The Federal Government’s attempts to push the public service into regional cities will not work, the Grattan Institute says.

Regional Affairs Minister Fiona Nash and Agriculture Minister Barnaby Joyce are leading the efforts the decentralise government jobs, calling for all agencies to review the potential costs and benefits.

Grattan Institute fellow Brendan Coates says it is by no means a new idea.

“We've been trying this for a hundred years, to move people and jobs and economic activity to the regions from the city, and it hasn't worked up until now and there's no reason to think that this will be any different,” he told reporters.

“You're spending a lot of money trying to subsidise jobs in regional areas, trying to push those jobs to the regions, and all the while we've seen more and more economic activity concentrated in our major cities.”

A recent Grattan Institute report found that even though regional areas receive disproportionate levels of infrastructure spending, jobs growth is still concentrated in Melbourne and Sydney.

“It doesn't actually seem like we've received much bang for our buck,” Mr Coates said.

“Instead it's largely been spent in marginal seats … in areas where governments look like they might win or lose elections, and that's been particularly the case in Queensland and New South Wales.”

He said that Canberra had a larger pool of skilled workers than any regional area.

“Either you attract less capable workers or you end up having to spend a lot more money to get those skills to regional areas,” Mr Coates said.

“A great example is the move by Agriculture Minister Barnaby Joyce to move the Australian Pesticide and Veterinary Medicine Authority [from Canberra] to Armidale [in New South Wales].

“Now we've seen reports that there's been extra inducements offered to encourage staff to move to those areas.”

He said that regional development was better achieved by reskilling the local workforce and improving services to make the cities an attractive place to live, rather than transplanting metro workers.
The Productivity Commission has also warned against the decentralisation agenda.

Its new Transitioning Regional Economies report raises serious concerns about the plan to move the Australian Pesticides and Veterinary Medicines Authority (APVMA) to Armidale.

“There is an increased risk that the move to Armidale will weaken the APVMA, increasing the costs borne by the Australian Government and taxpayers, and hampering the organisation's work,” the commission warned.

“Although public sector agencies can operate effectively in regional centres, attempts to relocate employment as a form of regional assistance can have unintended consequences.”

The commission cited independent analysis by Ernst & Young which estimated the net cost of the relocation would be about $23 million and still “involve significant risks”.

“Chief among these assessed risks was that the regulator would be unable to relocate or replace key executive, managerial and technical staff,” Ernst & Young said.

The Productivity Commission’s draft report includes concerns from the Community and Public Sector Union (CPSU) that the APVMA would “lose a large proportion of scientists as most of them would be unwilling to relocate from Canberra to Armidale”.