By Neve Brissenden in Sydney

A decision to bend to a rail union’s demands in the hopes of a resolution has been labelled stupid by the very leader who made it.

The Rail, Tram and Bus Union offered the NSW government a peace deal on Sunday, promising to pause all protected industrial action if it made public transport travel free until an agreement was reached.

The Labor government and the union have been at loggerheads for months over a new enterprise agreement.

An application by the government to the Fair Work Commission will be heard on Christmas Eve when the industrial umpire decides whether to suspend the union’s industrial action.

In a leaked memo to the government, the union set out its offer in response to the application.

“Although your application seems to be based on an erroneous understanding of the action that is organised (and) economic evidence consisting entirely of assumptions,” the leaked union offer reads.

“We nonetheless write to offer a way forward which would enable there to be minimal disruption on New Year’s Eve and over the festive period.”

The union offered to pause all action until January 7 if the government waived fares for Sydney commuters until an agreement was reached.

Union NSW secretary Toby Warnes said he had not heard from the government on Monday morning.

Premier Chris Minns said the deal would be rejected, despite agreeing to free fares over two weekends since June to appease the unions and reach a deal.

“I stupidly agreed to that twice in the last six months hoping that it would solve the industrial dispute, but nothing changed,” he told reporters on Monday.

“It’s a trust issue, we don’t trust the union to follow through from all their industrial demands.”

The premier said the government and taxpayers couldn’t afford to have fee-free fares indefinitely.

The union continues to demand a pay rise of eight per cent a year for four years, which Mr Minns has said is unaffordable.

He said the government won’t provide it while it is denying nurses a similar claim.

The government previously offered 11 per cent across three years, including superannuation increases.

On Friday, NSW Police Commissioner Karen Webb threatened to call off the world-famous New Year’s Eve fireworks event on Sydney Harbour, citing safety reasons concerning planned industrial action.

“I have grave concerns,” she told reporters.

“I haven’t ruled out that I will recommend to the government that we cancel the fireworks.”

Mr Minns said cancelling the fireworks was not off the table, but he had other tricks up his sleeve before it got to that point.

“We do have options if we’re unsuccessful tomorrow, I don’t want to speculate on them … but you know, nothing’s off the table,” he said.

Hundreds of trains were cancelled at the weekend as a result of the union’s industrial action, although Mr Warnes said track work also contributed to delays.

“It is, of course, a convenient excuse for disruption that’s caused by regular maintenance work,” he told ABC News on Monday.

“But we say to commuters that the government now has an offer on the table that would see absolute peace until January 7.”

Mr Warnes wants commuters frustrated by the industrial action to bottle their anger to take to the 2027 election.