna Booth and former NSW Industrial Relations Commission President Roger Bolan, and oversighted by the IRC, will come up with  “a modern industrial relations framework” to replace the wages cap, currently at 3.0 per cent per annum.

Removing the 2.5 per cent public sector wage cap was a key Labor election promise.

The taskforce is due to report back to the government before the end of the year.

The pay rise will put a $618 million dint in the state budget in the next financial year.

It comes after the state government last week announced a wage freeze for senior NSW public sector executives and MPs.