Australian federal politicians and public office holders will see their annual salaries increase by 3.5 per cent from July.

The independent Remuneration Tribunal says its decision aligns with the Fair Work Commission's recent decision to increase the minimum wage by 3.75 per cent.

Prime Minister Anthony Albanese's salary will rise from $586,929 to $607,471 per year, marking the first time his salary exceeds $600,000. 

Opposition Leader Peter Dutton's salary will increase to $432,239, reflecting a $25,000 boost.

The pay rise will also affect other high-ranking officials. Deputy Prime Minister Richard Marles will earn $478,968 annually. Treasurer Jim Chalmers and Senate Leader Penny Wong will each receive about $438,081 per year. Deputy Liberal Leader Sussan Ley's salary will rise to $367,988, while shadow ministers in the opposition will earn $292,054. Greens Leader Adam Bandt will receive $338,782 annually.

For backbench MPs, the pay increase means their annual salary will be approximately $233,643, up from $225,742. 

This translates to around $4,493 per week before tax, in contrast to the national average weekly earnings of $1,889 and an average annual salary of $98,218. 

The median annual salary in Australia is $67,600.

Announcing its decision, the tribunal highlighted the need for competitive and equitable remuneration to attract and retain qualified individuals for public office. 

“When determining remuneration for the broad spectrum of public offices within its jurisdiction, the tribunal’s primary focus is to provide competitive and equitable remuneration that is appropriate to the responsibilities and experience required of the roles, and that is sufficient to attract and retain people of calibre,” it stated.

The tribunal also acknowledged the public service motivations of many office holders. 

“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. Rather, office holders serve for the public good and the opportunity to influence economic and social policy initiatives,” it said. 

The tribunal noted that past increases for public office holders had been modest. 

Since 2015, cumulative wage increases for these positions have totaled 18.25 per cent, compared to a 24.4 per cent increase in the broader public and private sectors.

In addition to their salaries, federal politicians receive benefits such as travel allowances and transport expenses for parliamentary or political party trips, as well as budgets for political mail and online advertising.

While the pay rise is significant, it still represents a minor cut in real terms due to inflation, which was recorded at 3.6 per cent over the year to March. 

The tribunal's decision is part of an effort to balance the federal budget and consider movements in private and public sector wages. 

The Remuneration Tribunal's full statement is available here.