After a Coalition-dominated parliamentary inquiry into the mining industry's role in regional communities found labour hire could hurt people living in the bush, the Community and Public Sector Union has called out the government for hypocrisy.

Finance and Public Service Minister Mathias Cormann defended the Coalition's contractor use, saying the cost of government administration had fallen.

CPSU assistant national secretary Michael Tull said Liberal and National MPs on the committee, led by Barnaby Joyce, had come to realise the damage labour hire caused workers, their families and entire communities.

"That’s true for thousands of jobs that have been privatised in Commonwealth agencies like Centrelink and the Tax Office, many of them in regional communities, just as much as it's true for the mining and resource jobs that are the focus of this report," he said.

"This Coalition-dominated committee has made extremely positive recommendations to combat the damage caused by labour hire, but these are members of the same government that's adopted a destructive and arbitrary cap on staffing numbers that's designed to create exactly the sort of inferior, insecure work that's criticised in this report."

The inquiry's committee raised concerns about the increased use of casual labour hire by mining companies and the rise of fly-in and drive-in workforces.

"Workers who are employed under this model face financial difficulty and are often forced to move to capital cities for work, creating a 'second class' of mining employee," it said.

"These kinds of work practices can be damaging to communities, impacting on companies' social licence to operate, and should be reviewed."

Promoting moves to legislate against further outsourcing, it called for a review into the use of casual workers and labour hire companies in mining and other sectors.

It recommended the government consider changing workplace laws to prohibit replacing directly-employed, full time workers with 'permanent casual' employees, and to guarantee workers a legal right to convert from casual to permanent employment after a period of time.

The CPSU said the Coalition government was creating insecure jobs by capping its own workforce and resorting to contractors, pointing to its spend on consultants KPMG, EY, Deloitte and PWC, and its use of 2750 contracted Centrelink call centre staff.

"The government could have spent the same money to create quality Commonwealth jobs in regional communities, but has instead elected to pay for low-grade employment in Australia’s major cities," Mr Tull said of the Coalition's use of Centrelink contractors.

"Instead of decent, steady employment directly with Centrelink, these people have no job security, get paid less and receive the bare minimum of training."

Mr Tull called for an end to the cap on public service staffing that had forced agencies to use contractors.

Senator Cormann said the appropriate use of contractors, including consultants, was an efficient way to keep the overall cost of government administration low when the need to access relevant skills was temporary or the expertise was better found in the private sector.

"Contractors and consultants have been used by governments of both political persuasions and there has been no material change in the cost of consultants as a proportion of overall government expenditure over time," he said.

The overall cost of the federal government’s administration as a proportion of total spending, including the cost of consultants and contractors, had fallen from 8.5 per cent in 2007-08 to 6.8 per cent in 2017-18 and was projected to continue falling to 5.6 percent by 2021-22, Senator Cormann said.