The Police Association says the government's pay offer fails to recognise how far officers have fallen behind inflation over the past three years.
An independent arbitrator has decided the government's offer is fair.
It includes a $1500 lump sum payment and a flat $5000 pay increase backdated to November last year, plus another 4 percent increase in July and again in 2025.
There will also be a 5.25 percent increase in allowances backdated to last November.
Police Association members rejected a similar offer in April, saying it was nowhere enough and staff would leave in droves.
"We're obviously disappointed, and the members certainly are," Police Association president Chris Cahill told Morning Report.
Police union on lost arbitration case
"On the face of it, some people would say it's a pretty good deal - but what it fails to recognise is how far police officers fell behind inflation over the last sort of three-year period. And a lot of this is, you know, projected out rather than to catch up on that.
"And the… concern for officers is that there's nothing in here that recognises the increasing demands, the increasing risks, the complexity of the role and and they just feel because there's been no right to strike. They haven't had those increases that nurses and teachers have received over the last period."
Analysis earlier this year found police pay at a 50-year low, compared to minimum and average wages, with teachers not faring a lot better.
Cahill said police's drawn-out bid for better pay got caught in bad timing - the new government preaching austerity and tightening budgets across the public sector.
He said there would need to be a lot of work done between now and June 2026, when this deal expires, to "address some of the fundamental problems with police pay" and stop the force bleeding officers to Australia and morale falling further.
Recruitment to replace departing police officers was a "tight balance" at present, Cahill said, but the union held a "pessimistic" view.
"We've got to get police out of all this mental health stuff that sucks up so much police time, which isn't actually what police should be doing. A lot of the family harm stuff that's really dysfunctional families, rather than actually family harm, so police can get back to doing the things that this government wants them to do as well - see the cops out on the beat, investigate the burglaries, chasing the gang members.
"And, you know, if we can get more of a focus on that going forward, that at least gives them a bit of focus than getting involved with mental health and those sort of things."
Deputy Police Commissioner Jevon McSkimming told Morning Report there would be a "range of emotions" at the arbitrator's ruling.
"I think we have to acknowledge that some staff will be disappointed. But you know, we believe that policing is still a highly sought-after career. We have an excellent reputation both in-country and across the world for being one of the most progressive and rewarding roles in policing, so we think we still have a value proposition for people."
McSkimming said pay was not the only reason people joined the force.
"It's an exciting job. You get to literally save lives and keep people safe, but also you have a hands-on benefit to the communities that you work in, and often that's for the communities where people come from."
As for the government's tightening of the public purse, McSkimming said police were "not immune".
"I think we've got to focus forward. The first thing we need to do is get the pay into people's accounts, which we'll be working as hard as possible to do, and then focus on what our role is - and that, really under these sort of challenging constraints, it's been very clear that our role is about keeping our community safe and engaging our staff in that."