Opposition finance spokesman Jim Chalmers said in a pre-budget speech on Tuesday the government should reveal how much it spends on contractors, consultants and labour hire following deep cuts to public service jobs.

"At the same time as vulnerable people are lectured about tightening their belts they see a government spraying billions of extra dollars on contractors, consultants and labour hire," he said.

Dr Chalmers announced that Labor would overhaul government reporting of its contractor spend with several reforms, including changes forcing agencies to keep records of sub-contractors used.

Departments would have to track the number, length of service and cost of labour-hire firms with government contracts, a reform apparently responding to a parliamentary probe into contractor spending where agencies failed to put a number on their non-public servant workforce.

Following criticisms raised in the inquiry about confusion among departments between contractors and consultants, Labor said its reforms would set clear definitions for each.

Finance Minister Mathias Cormann defended the Coalition's use of contractors, saying it was an efficient way to keep the overall cost of government administration low when it temporarily needed access to relevant skills and expertise, or when these were more efficiently obtained in the private sector.

Senator Cormann said the overall cost of the federal government’s administration as a proportion of its total expenditure - including spending on consultants and other contracts for goods and services supporting government administration - had fallen from 8.5 per cent in 2007-08 to 7.1 percent in 2015-16 and was projected to continue to fall to 5.6 percent by 2020-21.

Spending on contractors and consultants was included in the audited financial statements of agencies annual reports, he said.

Major government agencies have more than doubled their spending on contracted labour in the last five years as the Coalition slashed their workforce, while a 2017 audit report showed its moves to cut 15,000 public service jobs coincided with a doubling in spending on consultants.

Dr Chalmers said a Labor analysis of the website for federal government tenders, AusTender, showed the Coalition had more than tripled labour hire spending, from $201.1 million in its first year in 2013-14, to more than $750 million in 2016-17.

"Of course, the Finance Minister has already tried to argue that these numbers – his own numbers, incidentally, from his own government’s own website – aren’t reliable."

The Coalition's staffing caps and cuts to government staff numbers since 2013 had forced agencies to spend more on contractors and consultants by hollowing out the public service, Dr Chalmers said.

Senator Cormann said AusTender did not report government spending but the maximum value that may be committed under a contract, and only reported the total value of multi-year contracts at a point in time.

The main public sector union, which has long criticised government staff cuts and rising contractor spending, said the Coalition was lining the pockets of private interests while hurting the quality and reliability of public services.

Community and Public Sector Union national secretary Nadine Flood said Labor proposed reforms were "commonsense solutions" and "an important first step".

"It’s just as important to tackle the underlying causes of this damaging trend, including scrapping the Turnbull government’s ideologically motivated cap on staffing levels and restoring public service jobs," she said.

“The vast majority of Commonwealth work being carried out by these private interests was previously in the hands of public sector workers before agencies were hollowed out by wholesale job and budget cuts, including through the so-called ‘efficiency dividend’.

"The only sensible solution to this is to cap the spending on consultants, contractors and labour hire and reinvest that money to rebuild the public sector’s critical in-house capacity, while also scrapping the efficiency dividend."