2. Decentralisation of Commonwealth Entities

Rationale for decentralisation

2.1
Decentralisation can be broadly interpreted. For some people, it refers to establishing or relocating public (and private) sector jobs and functions from metropolitan capital cities to regional or rural areas. As a strategy to support regional and rural towns, decentralisation seeks to create sustainable employment opportunities as part of a broader strategy to improve growth and prosperity in these areas.
2.2
For others, decentralisation may also include the establishment or presence of regional offices or out-posted offices in areas where services are needed and have traditionally existed; for example Centrelink, Medicare and Australia Post offices have distributed workforces across the country. In these cases, a head office may be located in a capital city with a network of rural or regional offices elsewhere.
2.3
At this stage in the inquiry, the Committee has adopted a broad interpretation of decentralisation to include the presence of any Commonwealth agency or entity across Australia, including the physical relocation of an agency from a capital city to a rural or regional town, and the distribution of regional branches or offices in non-metropolitan areas.
2.4
On 19 April 2017, the Minister for Regional Development, Senator the Hon Fiona Nash, announced the Coalition Government had embarked on a decentralisation program:
Departments will need to either indicate that they're suitable to move to the regions or justify why all or part of their operation is unsuitable.1
2.5
In announcing the Government’s policy on decentralisation, the Minister for Regional Development said:
Moving government functions to the regions means more people in our towns, more customers in our shops, more students in our schools, and more volunteers for the local fire brigade.
… It's important for government to lead by example and invest in rural, regional, and remote Australia, creating long-term careers and breeding confidence in those communities...2
2.6
All portfolio Ministers are expected to report to Cabinet by August 2017 on which of their departments or functions are suitable for a regional move, with more substantial business cases expected by December 2017.3
2.7
While decentralisation policies generally aim to address population imbalance - that is, the issue of more people living in capital cities than regional and rural areas - and provide employment opportunities, other benefits of relocating public sector jobs to non-metropolitan areas include:
bringing government services closer to the people;
tapping into specialist skills and experience of people living in regional and rural areas;
better aligning government agencies to specialist regional areas and resources; and
potentially lower operating costs for government.
2.8
Employment opportunities are not necessarily restricted to those within the relocated agency. Rather, employment opportunities may arise from any increased spending in the regional economy by public sector employees and their families, and from any associated private investment that follows a public sector move to a non-metropolitan area.4
2.9
Decentralisation has been associated with some negative policy implications. These include:
loss of skilled and experienced staff who do not want to relocate;
costs associated with redundancies, staff separation, recruiting and training new staff;
expenses associated with staff travelling to capital cities or home departments;
issues associated with managing remote, dispersed or virtual teams;
short term costs of setting up new offices, re-locating staff, and disrupting business; and
negligible benefits to regional towns and communities to which entities are located.
2.10
The success of any decentralisation policy needs to be measured with regard to the net benefit or growth achieved by the transfer of public and private entities from one location to another. This includes consideration of the wider impact of job losses in the original location, compared to the gains those jobs may provide to the location where decentralisation occurred.
2.11
The Committee’s inquiry will more closely examine the impact of recent decentralisation policy, with particular reference to family, social and community impacts.

National Broadband Network and technology

2.12
The Committee is interested in hearing about the impact and net benefits of communication infrastructure in regional and rural Australia. Improved efficiencies and increased automation may lessen job opportunities in regional areas. However, improved communication infrastructure may encourage people to live and work in regional areas.
2.13
For example, the availability of reliable information technology and infrastructure may lead to increased employment opportunities by providing people with more flexible employment options or arrangements – such as ‘teleworking’. Teleworking refers to ‘an arrangement whereby an employee has a formal agreement with their employer to work in a location other than the office, usually a home office’. This mode of work relies largely on information and communications technology to keep employees connected to colleagues and work systems.5
2.14
The Australian Public Service Commission cites a number of benefits teleworking provides for the employee and employers. For the employee these include cost savings by not having to travel to work, flexibility in work hours thereby increasing an employee’s ability to manage work-life balance, increased job satisfaction, and a greater ability to participate in the workforce. For the employer, the benefits of teleworking include improved recruitment and retention outcomes, reduced absenteeism, increased business resilience, reduced costs associated with office space and increased productivity.6
2.15
The current availability of the National Broadband Network may act as an enabler for decentralisation in some regional and rural areas. However, a lack of access to reliable and fast broadband can be a constraint in other areas.

