Commonwealth wages surge 7.2% complicates Labor's budget savings hunt
Commonwealth wages jumped 7.2 per cent, adding $2.9 billion to costs as the government hunts for savings.
The Commonwealth's public sector wages rose 7.2 per cent in 2025/26, blowing out cost-control efforts as the government prepares the December budget. The wage bill expanded by an extra $2.9 billion to a total of $41 billion, even though headcount grew by just one per cent to 389,200 staff.
Treasurer Jim Chalmers and Finance Minister Katy Gallagher are searching for savings ahead of the mid-year update. The government is locked in tough pay negotiations with public sector unions, which rejected an initial offer of nine per cent over three years and are demanding up to eight per cent annually, plus AI protections.
Agencies must fund any pay rise from their existing budgets, which are indexed to inflation each year. State and territory governments saw faster job growth at 2.8 per cent but only grew by 6.6 per cent in wages, well below Commonwealth growth.
- 7.2 per cent
- Commonwealth wage growth
- $2.9 billion
- Cost blowout
- $41 billion
- Total wages bill
- 389,200 staff
- Commonwealth headcount
Why it mattersEconomists have blamed high government spending for contributing to inflation and the Reserve Bank's decision to keep lifting interest rates, raising mortgage costs.
AustraliaAustralians face ongoing high interest rates and mortgage pain while government struggles to contain spending that's contributing to inflation.
✓ Claims checked against the source and corrected before publish. checked 2 d ago
