Under questioning from Labor's spokeswoman on the public service, Katy Gallagher, Senator Cormann acknowledged "that environment has changed," regarding the budget situation that led to the average staffing level cap being introduced in 2014-15.

Senator Cormann said the budget would be back in surplus this financial year, but that as always any increases to the public service would be "as high as necessary and as low as possible".

"I don't want to send a message here that it's open slather on the size of the public service."

Senator Cormann said when the Coalition came into government it inherited "a rapidly deteriorating budget position" and the decision to restrict the number of public servants to the same number as in 2006-07 had been part of budget repair measures.

"2019-20 is, obviously, when we are returning to surplus, so you know moving forward, obviously, we will continue to make judgments to ensure that the size of the public service is appropriate.

"But you know, obviously at some point, there will be growth in the size of the public sector, but as high as necessary but as low as possible because in the end we've got to continue to treat taxpayer dollars wisely in that regard."

Senator Gallagher asked if that meant the policy to cap public service staff numbers was coming to an end, but Senator Cormann didn't say that would be the case.

"Obviously, now that we are in surplus that environment has changed, but we will continue to make sensible decisions when it comes to making decisions on additional public service resources," Senator Cormann said.

The Finance Minister said the policy wasn't necessarily a cap, but an "offset" and said departments must first consider whether internal resources could be "re-prioritised" to deliver new programs before coming to the government asking for more funding for more staff.

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Senator Cormann said if an agency had made the assessment and still needed more permanent public servants, the request could be made, but the government wouldn't approve them with the "automaticity" of former governments.

"The fiscal environment is more benign now than what it was when we came into government. By the same token, we will still be focused on ensuring that the public service is as efficient, as productive, and as responsive to community needs as possible."

When asked about reports the CSIRO had refused work that would have been paid for by an external party due to the staffing cap, Senator Cormann accused the union of "myth creation" around the staffing cap.

"If there is a good case as to why the additional [average staffing level ] are required and the explanation is provided that the opportunity for re-prioritisation of existing resources has been exhausted, that absolutely can and would be considered by the government."

"The proposition somehow that there is inflexibility in this rule is wrong. It is something that a particular union has been trying to suggest for some time, falsely."

Senator Cormann took on notice how many exemptions to the staffing cap had been granted and under what circumstances.