Defence pay of rise 1.5% 'insulting'

Labor and defence lobby groups have slammed the new defence pay deal which will give uniformed personnel a pay rise less than inflation.

Australia's defence personnel will get a 1.5 per cent pay rise under a new government deal. (AAP)

The government doesn't think a 1.5 per cent defence pay rise will hurt recruitment, given generous salaries and allowances.

But Labor has branded the below inflation pay increase as disgraceful and the Defence Force Welfare Association calls it insultingly low.

The Defence Force Remuneration Tribunal has signed off on a three-year pay deal with a 1.5 per cent increase for defence's 57,000 full-time uniformed personnel and 20,000 reservists and the loss of some leave days and allowances.

Assistant defence minister Stuart Robert says it's as good as can be offered under the current economic circumstances.

"We would love to give our fighting men and women more money, but we can't. We don't have it," he told ABC television.

Mr Robert says it won't hurt defence recruitment.

"We say to those coming in there's a salary. It's generous. There's an enormous number of allowances. There's subsidised housing. There's free ADF health care," he said.

But Opposition Leader Bill Shorten says Prime Minister Tony Abbott should hang his head in shame.

"The government's own budget papers reveal the funds for a fair pay deal had already been provided for," he said in a statement.

Defence Force Welfare Association national president David Jamison urged Mr Abbott to intervene.

This "insultingly low annual increase" was a strange way to reward defence personnel for their dedication and hard work, especially as the government had just dispatched a new contingent to Middle East, he said.

"This so-called increase represents barely half the expected annual inflation rate and an even lesser proportion of the expected rise of annual living costs," he said in a statement.

The tribunal said the 1.5 per cent rise was less than in earlier agreements and likely less than inflation over the next three years.

But it said it was negotiated in circumstances requiring wages policy to be observed and for genuine productivity and efficiency gains to be identified and costed.

The pay deal comes into effect on November 4.