The giant Department of Human Services, which runs Centrelink and Medicare, now has 70 per cent of its workers on less than average wages with tens of thousands of "frontline" service delivery staff on frozen wages for three years, the Senate has reported.

The government has used "misleading" information in its three-year dispute with its workforce, falsely claiming they enjoy "exorbitant wages" and "extravagant conditions", according to the Senate's Standing Committee for Education and Employment.

Most public servants are in fact paid less than private sector workers according to the report, and the three-year wage freeze imposed by the government's "toxic" approach to enterprise bargaining has left many public service families struggling financially.

But Coalition senators on the committee disagree with their majority Labor and Greens colleagues, with Liberal and National Party senators using research from a right-wing think-tank to back their insistence that public service workplace conditions are generous and that public servants are better paid than workers in private enterprise.

The committee's report Siege of attrition: the Government's APS Bargaining Policy was published on Wednesday evening and calls on the government to completely rethink its public sector industrial stance which has caused three years of industrial strife across the public service.

"As at May 2016, the majority of APS employees (53 per cent) were classified as APS5 or below and that the median base salary for an APS5 employee was $74 451 per annum which was below the adult average ordinary full time earnings of $78 832 per annum," the report states.

In the report, the committee slams the Coalition government for its campaign against its own public servants.

"The Australian Public Service (APS) bargaining process has been conducted against a backdrop of misleading claims that Commonwealth public servants are somehow paid exorbitant wages and enjoy extravagant conditions," the report reads.

"These assertion have been propagated by interest groups with an extreme ideological agenda such as the Institute of Public Affairs (IPA).

"Moreover these narrow and erroneous views have been endorsed and supported by the Coalition government."

The committee was scathing of the evidence of the IPA and its controversial legal fellow Aaron Lane after looking at wage conditions at Human Services.

"This evidence flatly contradicts the ludicrous assertions emanating from interest groups such as the IPA that public servants somehow enjoy overly generous wages and conditions when compared to the private sector," the committee wrote.

After hearing from numerous public servants in financial strife after a four-year pay freeze, including some who were working second jobs to make ends meet, the committee slammed the government's ban on back pay, which one ATO official described as "blackmail".

"The prohibition on back-pay has had a disastrous impact on many lower and middle-ranking public servants who are now struggling to meet their financial commitments," the report states.

In their dissenting report, the Coalition senators on the committee insisted that public service wages and conditions and benefits were "generous" and that any pay increases granted might flow on into the private sector.

"Any consideration of the government's bargaining policy must start from the premise that, as the APS Commissioner has submitted, 'public service employment conditions are generous," the Liberal and Nationals senators wrote.

"The government cannot afford further additional salary increases to public sector employees and the Australian public would rightly object if such increases were granted.

"There is a risk that wage increases above productivity gains may flow through to the private sector, which does not have the same capacity to absorb costs through increased taxation or by running continued budget deficits."