Several of the Albanese government’s biggest departments collectively exceeded their staffing budgets by about $5.6 million every day during the last financial year.
Annual reports reveal that more than 40 federal departments and agencies spent over $2 billion beyond their combined forecasts for employee costs.
The Department of Home Affairs recorded the largest blowout. Its employee expenses climbed to $2.23 billion, exceeding the budget by $275 million.
The National Disability Insurance Agency was $224.6 million over its staffing allocation, while the Department of Climate Change, Energy, the Environment and Water exceeded its forecast by $197.6 million.
Staffing costs at the Department of Agriculture, Fisheries and Forestry were $157.1 million higher than budgeted. Employment and Workplace Relations also surpassed its allocation, by $135.1 million.
The Department of Health, Disability and Ageing reported a $129 million overspend on employee expenses.
The figures come as Treasurer Jim Chalmers and Finance Minister Katy Gallagher face growing pressure to rein in government spending before December’s Mid-Year Economic and Fiscal Outlook.
The Reserve Bank is also widely expected to raise interest rates again on Tuesday, after underlying inflation accelerated during the September quarter.
Katy Gallagher (pictured) acknowledged on Sunday that the ‘pressures on the budget are real’
Financial markets have placed a strong probability on a quarter-point increase, which would lift the cash rate from 4.60 per cent to an 18-year high of 4.85 per cent.
Gallagher admitted on Sunday that pressure on the budget was intensifying as ministers look for savings ahead of the economic update.
Appearing on ABC’s Insiders, the Finance Minister said the government was facing rising demands across several major spending programs.
“The pressures on the budget are real,” she said.
“The pressures on the budget are increasing, not decreasing, and so not only is it how do we manage those, it’s how do we repair the budget over time.”
Gallagher pointed to the National Disability Insurance Scheme, healthcare, aged care, defence and interest payments on government debt as the main sources of spending pressure.
“When you look at the areas of growth, when we came to government and they haven’t changed really, but it’s been NDIS, healthcare, aged care, defence spending and interest on government debt,” she said.
Host David Speers questioned whether the scale of those demands had made it increasingly difficult for the government to control expenditure.
Jim Chalmers (pictured) is facing pressure ahead of an expected interest rate rise on Tuesday
Gallagher rejected the suggestion, while conceding that the budget was under mounting strain.
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“No, I’m not saying it’s too difficult, but I am saying that there should be some acknowledgement of the world in which we are living and the pressures on the Commonwealth budget,” she said.
‘They are real, they are increasing, and we have to deal with them.’
Pressed on whether the government would deliver net savings in the December budget update, Gallagher declined to make a commitment.
‘I can’t get ahead of decisions that haven’t been made yet,’ she said.
However, she said ministers were working intensively to find savings.
‘There is enormous effort being placed, particularly by Jim and myself, on the savings side,’ Gallagher said.
Asked whether any areas would be protected from savings measures, Gallagher indicated spending across government was under review.
Budget blowouts under the Albanese government are costing taxpayers $5.6million per day
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How should the government balance public service pay with the growing pressure on the national budget?
‘We look across the board,’ she said.
‘I would not say that any area is exempt from the scrutiny that the Department of Finance applies.’
While many large departments blew out their staffing budgets, a small number spent less than forecast.
The Australian Taxation Office spent $76.8million less than budgeted on employee benefits, while the Department of Social Services underspent by $35.1 million.
The employee-cost overruns occurred as federal tax collections continued to climb.
Personal income tax receipts surged by $28.5billion in 2025-26 alone, taking total collections to about $346 billion.
When Labor came to office in 2022, personal income tax revenue stood at about $242 billion.
The increase partly reflects bracket creep, under which rising wages can push workers into higher tax brackets, as well as employment, population and income growth.