This is a study of the renegotiation of pay, employment security, and of the relationship between government and public sector unions, in an Australian state public service during and after the global financial crisis. It examines the extent to which this renegotiation of the ‘public service bargain’ was necessitated by austerity requirements, and the extent to which the crisis provided an opportunity for the deprivileging of public employment that has been an enduring feature of the neoliberal state. A case study of the different approaches of two Queensland governments to their relationships with public sector workers between 2009 and 2014, it tracks two key measures of wages and staff numbers, as well as the consequences of breaches of the trust relationships of the traditional public sector bargain. Given the moderate nature of Australia’s economic downturn, the implementation of public service austerity measures was less an economic necessity than an opportunity for a conservative government to alter employment policies and sever union relationships. This continuation of public sector employment relations favoured by previous conservative governments had electoral consequences.