Decentralising the Commonwealth public service

2.16
The Commonwealth public service currently comprises 114 federal departments, agencies and entities.7 As at 31 December 2016, there were 153,421 people employed in the Australian Public Service (APS).8 The majority of Commonwealth departments and agencies are based in Canberra, which accounts for 38 per cent of all Commonwealth public servants. This is followed by New South Wales (19 per cent) and Victoria (17 per cent).9
2.17
Since the early 1960’s, much of the push for decentralisation of government functions and services has been in response to growing concerns about the concentration of the Australian population in capital cities, and the need to encourage stronger development and settlement in regional areas.
2.18
While Australia is one of the most urbanised countries in the world, this issue is not unique to Australia. Across the world, governments are trying to manage the trend of people drawn to metropolitan cities, rather than regional and rural towns.
2.19
In Australia, Commonwealth decentralisation policies have been ad hoc. Many policies have either not received bipartisan support or survived a change of government. Indeed, policies aimed at supporting rural and regional areas have tended to focus on ways of improving regional development and sustainability through targeted programs and funding rather than the decentralisation of government services. Some of this history is set out below.
2.20
In 1964, the Premiers’ Conference led to the establishment of a Commonwealth/State Officials Committee on Decentralisation, which drove many of the debates over decentralisation.10 Each of the state governments were represented on the Committee, which comprised members from fifteen Commonwealth and State Government departments.11
2.21
The Committee based its inquiry on two concepts of decentralisation: as a way of promoting growth outside of the cities, while reducing the rate of growth within them.12 Six main conclusions were drawn by the Committee in its final report. The primary conclusion was that:
The evidence before the Committee did not allow it to establish the existence of either a decisive net advantage or net disadvantage to the nation from an economic viewpoint arising from continuing centralisation. This means that the Committee considers that a properly conceived and executed programme of selective decentralisation could be undertaken without necessarily inhibiting economic growth.13
2.22
In 1973, the then Prime Minister, Gough Whitlam, in partnership with the Victorian and New South Wales (NSW) governments, established the Albury-Wodonga Growth Centre project. The aim of the project was to progress the development of Albury-Wodonga as a major regional hub, and to ‘relieve the problems of what was seen as overpopulation in Sydney and Melbourne’.14
2.23
The Growth Centre project was essentially established as an “experiment”; a project that might be used as a model for other regional areas. Over the following decades however the project was revised by successive governments and the population targets reduced. The experiment formally ended in 1995.
2.24
In the 1990s, the Keating Government introduced a new regional development program that resulted in the establishment of Regional Development Organisations (RDOs) and Area Consultative Committees (ACCs).15 The introduction of these bodies signalled a shift in regional politics in Australia – one that emphasized more regional specific solutions. Rather than “top down” approaches that focused on the redistribution of economic activity, attempts were made to drive regional competitiveness and lift productivity in all regions through “bottom-up” approaches, local leadership, and developing “local solutions to local problems.”16
2.25
In 1999, the then Deputy Prime Minister and Minister for Transport and Regional Services, the Hon John Anderson MP, convened the Regional Australia Summit. The Summit resulted in the establishment of a Regional Australia Summit Steering Committee and a Secretaries Taskforce to help raise the profile of regional Australia across all Commonwealth Departments. It also resulted in the introduction of a number of regional programs, the genesis of which can be found in the Summit.17
2.26
One of these programs was the Regional Partnerships Program. Announced in June 2000, the Regional Partnerships Program was designed to provide targeted funding to regional communities “dealing with economic stagnation or population decline due to industry restructuring and a lack of development opportunities, and to regional areas with high population growth experiencing above-average unemployment levels.”18
2.27
Similarly, the Sustainable Regions Program introduced by the Howard Government in 2001 sought to support those rural and regional communities in need. Twelve regions were identified and supported through a range of initiatives, which marked a shift from previous decentralisation approaches to one that focused on “regions in difficulty” and tailored approaches with local input.19
2.28
In 2012, the Gillard Government established a network of 55 Regional Development Australia committees (RDAs) to ‘work with businesses, community groups and all levels of government to support the development of their regions’. The committees, which replaced the RDOs and ACCs, function by ‘empowering local people to develop local solutions to local issues’.20
2.29
In 2015, the Abbott Government released a White Paper on Northern Australia which aims to develop the Northern Territory, North Queensland and northern parts of Western Australia as an ‘economic powerhouse’. While not a decentralisation policy per se, the policy does seek to promote significant public and private investment in some of Australia’s most regional areas. The Office of Northern Australia, which is responsible for coordinating the implementation of the white paper, is based in Darwin.
2.30
Most recently, the Turnbull Government adopted the United Kingdom’s ‘City Deals’ model as part of its Smart Cities Plan. City Deals are bespoke models for infrastructure funding and delivery that work through coordination of the three levels of government, communities and the private sector. The program aims to promote, among other things, economic growth, increased jobs, affordable housing and environmental sustainability. The program’s funding model is tailored to local circumstances, objectives and opportunities. To date, the Federal Government has entered into three ‘City Deals,’ with Western Sydney, Townsville, and Launceston.

