A second interim report into job security, released on Tuesday, has revealed the federal government has continued to spend millions on labour hire and consultancy firms for short-term capability requirements, resulting in capability gaps for the workforce.

The Labor and Greens-dominated committee noted that while agencies enjoyed the greater flexibility of hiring and firing casual and short-term employees, transparency and central reporting of deals was minimal.

"Labour-hire companies and outsourced service providers have been allowed to pillage the public purse through excessive profit margins, meaning not only is the Australian public receiving a degraded quality of service, they are also paying more for it," the report said.

"It is particularly concerning that a centralised record of labour hire headcount and expenditure is not recorded by either the APSC, or the Department of Finance."

Among the report's 38 recommendations is a push to remove the average staffing level cap to enable the hiring of permanent public servants, the central collection of labour-hire data by the public service commission, and the introduction of a supplier code of conduct.

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Coalition senators called the committee inquiry a "political farce" and the report's findings on job insecurity a "Labor lie" as the unemployment rate hit 4.6 per cent.

Government committee members, which include Nationals senator Matthew Canavan and Liberal senator Ben Small, said it was "negative politicking" in the lead-up to a federal election.

"The inquiry has thus far been little more than a staged political farce by Labor and the Greens with two objectives; developing a predetermined narrative to discredit the success of the Morrison government's broad management of workplace relations, and simultaneously campaigning for big government control of Australians in the workplace," the government's dissenting report said.

"Clearly, public sector service demand fluctuates and so workload changes accordingly," the report continued.

"It is highly appropriate for that additional employment to meet that surge demand. This is crucial in delivering the necessary services to the Australian public at the standard expected."

A Canberra Times report earlier this week revealed the federal government is on track to record its highest consultancy bill so far.

Data from the government's tender site showed more than $220 million had been spent in the financial year up until mid-October, averaging around $2 million a day.

During the nearly four-month period, almost one-quarter of consultancy contracts, or more than $50 million, were entered into with big-four firm PricewaterhouseCoopers.

Other major firms, including Deloitte, KPMG, Ernst & Young and Boston Consulting Group, had also received contracts for millions of dollars since July.

Greens senator Larissa Waters said the committee's findings showed corporate Australia was getting more than its fair share of the pie.

"Australia needs a strong, independent public service capable of meeting the education, housing, health, social security, environmental protection and infrastructure needs of the country," she said.

"But this PM, true to form, is more interested in delivering corporate handouts than he is in delivering good policy outcomes."

Community and Public Sector Union national secretary Melissa Donnelly, who appeared before the committee in August, said the federal government should be a shining example for private-sector employers follow.

But that hadn't been the case, she said.

"The pandemic has highlighted the extent of insecure work in this country, and the damage it is causing," she said in her opening statement.

"The Commonwealth should be leading the way on a solution, it should be a model employer - that is clearly not where we are today - and the Commonwealth could and should be doing more to support secure jobs."

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