The federal bureaucracy lost another 1368 jobs in the past year, shrinking to its smallest size in 12 years.
The Australian Public Service shed staff in most parts of the country, including Canberra, employing 150,594 people on June 30 this year.
The public sector union called the latest cuts a "neoliberal attack" and a "massive con", saying the government was instead hiring private firms to do the work, which cost taxpayers more.
However, Finance Minister Mathias Cormann said Australians expected the government to be efficient, and the Commonwealth's workforce had stabilised after reaching much higher levels under Labor.
The APS now has about 4500 fewer staff than it did under John Howard's prime ministership in 2007.
Since winning office in 2013, the Coalition has used the final year of the Howard government as a benchmark for restraining the public sector's growth.
In 2007, the APS had one employee for every 133 Australians. Today, it has one for every 165.
However, Mr Cormann said the government used a different measure for its target – full-time-equivalent jobs across all Commonwealth employers, but excluding the military – and that that measure indicated the government's workforce was expected to grow this year.
Under the broader measure – which includes, for example, non-APS agencies such as the National Disability Insurance Agency, the ABC and intelligence agencies – the workforce was expected to add about 900 full-time jobs this budget year.
The public service was also modernising and becoming more effective, Mr Cormann said, thanks particularly to the government's investment in digital skills.
"While the staffing level of the Australian government workforce is steady, this workforce is more experienced than ever ... and its capability is growing ..."
The latest data coincides with a parliamentary inquiry into government contracting, which has examined the bureaucracy's use of consultants and labour-hire staff instead of public servants.
It remains unclear whether the total number of employees who are paid by government, including private sector workers, has increased, as such data is generally not reported.
Community and Public Sector Union national secretary Nadine Flood said the latest staff headcount confirmed "the Coalition has continued slashing quality, permanent jobs in Commonwealth agencies, hurting workers and doing further damage to essential public services and policy capacity".
"The government is taking the money it's gouging out of the APS through arbitrary job and budget cuts and showering it on corporations to do the same work at a higher price and generally a lower standard through contractors, consultants and labour hire. It's a massive con," she said.
In line with the Coalition's policy of decentralising the public service, most jobs growth was in regional areas.
Gosford (NSW) gained 361 employees, Geelong (Victoria) 179, Bunbury (Western Australia) 110 and the La Trobe-Gippsland region (Victoria) 91.
Perth was the only capital city to benefit; jobs were lost from most other areas of the country, including 534 from the ACT.
The Department of Human Services, which includes services such as Centrelink and Medicare, copped the steepest cut, losing 1168 employees over 12 months.
Shadow treasurer Andrew Leigh said the public service grew in line with population under the Rudd and Gillard Labor governments, "increasing every year except our final year, when they fell by just a few hundred".
"Under the Liberals, the cuts have exceeded the 12,000 they promised. Our public service has been literally decimated," he said.
"This hasn't just hurt Canberra: the census failure, the Centrelink wait-time blow-out and the robo-debt debacle are a direct result of savage public service cuts."
Dr Leigh said a Labor government would abolish the "arbitrary staffing cap and ensure Australians get the quality of public services they deserve".
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