Mounting evidence suggests public sector wages are exploding and taxpayers will be left holding the bag. Governments must get real about spending and restore fiscal rules or we will all pay the price.

For example, the mid-year economic and fiscal outlook failed to put aside sufficient money for rising public sector wages, exposing taxpayers to a $7.4 billion budget blowout. Also, state governments such as Victoria, Queensland and NSW are increasingly on the brink of debt rating downgrades – which will push up interest rate costs – after removing budget rules that sought to cap wage increases and link them to productivity improvements.