Australian federal departments overspent by $2B
Key points
- Federal departments recorded a $2 billion public sector wage blowout over the last financial year.
- The Australian Government faces rising pressure to cut spending ahead of December's budget update.
- Departmental overspending poses ongoing challenges to national efforts aimed at reining in inflation.
Australian government departments exceeded public service staff budgets by more than $2 billion over the past financial year, averaging a blowout of $5.6 million per day.
This spending overrun contrasts with official targets to cut costs, as marginal reductions in contractor fees failed to offset rising public service wages.
“It looks as if departments and agencies are finding it a real struggle to hold the line on their costs,” said independent budget economist Chris Richardson.
The Department of Home Affairs recorded the largest individual wage blowout after spending $2.23 billion on staff costs against a planned $1.69 billion budget.
Upcoming enterprise bargaining pay increases are expected to add further cost pressures to future public service budgets.
Over the past four years, official budget projections indicate public sector staffing expenses are set to expand by $19.6 billion.
Overall public service headcount has expanded by 25% since 2022, with average staffing levels projected to reach 217,300 by 2026–27.
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