In a major speech outlining his view on the path the nation should follow in steering its way out of the COVID-19 emergency, Mr Albanese urged an end to policies that have capped public service jobs and forced the outsourcing of many government functions.

"The contracting out of essential public services is not in the national interest and must stop," Mr Albanese told a meeting of Labor MPs on Monday.

In a swipe at the federal government's robodebt program, which has had to be rebooted after erroneously ordering many welfare recipients to repay benefits, the Labor leader said it was "time to put human beings and human dignity back into human services".

Mr Albanese said the COVID-19 emergency had emphasised the importance of public institutions such as the Commonwealth Science and Industrial Research Organisation and exposed the cost of government cutbacks.

The CSIRO's expertise would be critical in building the country's high tech manufacturing capability, he said.

"But instead the government has slashed funding to the CSIRO, the very organisation now testing vaccines for the coronavirus," he said. "At a time we need muscle, the government has left us only bone."

Mr Albanese linked an end to the contracting out of public service jobs to a strategy to boost regional economic development by "restoring" the shopfront services of Medicare, Centrelink and Veterans' Affairs in regional areas.

Labor's public service spokeswoman, ACT senator Katy Gallagher, said Labor's decentralisation push was focused on reopening regional services rather than relocating existing jobs and agencies.

Senator Gallagher told ABC radio that "what we've seen is the closing of a lot of regional services and shopfronts".

"We value these things, they're important for our lives - then why don't regional Australia have the same access to them? They don't want to just be on the phone line forever or in a queue," she said.

Government figures show that there has been a 6.1 per cent fall in the number of federal public servants working in regional areas in the past four years.

Community and Public Sector Union national secretary Melissa Donnelly said Coalition public service job cuts, combined with a staffing cap, had caused "enormous damage" to the government's ability to deliver essential services.

Ms Donnelly backed Mr Albanese's call to end "inefficient and costly" outsourcing and labour hire practices.

"Investing in core public services is an important nation-building exercise that has to be part of our recovery, particularly for regional Australia," she said, adding that creating more frontline roles for services such as the Department of Human Services and the Australian Taxation Office would not only provide quick access to services but help ensure "these towns can rebuild."

Former Australian Public Service Commissioner Andrew Podger backed Labor's call to axe the APS staffing cap, which he said was unnecessary and counter-productive, and expressed concerns about outsourcing, particularly involving frontline positions in agencies such as Centrelink and the ATO.

But Mr Podger expressed deep misgivings about the idea of using public services jobs as a way to spur regional development.

The troubled relocation of the Australian Pesticides and Veterinary Medicines Authority to Armidale, during which it experienced a mass exodus of staff, underlined the challenges involved.

Rather than simply adding public service jobs to an area, Mr Podger said the government needed to consider how it could promote development based upon a region's comparative advantages and must work closely with state and local governments.

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Senator Gallagher said caps on public service staffing "make no sense at all" and cited the CSIRO as a "classic example".

"It's had a cap on it which has reduced the ability for permanent staff to do their work and they've been contracting it out and now as we're looking for a virus response, the government's having to shovel money into CSIRO because they've stopped its growth so much," she said.