The opposition on Wednesday slammed the Coalition's decision to shrink the agency that runs Centrelink and delivered welfare payments to 1.5 million Australians in the pandemic, after budget papers revealed Services Australia would lose 800 staff next year.

Senator Gallagher said while the budget showed growth in agencies such as the Prime Minister's Department, the priority should be the agency that answered calls from people needing the government's help.

"That is disappointing because you take 800 staff out of Services Australia and the waiting times will go up and the staff will be overworked again," she said.

The ACT Labor senator also criticised the government's decision to keep its staffing cap on the public service, calling it a ridiculous policy that had forced agencies to buy in private sector services at higher rates.

Senator Gallagher said the Coalition did not care about public servants.

The Community and Public Sector Union welcomed the overall growth in staffing numbers flagged in the budget, but said it wouldn't restore the jobs lost since the Coalition won power in 2013.

The union said the government had finally admitted its staffing cap for the public sector was not working.

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"It is failing the Australian community who rely on public services and the public sector employees working so hard to deliver those services," the union said.

Job cuts at Services Australia would lead to more long call waits for people calling Centrelink, and more unanswered calls, union national secretary Melissa Donnelly said.

ACT Liberal senator Zed Seselja said the overall growth in public service staffing was a recognition that circumstances had changed and there was a need to step up in response to the pandemic.

"There's no doubt that the public service was asked to step up last year in a way that certainly it hadn't been asked to do in a long time and they performed admirably," he said.

The growth in public service jobs would be welcome in Canberra, Senator Seselja said.

"From my perspective, whether it's a public servant in a job, whether it's a contractor to the Commonwealth, or whether it's someone in the private sector, they're all jobs for Canberra, which is a good thing," he said.

Budget papers on Tuesday showed public service jobs will grow next fiscal year as the federal government tasks its agencies with delivering the health and economic recovery from COVID-19.

The government will keep its cap on staffing levels despite embracing larger numbers of bureaucrats on its payroll, saying it would remain as the government "transitions toward the next phase of its workforce-planning approach".

Budget papers show the bureaucracy's average staffing level will reach nearly 174,300 next fiscal year, up 5400 compared to 2020-21 numbers.

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