Relocation of agencies

2.31
To date, only a small number of Commonwealth government agencies have established rural or regional offices in support of decentralisation. For example:
the Grains Research and Development Corporation has established offices in Adelaide, Perth, Dubbo, and Toowoomba. Its head office remains in Canberra;
the Australian Securities and Investment Commission was established in Traralgon in the 1990s,21 and
the Australian Taxation Office established a regional office in Albury, NSW in the 1970s.
2.32
At the state level, examples of decentralisation of government services from capital cities to regional towns include:22 23
the NSW Department of Agriculture moved to Orange in 1992;
the NSW Labor Government moved at least seven agencies from Sydney to a regional centre between 2000 and 2005;
the Victorian Transport Accident Commission moved to Geelong in 2009;
Work Safe Victoria has commenced relocating from Melbourne to Geelong;
the NSW Office of Local Government moved to Nowra;
the NSW Department of Mineral Resources moved from Sydney to Maitland; and
the Western Australian Department of Water moved from Perth to Mandurah.
2.33
Future relocation has been identified for the following Commonwealth agencies:24 25
Rural Industries Research and Development Corporation will establish an office in Wagga Wagga;
Fisheries Research and Development Corporation will establish an office in Adelaide;
Australian Pesticides and Veterinary Medicines Authority will establish an office in Armidale;
the new head office of the National Disability Insurance Scheme will be based in Geelong;26 and
the CSIRO will establish an agriculture research facility near Boorowa, NSW.27
2.34
In addition, it has also been announced that planning is underway for new regional offices of the Murray-Darling Basin Authority to be established in Albury-Wodonga, Toowoomba and Adelaide.28

What characteristics of agencies and regions lend themselves to decentralisation?

2.35
Decentralisation of any Commonwealth agency is not an end in itself. Careful consideration must be given to the government service or function to be decentralised, and the regional or rural town to where the Commonwealth entity will be relocated. Regional growth and sustainability must be driving factors of any decentralisation effort, so too must improving government service.
2.36
In its report, Moving Public Servants to the Regions, the Canadian Parliamentary Library identified some issues for consideration when determining the decentralisation of public sector agencies. For agencies, they should:
be relatively independent or specialised so not to impair interactions with partner departments or agencies; and
not have continual interaction with public officials or develop public policy on a daily basis.
2.37
It was also recommended that specific attention be given to the demographic and professional characteristics of employees to be relocated. This was re-affirmed by Mr Jack Archer in evidence recently provided to the Committee:
… 17 per cent of Commonwealth jobs are outside the big five cities and Canberra, but very, very few of them are SES level, so there are virtually no decisions being made in regional areas about regional issues, whether that is in Indigenous affairs, which is overwhelmingly focused on remote challenges, or other areas.29
2.38
For the host region, it was recommended that:
relocation should boost the local economy and contribute to the economic base;
labour and office space must be available, and transport constraints not detract from the agencies operations; and
the selected town must have some appeal to public servants and their families.30
2.39
Similarly, in its report, The Decentralisation of Core Government Services, the Urban Development Institute of Australia identified the key steps that lead to effective decentralisation. These include a well planned and executed proposal, the benefits outweighing the costs, and decentralisation leading to regional growth.
2.40
The Committee is keen to examine these factors more closely. In particular, the characteristics of regional and rural towns that would lend themselves to decentralisation. Some of these may include:
compatibility of Commonwealth agency, function or services to regional town;
availability of skills and experience in these areas;
population of host towns and cities; and
infrastructure and services to accommodate and support employees.
2.41
It must also be recognised that regions are not identical and have their own characteristics. Professor Tony Sorenson observed:
Rural communities are hugely different in terms of their social complexions, their resource bases, their locations with respect to markets or major cities, their infrastructure and services, and other social services. Everything about rural Australia is hugely diverse and complex, and this is another thing that we will have to deal with.31
2.42
The Committee will examine examples of public sector agencies that have relocated to non-metropolitan areas, and the rationale for these moves.

