A few days prior, an official sitting at a computer in the Treasury building in Canberra sent out an alert.

Across the Sydney trading rooms of the big four Aussie banks and the local arms of international banks – about 15 of them in total – an alarm sounded and a message flashed on screen to notify them of the upcoming event.

Traders hit the phones, talking to bank clients to see: "Do we want in?"

At 10.45am on Wednesday, the traders logged in to a special computer application called "Yieldbroker" where they began to make bids.

For what?

For government debt, or "bonds". When you or I want a loan, we go cap in hand to the banks. When the government wants to borrow, the bankers come cap in hand to it. You and I take out a mortgage. The government issues "bonds".

Since the global financial crisis and the blow out in Australia's budget deficits, these bond auctions have been happening with increasing regularity.

It's a blind auction. Traders can't see the bids from other banks.

A trader for Deutsche Bank might decide to lodge a bid for $250 million worth of 10-year bonds at a yield of, say, 2.35 per cent.

What does that mean? Essentially, Deutsche Bank agrees to hand over to the government a quarter of a billion dollars for a period of 10 years, after which time the government must give it back. In the meantime, Deutsche Bank will receive an annual interest payment of 2.35 per cent each year.

The government will use the money to fund the gap between its incoming revenue and outgoing spending.

Deutsche will probably sell the bond to a client, perhaps a pension fund, hedge fund, sovereign wealth fund or central bank. And collect a fee for the service, of course.

Turns out about two-thirds of Australian government bonds end up in the hands of foreigners. Japanese pension funds have been particularly interested as we've started offering longer term bonds.

After 15 minutes of bidding, the gavel comes down on the auction when the Treasury official clicks "finalise" on his or her screen. The computer system then automatically sorts and assigns successful bids - whoever has offered to accept the lowest interest payments on the bonds. All this happens within a second or two, when traders are advised if they have been successful.

At Wednesday's auction, the government received 39 bids to buy a total of $2.25 billion of bonds, of which 15 were successful and $900 million issued. The government agreed to pay an average yield of 2.43 per cent.

We've come a long way. In years gone by, bidders had to write on pieces of paper and put them in a box.

Today, our government can slip ever deeper into debt with just a few keystrokes.

The blow out in government debt is the sleeper issue of this election. Both parties have decided to abandon the so-called "debt and deficits disaster". But on it ticks.

Whichever party takes power will, within its first year, be forced to issue a new direction to allow government debt to exceed the current $500 billion limit.

Today the government has $435 billion worth of securities – mostly bonds – on issue.

By 2026-27, this will hit $640 billion. Former Treasurer Joe Hockey lambasted Labor for leaving a debt legacy of $667 billion – just one billion more than the devil's number.

But in reality, the Coalition has done nothing to stem the debt flow.

It isn't a disaster. Our net debt position remains low compared to other countries. Six countries with AAA ratings have a higher net debt to GDP ratio than us, including New Zealand, Canada and USA. But our debt is growing more rapidly than most.

And there are hidden costs.

As the heads of Treasury and Finance pointed out last week, it leaves us exposed. "Should Australia experience a significant negative economic shock or increased interest rates or debt levels rise above current projections over the medium term, the debt burden will impose an increasingly significant cost on the fiscal and economic outlook."

Presently, investors are falling over themselves to bid for our debt. Although the coverage ratio at auctions – the amount of bids made to the amount of bonds on offer - has fallen slightly, from three times, to two and a half, as the amount on offer has risen.

But the real issue is what this debt is being used to fund.

Borrowing to invest in things which increase the economy's productive capacity, like infrastructure and education, makes sound financial sense. The economy will be bigger because we borrowed and we'll be able to repay the debt comfortably, plus interest.

But the federal government today is in debt simply to fund "recurrent" expenses, like pensions and welfare.

As a community, we simply refuse to pay enough tax to cover the cost of all the goodies we expect from government.

As a result, we are forking out $15 billion a year in interest on gross government debt, rising to $19 billion a year by 2020.

That's about three times our foreign aid budget and roughly what the federal government spends on schools each year.

Neither party is being honest about the true cost of our budget denial.

As the Treasurer and Shadow Treasurer square off on Friday morning at the National Press Club, another auction for Treasury bonds will have just gone off.

The nation will be a billion dollars deeper in debt.

Whoever wins, those auctions will just keep ticking over.