Senate estimates day three: Angus Campbell and Jacqui Lambie's tense exchange, Services Australia staffing challenges, Defence export permits to Israel

General Angus Campbell later withdrew his comments, but did not apologise.

"In regard to the interaction between myself and Senator Lambie early today relating to a combination of the workforce remuneration and executive vehicle allowance, chair, I would request to withdraw my comments," he told chair of the committee, Senator Raff Ciccone.

General Campbell made the comments after Senator Lambie said senior brass were given a boost to their executive vehicle allowance, after "the diggers were given a pay cut".

She was referring to a pay deal of 11.2 per cent over three years for Australian Defence Force personnel, which she said will not be enough in the face of rising cost of living pressures.

She asked why officials' executive vehicle allowance was increased, which officials said wasn't the case.

"Senator, there is no additional money being received, an allowance has been pushed into the salary," General Campbell responded.

"It is very simple, very clear and you are maliciously attempting to drive a wedge between senior command and the Australian naval sailors, aviators, soldiers across the force and I see it constantly from you and I think it is deeply undermining of the cohesion of the force,"

"And quite frankly Senator you should be ashamed of yourself."

Senator Lambie at the time accepted the officials' answer that the vehicle allowance was not new, but had recently been rolled into salaries.

In a statement later in the day she said she was surprised by General Campbell's comments, and that she was just doing her job.

"I was asking if senior command was getting extra cash from an executive car allowance, when diggers are getting a pay rise, that is below the rate of inflation, so it is actually a pay cut," she said.

"General Campbell's response did take me by surprise. It is my job, and the job of all senators to hold all public officials to account for taxpayer money."

She called for the Defence Force chief to withdraw the comments and apologise.

Defence officials outlined ongoing retention struggles across the force on Wednesday, admitting they were behind a recruitment target by about 800 personnel.

In the Community Affairs committee, Services Australia acting chief executive officer Chris Birrer admitted that it would be "very challenging" for the agency to meet its KPIs this year due to staffing limitations.

Average staffing level allocation for Services Australia reduced from 28,560 down to 26,692 full time employees in the last budget. Recent pay processing also showed there were 26,773 average full time employees, though there are more than 31,000 public servants working in the agency, counting part-time staff.

Greens senator Janet Rice asked whether the agency had enough staff to ensure the "proper delivery of services".

Mr Birrer said the agency was looking for ways to be more efficient and improve productivity.

"We're working towards [our targets] but given where we are at at this point in the year, meeting all of our KPIs this year will be very challenging," he said.

In the Foreign Affairs Defence and Trade committee, Greens senator David Shoebridge said the government needed to be more transparent around military exports after it was revealed hundreds of defence export permits had been issued to Israel since 2017.

Defence officials told the committee 322 defence export permits had been issued to Israel from 2017 to March this year, covering military and dual use items.

Senator Shoebridge said the department couldn't give assurance that the materials are not being used in Gaza. Officials denied this, and said permits were issued after a rigorous process, adding that materials could be things such as radios and body armour, not necessarily weapons.