The Senate has criticised moves to outsource the Department of Human Services' $30 billion payment system.
Labor, the Greens and Palmer United Party senators expressed concern at what the motion from Greens senator Richard Di Natale labelled the privatisation of the Medicare payment system.
Human Services Minister Marise Payne said the outsourcing was not a selloff but an investigation into an IT upgrade to replace an outdated system.
She said after years under "Labor's mismanagement and waste", the government was focused on improving the way services were delivered and said that claims about privatisation and job losses were irresponsible and alarmist.
Palmer United Party senator Glenn Lazarus said selling off assets would reduce jobs for Australians.
"The only way we can ensure jobs stay in Australia is to own Australian government services and assets," he said.
The vote followed a "stop the Medicare selloff" advertising campaign launched this week by the Community and Public Sector Union, which said outsourcing the payments system would endanger jobs and data security.
Outsourcing would see the administration of $30 billion annually in Medicare and pharmaceutical benefits scheme payments farmed out to the private sector.