During a heated exchange in Senate estimates on Thursday, Labor senator Katy Gallagher told Senator Cormann she had asked 70 public agencies to detail their contractor and consultant spend over the past five years through a series of questions on notice.

She found contractor spend had risen from $1.25 billion in 2014 to nearly $3 billion in the 2019 financial year.

Spending on consultants also jumped from $284 million in 2014 to $554 million in 2019.

When including Defence and National Disability Insurance Agency outsourcing, it took the grand total to $4.8 billion.

The increased spend has come as the size of the permanent public service workforce shrinks.

In June 2019, there were more than 132,000 people employed permanent in the Commonwealth bureaucracy and more than 15,000 non-ongoing staff.

In June 2014, there were nearly 158,000 public servants, including nearly 145,000 staff.

Senator Gallagher said the figures were concerning.

"I can't think of another area of government where if we'd seen a doubling in expenditure in three or four financial years that Finance wouldn't be asking some questions about what's going on here," she said.

However Senator Cormann said departmental expenses, as a percentage of total government expenses, was falling.

"That includes the cost of consultants and contractors," Senator Cormann said

"And, you know, there are clearly circumstances where it's more appropriate to engage a contractor or consultant ... either the need is temporary or there's a spike in demand that is not ongoing and it doesn't make sense to hire an additional person on a permanent basis, or where there are very specialised skills that are better, obtained and maintained ... in a dedicated private sector business.

"There are a whole range of circumstances where the use of contractors and consultants can be a very effective way to keep the overall cost of government administration low."

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Senator Gallagher pointed to the Aged Care Safety and Quality Commission, which told a Senate inquiry recently it was using labour hire staff to get around the average staffing level cap.

"These are the assessors that assess whether or not aged care facilities meet the standards, the job of these people doesn't seem to me [to be] really a temporary kind of employment arrangement, yet 27 per cent of the workforce is employed on labor hire, does that fit your understanding of specialised or temporary?" Senator Gallagher asked.

Senator Cormann said departments that needed extra people were able to ask for their ASL to be raised.

"But it's good housekeeping, it's good management, it's good financial control, to ask agencies to be able to confirm that they have, before asking for additional ASL, that they've made an effort to look at their existing resources, to see whether all of the things that were done in the past are still priorities at present, or whether there is a capacity to reprioritise within existing resources, that should always be the first step," he said.

Senator Cormann also said department heads had an obligation to ensure they were delivering value for taxpayer money.

"An agency head that made a decision along the lines of you describe to essentially procure services in a way that is not value for money would be breaching their their obligations," Senator Cormann said.

It comes as the Greens try to instigate a Senate inquiry into outsourcing in the public sector.

Greens leader Adam Bandt said the figures proved outsourcing was "out of control".

"We need a wide-ranging inquiry into the full impacts of privatisation and outsourcing," Mr Bandt said.

"We've seen the impact of privatisation and outsourcing in the federally-managed aged care sector, as well as Melbourne's hotel quarantine and contact tracing. This ideological push to outsource can cost lives."

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