Australia can save "in the low billions" by removing "arbitrary" caps on the public service and reviewing payments to private contractors, Jim Chalmers says.
Spruiking last week's budget reply to the National Press Club on Tuesday, the Labor treasury spokesman said reducing the APS capacity had bled taxpayer money into consultants fees.
But Liberal frontbencher Jane Hume has accused Mr Chalmers of pledging to grow the public service because he "can't promise to build jobs anywhere else".
The Coalition last year ditched its long-standing aim to reduce the public sector to 168,000 staff, as the COVID-19 pandemic necessitated a widescale government response.
But Mr Chalmers said the "arbitrary" cap had forced government to rely heavily on private consultancy fees in areas traditionally performed by public servants.
He has pledged not to implement austerity or "spray money around unnecessarily", and singled out consultancy fees as fat to trim.
"I spent a lot of time with the accounting firms and the consulting firms. They do first-class work and nobody is saying that we end that," he said.
"But there is an opportunity, I think, to have a good look at the spending that goes into that part of budget, to work out whether we could do more with less.
"More in terms of capacity, less in terms of spending on contractors and consultants ... I would expect that that would come up with a saving in the low billions."
Superannuation Minister Jane Hume accepted public servants were often experts in their fields, but insisted a "modern" APS often required third-party experts to help make "targeted decisions".
Mr Chalmers has pledged to grow secure work if Labor wins office, but Senator Hume claimed increasing the size of the public service did not always reap results.
"I assume that that's where he's going to get his new jobs growth from. He can't promise to build jobs anywhere else, so he's going to grow them in the public service," she said.
"Why on earth would you bring in people that aren't experts in the field?
"Shouldn't you be consulting with people that can actually help you make the right decision, as opposed to just bolstering the public service at the cost of the taxpayer?"
Public Service Minister Ben Morton defended the outlay, arguing total public service expenditure had continuously fallen under the Coalition.
Mr Chalmers' comments came just weeks after the Greens demanded consultancy fees be capped, and APS staffing restored to pre-Coalition government levels.
Sign up for our newsletter to stay up to date.