The former top public servant, who led the Prime Minister's Department between 2008 and 2011 and now chairs the Centre for Policy Development, also called for an end to the "obsession with the contracted state".

Mr Moran, in an oration honouring businessman, politician and humanitarian Jim Carlton at the University of Melbourne on Monday, said the public service would need rebuilding for a third wave of reform following the post-World War II nation-building era, and the economic and social reform agenda starting in the 1980s.

He hoped the major review of the federal bureaucracy led by businessman David Thodey would end the "obsession" with outsourcing government work and called for several sweeping reforms to the public service growing transparency and public trust.

Calling for "big, bold ideas" driving policies and programs, Mr Moran said the federal bureaucracy would need to change if it was to pursue the next economic and social agenda replacing a previous wave of reform now losing support.

"Community sentiment has swung away from the primacy of light touch regulation of markets, the unexamined benefits of outsourcing, a general preference for smaller government, and a willing ignorance of public sector values and culture as a means of underwriting commitment to the public interest and the needs of communities," he said.

"Instead, there is increasing acceptance of a larger role for government, including involvement in service delivery, more effective regulation and bolder policy initiatives. Australians want government to be active and collaborative players, not just investors or market fixers. We know they support reinvestment in the delivery of essential services."

Mr Moran called for a return of security for the most senior public servants letting them safely offer tough, independent professional advice "in the face of stakeholder blandishments, whims and aggravation at the ministerial level".

"We must return to a public service able to provide frank advice to ministers while securing continuity in our system of government," Mr Moran said.

"This must involve respect for the culture and values of the public service, a significant investment in its capability and acknowledgement that the untested and supposed superiority of the private sector is actually an illusion cultivated by rent seekers monetising service delivery opportunities, constraining advice in the public interest or pretending that efficiency and nothing else matters."

Ministerial advisers must have their roles formalised and come under the scrutiny of parliamentary committees and integrity bodies.

Since growing in influence under Gough Whitlam, their roles had morphed into something "quite different and dangerous".

"It needs far more formality and accountability to avoid a descent into assaults on the national interest," Mr Moran said.

The public service also needed an integrity watchdog with a broad brief to investigate maladministration, deficient policy advice and incompetence in program management.

This reform would likely work better if freedom of information laws were reformed to reduce opportunities for departments to reject requests for documents.

Freedom of information regimes today encouraged obfuscation, Mr Moran said.

"Other comparable democracies have disclosure regimes that look like the speed of light compared to our glacial progress. It breeds distrust and needs to stop."

A stronger public service commission should bring together functions scattered to PM&C;, the Department of Finance and departmental secretaries when the Public Service Board was abolished.

Mr Moran also called for an overhaul of laws governing political donations.

"Unless we renovate our institutions and the approach taken by the federal government to the delivery of services we are at risk of heightened populism in the next decade and all the disharmony and simple nastiness which will flow from it."

The ex-Prime Minister's Department secretary spoke a week after the public service review panel, led by Mr Thodey, released interim findings and recommendations for reform.