Measuring the success of decentralisation

2.43
The Committee acknowledges decentralisation as a means to improving regional growth and development. A focus of the Committee’s inquiry will be measuring the success of this policy. That is, how do we know that decentralisation has been effective in achieving its goal? What are the indicators of success? Some of these indicators might include:
growth and prosperity of regional areas;
jobs created;
economic growth;
longevity of industry, services and functions; and
maintaining and increasing population in regional areas.
2.44
To date, measuring the success of public sector decentralisation has been subjective. There is very little domestic or international research that has quantified the economic and social reality of relocation. Most accounts have focussed on the number of jobs that moved with the agency, rather than the benefits that have flowed from the relocation. Through its inquiry, the Committee plans to examine how some of the proposed outcomes of decentralisation can be measured.

  • 1
    The Honourable Fiona Nash, Minister for Regional Development, and Local Government and Territories. Media Release. Coalition begins decentralisation process. 19 April 2017 <http://minister.infrastructure.gov.au/nash/releases/2017/April/fn054_2017.aspx>, accessed 20 July 2017.
  • 2
    The Honourable Fiona Nash, Minister for Regional Development, and Local Government and Territories, Investing in the future of our regions. Speech to the National Press Club, 19 April 2017, <http://minister.infrastructure.gov.au/nash/speeches/2017/fns001_2017.aspx>, accessed 20 July 2017.
  • 3
    The Honourable Fiona Nash, Minister for Regional Development, and Local Government and Territories, Investing in the future of our regions. Speech to the National Press Club on 19 April 2017, <http://minister.infrastructure.gov.au/nash/speeches/2017/fns001_2017.aspx>, accessed 20 July 2017.
  • 4
    Decentralising public agencies: regional benefits with agency risks. Urbecon, SGC Economics and Planning, September 2016, <https://www.sgsep.com.au/publications/decentralising-public-agencies-regional-benefits-agency-risks>, accessed 21 July 2017.
  • 5
    Australian Public Service Commission, State of the Service Report: 2012-2013, Teleworking, Chapter 9, <http://www.apsc.gov.au/about-the-apsc/parliamentary/state-of-the-service/sosr-2012-13/chapter-nine/teleworking>, accessed 9 August 2017.
  • 6
    Australian Public Service Commission, State of the Service Report: 2012-2013, Teleworking, Chapter 9, <http://www.apsc.gov.au/about-the-apsc/parliamentary/state-of-the-service/sosr-2012-13/chapter-nine/teleworking>, accessed 9 August 2017.
  • 7
    APS agency listing – Agencies covered by the Public Service Act 1999, (last updated 4 July 2017), <http://www.apsc.gov.au/publications-and-media/current-publications/australian-public-service-agencies>, accessed 21 July 2017.
  • 8
    People employed under the Public Service Act 1999. APS Statistical Bulletin: December 2016, (last updated 31 March 2017, <http://www.apsc.gov.au/about-the-apsc/parliamentary/aps-statistical-bulletin/december-2016>, accessed 21 July 2017.
  • 9
    Table 6: ‘All employees: location by base classification and employment category’, 31 December 2016, APS Statistical Bulletin: December 2016, (last updated 31 March 2017), <http://www.apsc.gov.au/about-the-apsc/parliamentary/aps-statistical-bulletin/december-2016>, accessed 21 July 2017.
  • 10
    Collits, P., ‘Regional Policy in Post-War Australia: Much Ado about Nothing?’ in Rural and Regional Futures, Hogan, A., and Young, M., (eds), Abingdon, Oxon New York Routledge, 2015.
  • 11
    Report of the Committee of Commonwealth/State Officials on Decentralisation, July 1972, p vi.
  • 12
    Report of the Committee of Commonwealth/State Officials on Decentralisation, July 1972, p 1.
  • 13
    Report of the Committee of Commonwealth/State Officials on Decentralisation, July 1972, p 11.
  • 14
