Australia’s most senior bureaucrat will step down next month, two years before his contract expires.

But Martin Parkinson insists he is not leaving because he has any issues with Prime Minister Scott Morrison.

Dr Parkinson will leave the Department of Prime Minister and Cabinet at the end of August, ahead of his term expiring in 2021.

The former Treasury chief stepped into the leadership role under former prime minister Malcolm Turnbull in 2016.

Dr Parkinson, who initially planned to retire when his term ended, said he wanted to give Mr Morrison the chance to work with a department head for the next three years.

“He is at the beginning of the term. He has a full agenda. And I came to the view it was better all around that he had someone who could go the full term with him,” he told The Australian on Thursday.

“I would not want anyone to think there was anything about my relationship with the Prime Minister that was leading me to leave.

“It is up to others to judge, but I think what he would tell you is that he and I have a very good personal and professional relationship. And I’ve really enjoyed working with him since the period he became PM.”

PM confirming his former COS and current Treasury boss Phil Gaetjens is new secretary of Prime Minister and Cabinet replacing Martin Parkinson. Gaetjens also served for 10 years as Peter Costello's COS

— Samantha Maiden (@samanthamaiden) July 25, 2019

Mr Morrison is preparing to make significant changes to the public sector, based on the draft recommendations of a review led by former Telstra boss David Thodey.

Dr Parkinson, who initiated the probe, says further reforms are needed, including technological changes and ending the idea that people work in silos.

“What I want is a public service that is knowledge-based, curious, looking all the time for how existing policies are working, at what future policies should be, engaged in collaborating with people inside the public service as well as outside,” he said.

“People [the public] have become used to Amazon levels of digital service delivery, and we are lagging behind – a long way behind.”

Mr Morrison shared his gratitude for Dr Parkinson’s work.

“I thank Martin for not only his service to me and service to my department, but his work over a much longer period … I thank him for service to our country,” he told The Australian.

Less than a week after the federal election in May, Mr Morrison told public servants to brace for a hectic three years and “very clear” performance targets.

Dr Parkinson has issued a departing warning to the government to ramp up productivity to maintain Australia’s living standards, saying the nation has fallen behind in productivity globally.

“For whatever reason, our productivity performance is not keeping up,” he said.

Shadow treasurer Jim Chalmers, who commended Dr Parkinson for making an “extraordinary contribution” said he agreed the country had a “massive productivity problem”.

“That has big consequences for our economy,” he told ABC radio.

-AAP