New rules would force agencies to report the pay of senior bosses and disclose the government's spending on contractors in reforms pushed by independent reviewers.
A draft paper by former Telstra chief executive David Thodey and Medibank Private chair Elizabeth Alexander says there is a lack of transparency around executive pay and expenditure on contractors in the public service.
It found that some agencies have continued to ignore a request from leaders of the Prime Minister's department and Finance department to voluntarily publish information about executive pay on their websites.
Companies, or individuals, receiving a large amount of the government's contractor spending would also have their names listed in annual reports under the new reporting rules.
The independent review of rules for government agencies released its draft paper amid growing scrutiny of the Coalition's booming spend on contractors, which has more than doubled in the last five years at the largest Australian Public Service workplaces.
Mr Thodey, the CSIRO's chairman, is also leading a separate independent inquiry into the federal bureaucracy commissioned by Prime Minister Malcolm Turnbull that may lead to its biggest overhaul in more than 40 years.
All government agencies and companies should report the pay - including allowances and bonuses - of individual senior managers in annual reports to at least the same level of transparency required of ASX-listed companies, the draft review found.
"There are high expectations around the timely and adequate disclosure of executive remuneration by listed companies," it said.
"Disclosure of executive remuneration should be at least as important in the public sector, where high transparency standards are expected."
The government should also establish reporting rules similar to others before 2013 that would force agencies to report the number, and average pay, of all senior executives and highly paid staff by band, the draft report recommended.
It said most agencies were open to disclosing their executives' pay and had reported being frustrated by recent changes to reporting rules, and confusion it had caused about how remuneration should be disclosed.
"They have asked for a clear and consistent approach for everyone," the report said.
After secretary of the Prime Minister's department Martin Parkinson wrote in May 2017 to portfolio secretaries asking them and their agencies to publish information on executive pay on their websites voluntarily, only half did so within the requested deadline, according to the report.
A joint request followed from Dr Parkinson and Finance secretary Rosemary Huxtable, but there were still agencies that had not complied, it said.
Agencies should report their total spend on contractors and consultants in annual reports, and departments should have to disclose the number of new and ongoing contracts, it recommended.
Businesses and individuals receiving 5 per cent or more of an agency's contractor and consultancy spending would have their name disclosed under the reporting rules.
In cases when this included fewer than five organisations or individuals, agencies would have to disclose their top five contracts and consultancy service providers by value.
The report urged the government to phase out hard copy annual reports, and require that they are presented to parliament on or before September 30, after finding current rules did not allow adequate scrutiny.
Ms Alexander and Mr Thodey met with heads and senior staff of multiple agencies during the review, including Dr Parkinson, Defence secretary Greg Moriarty and Ms Huxtable.
Labor called for the Coalition to reveal how much money it was spending on labour-hire firms instead of hiring permanent staff, accusing the government of waste.
Finance Minister Mathias Cormann said the appropriate use of consultants and other contractors kept the overall cost of government administration low, when agencies needed to access relevant skills temporarily, or the expertise was more efficiently obtained in the private sector.
"The bottom line is that the overall cost of government administration as a proportion of overall government expenditure, which includes the cost of consultants, is continuing to fall under the Coalition," he said.
Senator Cormann said the Coalition government would consider the final report's findings and recommendations.
Labor's finance spokesman Jim Chalmers, employment spokesman Brendan O'Connor and public accounts committee deputy chair Julian Hill said the public had a right to know how much money was going to contractors, consultants and well-paid executives.
Since the change of government in 2013, annual expenditure on labour contractors for 18 of the largest workplaces has ballooned from $318 million to more than $730 million as the Coalition imposed staffing caps and shed public servants.
The draft report is open for public comment until June 22.