    Albury-Wodonga Growth Centre Collection: Significant Assessment, <https://eservice.alburycity.nsw.gov.au/portal/Temp/TrimDocumentViewer_913850_awCfGoEMDu.PDF>, accessed 21 July 2017, p. 9.
  • 15
    Collits, P., ‘Regional Policy in Post-War Australia: Much Ado about Nothing?’ in Rural and Regional Futures, Hogan, A., and Young, M., (eds), Abingdon, Oxon New York Routledge, 2015.
  • 16
    Collits, P., ‘Regional Policy in Post-War Australia: Much Ado about Nothing?’ in Rural and Regional Futures, Hogan, A., and Young, M., (eds), Abingdon, Oxon New York Routledge, 2015.
  • 17
    The Regional Australia Summit, Department of Infrastructure and Regional Development, <https://www.infrastructure.gov.au/department/annual_report/1999_2000/RegionalAustraliaSummit.aspx>, accessed 21 July 2017.
  • 18
    The Regional Australia Summit, Department of Infrastructure and Regional Development, <https//www.infrastructure.gov.au/department/annual_report/1999_2000/RegionalAustraliaSummit.aspx>, accessed 21 July 2017.
  • 19
    Collits, P., ‘Regional Policy in Post-War Australia: Much Ado about Nothing?’ in Rural and Regional Futures, Hogan, A., and Young, M., (eds), Abingdon, Oxon New York Routledge, 2015.
  • 20
    Stronger Regions, Stronger Nations: Statement by the Hon. Simon Crean, Minister for Regional Australia, 8 May 2012, < http://www.budget.gov.au/2012-13/content/ministerial_statements/rural_and_regional/html/rural_and_regional.htm>, accessed 18 July 2017.
  • 21
    Senate Committee Report, Finance and Public Administration References Committee, Operation, effectiveness and consequences of the Public Governance, Performance and Accountability (Location of Corporate Commonwealth Entities) Order 2016, p. 54.
  • 22
    Senate Committee Report, Finance and Public Administration References Committee, Operation, effectiveness and consequences of the Public Governance, Performance and Accountability (Location of Corporate Commonwealth Entities) Order 2016, pp. 53-54.
  • 23
    The Hon. Barnaby Joyce MP, Deputy Prime Minister and Minister for Agriculture and Water Resources, Media Release, Boosting regions through decentralisation, 18 October 2016, <http://minister.agriculture.gov.au/joyce/Pages/Media-Releases/Boosting-regions-through-decentralisation.aspx>, accessed 26 July 2017.
  • 24
    Senate Committee Report, Finance and Public Administration References Committee, Operation, effectiveness and consequences of the Public Governance, Performance and Accountability (Location of Corporate Commonwealth Entities) Order 2016, pp. 53-54.
  • 25
    The Hon. Barnaby Joyce MP, Deputy Prime Minister and Minister for Agriculture and Water Resources, Media Release, Boosting regions through decentralisation, 18 October 2016, <http://minister.agriculture.gov.au/joyce/Pages/Media-Releases/Boosting-regions-through-decentralisation.aspx>, accessed 26 July 2017.
  • 26
    The Hon. Christian Porter MP, Minster for Social Services. Media Release. Jobs boom for Geelong with new NDIA headquarter’, 2 December 2016, <http://christianporter.dss.gov.au/media-releases/jobs-boom-for-geelong-with-new-ndia-headquarters>, accessed 26 July 2017.
  • 27
    The Hon. Ian Macfarlane MP, Minister for Industry and Science. Media Release, CSIRO purchases site for purpose-designed research farm, 10 September 2015, <http://www.minister.industry.gov.au/ministers/macfarlane/media-releases/csiro-purchases-site-purpose-designed-research-farm>, accessed 26 July 2017.
  • 28
    Murray Darling Basin Authority. Media Release, MDBA progressing regional presence agenda, 20 March 2017,< http://www.mdba.gov.au/media/mr/mdba-progressing-regional-presence-agenda>, accessed 8 August 2017.
  • 29
    Mr Jack Archer, CEO Regional Australia Institute, Proof Committee Hansard, 7 August 2017, p. 5.
  • 30
    Le Goff, P., Moving Public Servants to the Regions, PRB 05-100E, Library of [the Canadian] Parliament, 31 March 2006.
  • 31
    Professor Tony Sorenson, Proof Committee Hansard, 7 August 2017, p. 6.

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