Prime Minister and Cabinet boss Martin Parkinson has labelled federal government mandated caps on public service employment a "blunt instrument" for management, calling for new thinking on workforce capability and headcounts in Canberra.
The nation's most senior public servant also said implementing the National Party-led plan for forced relocation of government agencies to the regions would be based on detailed business cases, and defended careful spending of taxpayer funds for external consultants in the bureaucracy.
Two years after being appointed by Prime Minister Malcolm Turnbull to head the 152,000-strong federal workforce, Dr Parkinson said in an exclusive interview with Fairfax Media that public servants needed to better know the needs and expectations of Australians, describing planning for 2045 and beyond remained as a key challenge in 2018.
On public service staffing, he said consideration of fluctuations of a few hundred people at any time was not sensible.
"I don't think headcount is the right measure," he said. "The question is really does the APS have the capability set it needs to deliver for the challenges Australia faces in the next quarter century?
"If it does, that's great. If if doesn't, what capabilities is it missing or is it short of? Are those things you can buy in or do you have to breed them yourself?
"If you look at the service and say data analytics is really going to be central to improving outcomes, do we have sufficient capability? Answer: absolutely not.
"Do I fix that by increasing headcount by 500 people? Actually, if I've got to find more data analysts and I've got 152,000 people, is going to 152,500 going to make any difference? It's actually about prioritising what skill sets you need."
This month a national auditor-general's report showed the Coalition's moves to cut 15,000 public service jobs coincided with a doubling in spending on private consultants with specialist skills.
Dr Parkinson said departments shouldn't need to call in consultants for "core business" but effective use of external talent was justified, including for specialist work in irregularly timeframes.
"Where there's a situation where I just need a fresh pair of eyes to have a look at this and just do a robustness test, just check that we're on track, I think that's totally legitimate, [a] traditional role of consultants.
"If I have a concern, it's about some parts of the service relying on consultants to do what should be their core business because ultimately we deal in ideas, and that can be a policy idea, it can be the delivery of that through a program... or it can be the regulation of it through oversight arrangements.
Dr Parkinson attracted headlines this month over comments critical of former prime minister Tony Abbott's management of the APS, but has described 2017 as a year of significant achievement for government agencies, including on Indigenous affairs, the national marriage survey and advice on the dual citizenship saga.
As federal cabinet considers plans for forced relocations of government departments and agencies away from Canberra, Sydney and Melbourne, Dr Parkinson said Finance Minister Mathias Cormann and Treasurer Scott Morrison were carefully focused on business cases for the moves.
"The question is how much of the public service should be optimally outside of Canberra? You can't make that decision at a meta level.
"You've got a range of places that have already moved because the business case makes sense for them. That's the critical issue here. We have to make sure there are robust reasons for doing it."