Should the public service shift north?

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ScreenHunter_3208 Jul. 09 10.32

By Leith van Onselen

On Monday, the Canberra Times published an article claiming that the Abbott Government was considering a push by regional centres in northern Australia to decentralise the federal bureaucracy and shift public servants from Canberra to the north:

The Abbott government has already indicated it is open to the idea and, if successful, it could mean public servants moving more than 4000 kilometres in some cases.

Already there are plans to disperse the Commonwealth public service workforce to boost regional economies.

At least 600 will be moved to the Central Coast while investigations are underway about relocating others to Tasmania.

The federal parliament’s inquiry into the development of northern Australia is now dealing with requests from places such as Townsville and Cairns in Queensland, Kununurra in West Australia and Darwin.

Today, the Canberra Times reports that the Labor Government has rubbished the idea of shifting the Australian Public Service (APS) north, claiming that it would represent “pork barelling” and would also make the APS “less effective”:

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”Skilled public servants are unlikely to relocate from Canberra to regional communities in the far north, while skills shortages in the regions mean the departments would struggle to find staff to replace them,” [ALP Fraser MP, Dr Andrew Leigh] said.

”The end result would be a less responsive and effective public service”…

”While we understand the need to develop and diversify northern Australia’s economy, it makes little sense to scatter the Australian Public Service all over the country,” Dr Leigh said.

”Departments need to work together more closely than ever to manage the kinds of complex policy issues facing governments today.

”It would be a real concern if we saw more public servants relocated simply to give the government something new to promise the people of northern Australia in the lead-up to the next election.

I tend to agree with Labor on this issue.

While the branch functions of certain departments (e.g. quarantine and immigration) could logically be moved to other regions in order to be ‘closer to the action’, it makes little sense in moving central functions away from Canberra. Such a move would likely reduce economies of scale and the effectiveness of the APS, while also potentially raising costs.

There is also a lot to be said for being located close to parliament and the decision-making process. Leaving the bureaucracy in Canberra also makes collaboration via inter-departmental committees easier and more effective.

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And then there is the issue of Canberra itself. Rightly or wrongly, Australia chose many years ago to locate the federal government and the bureaucracy there, and the city represents what is effectively a ‘sunk cost’. To move a significant share of the bureaucracy away would likely leave the Canberra economy in a mess – a textbook case of ‘robbing Peter (the ACT) to pay Paul (regional Australia)’.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.