Commonwealth Wages Rise 7.2 Per Cent in 2025/26
Public sector pay growth outpaces the private sector as Treasurer Jim Chalmers searches for savings before the December budget update.
Updated on Nov. 5, 2026 in Employment
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Commonwealth government wages and salaries rose 7.2 per cent in 2025/26, the Australian Bureau of Statistics reported on Thursday. Public sector headcount grew by one per cent to 389,200, adding $2.9 billion to the $41 billion wages bill.
Why it matters
The figures land as Treasurer Jim Chalmers and Finance Minister Katy Gallagher look for savings ahead of the December mid-year budget update. Agencies must fund pay rises from existing budgets indexed to inflation, which puts pressure on spending decisions across the Commonwealth.
The Australian Bureau of Statistics reported Commonwealth wages growth of 7.2 per cent, down from the prior year's 9.5 per cent. Public sector headcount reached 389,200 and the total wages bill stands at $41 billion, though the stub does not explain how the government plans to contain future growth.
The players
Australian Bureau of Statistics
Australia's national statistical agency, responsible for publishing official employment, wages and economic data.
Jim Chalmers
Australia's Treasurer, leading the government's budget strategy and search for savings ahead of the mid-year update.
Katy Gallagher
Australia's Finance Minister, responsible for public sector employment and government spending oversight.
The details
Public service wages outpaced private sector wages over the same period, while the Department of Climate Change, Energy, Environment and Water spent $258 million on consultants in 2025/26. Unions overwhelmingly rejected the government's initial offer of nine per cent over three years and are seeking increases of up to eight per cent per year for tax office workers.
Timeline
The 2025/26 financial year saw Commonwealth wages rise 7.2 per cent.
The Australian Bureau of Statistics released the wage figures on Thursday.
The mid-year budget update is scheduled for December 2026.
Market Dynamics
Commonwealth wage growth slowed from the 9.5 per cent recorded the previous year to 7.2 per cent in 2025/26, according to the Australian Bureau of Statistics. The moderation sits against a backdrop of Treasury efforts to cut reliance on external consultants, which has been a factor in overall public service cost growth.
Public sector pay growth affects federal budget decisions that can shape government spending, service delivery and hiring across Australia. Agencies must absorb pay rises within existing budgets indexed to inflation, which may limit room for new programs.
The takeaway
Wage growth in the public sector is running ahead of private sector pay, and the December budget update will show how the government intends to balance that against its savings goals.
What happens next
The government's mid-year budget update in December 2026 is expected to set out its savings plans in response to rising public sector wage costs.
Further reading
For more on how public sector pay is shaping national spending, see Employment coverage across Australia.
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