The process of making the order
This chapter outlines the process leading to the making of the order
including the policy development process and the consultation undertaken by the
government. Entities that may be subject to this order and other similar orders
and the regional locations that may be eligible for a relocated agency will
also be discussed. The principles that should underpin any decentralisation
policy will also be explored.
In June 2016, as part of the election commitment to create centres of
excellence in agriculture, the Coalition announced that 'within the first year
of re-election, the Coalition will proceed with the relocation of the
Australian Pesticides and Veterinary Medicines Authority (APVMA) to Armidale,
New South Wales'.
On 23 November 2016, the Minister for Finance, Senator the Hon Mathias
Cormann made the following order, Public Governance, Performance and
Accountability (Location of Corporate Commonwealth Entities) Order 2016 (the
order). Section 5 of the order specified that the subject of this order
is the APVMA. Section 4 of the order specified the location of the APVMA:
- It is a policy of the Australian Government that a
corporate Commonwealth entity with agricultural policy or regulatory
responsibilities is to be located:
- in a regional community; and
- within 10 kilometres by road of the main campus of a regional
university that is recognised for research and teaching in the field of
- In this
regional community means a community that is
not within 150 kilometres by road of Canberra or the capital city of a State.
The order was made under subsection 22(1) of the Public Governance,
Performance and Accountability Act 2013 (PGPA Act).
This subsection empowers the Finance Minister to make an order that
specifies a policy of the Australian Government that affects corporate
Commonwealth entities. Such orders are known as government policy orders (GPO).
This is the first order made under the PGPA Act, and the first GPO made since
The committee notes that, despite the order being a legislative instrument, it
is not subject to disallowance motions in either House of the Parliament.
The APVMA is 'an Australian government statutory authority established
in 1993 to centralise the registration of all agricultural and veterinary
chemical products into the Australian marketplace'.
The APVMA is part of the Agriculture and Water Resources portfolio and considered
a corporate Commonwealth entity under the Public Governance and Performance and
Accountability Act 2013 (PGPA Act).
The APVMA has been based in Canberra since 1993. Croplife explained the
genesis of the APVMA:
The National Registration Authority for
Agricultural and Veterinary Chemicals (NRA), which subsequently became the
APVMA, was established in 1993 under Commonwealth and state and territory
agreement and corresponding legislation to centralise the registration of all
agricultural and veterinary chemical products into the Australian marketplace.
Prior to this, each state and territory government had its own individual
system for the registration for agricultural and veterinary chemical products.
The APVMA's principal responsibilities are laid out in the Agricultural
and Veterinary Chemicals (Administration) Act 1992 and the Agricultural
and Veterinary Chemicals Code Act 1994 and include:
registration of pesticides and veterinary chemicals;
oversight of manufacturing standards; and
compliance and enforcement of permit and manufacture conditions.
The APVMA is largely funded through cost-recovery whereby:
...registrants pay application fees to register products, and
an annual fee to maintain product registrations. Registrants also pay levies
based on the annual wholesale sales value of registered products.
The APVMA receives over 3, 500 applications per year.
Which agencies could this order
Although the department highlighted that this order 'could feasibly
apply to other entities, to date it has only been applied to the APVMA'.
The APVMA is the only Commonwealth entity subject to this particular
order. However, the committee has sought to clarify the meaning of section 4 of
the order which suggests that other Commonwealth agricultural entities may be
subject to similar orders in the future.
Mr Andrew Thompson, First Assistant Secretary, Department of Agriculture
and Water Resources (DAWR) could not confirm whether or not other corporate
Commonwealth entities would be subject to the order. Notwithstanding this, Mr
Thompson provided a list of entities responsible for agricultural policy or
regulation that could be subject to the criteria within the order, some of
which had already been relocated:
They are the APVMA; the Australian Grape and Wine Authority;
the Cotton R&D Corporation, which is in Narrabri; the Fisheries R&D
Corporation; the Grains Research and Development Corporation; the Rural
Industries R&D Corporation; and the Murray-Darling Basin Authority.
Research undertaken by the Parliamentary Library for Mr Joel Fitzgibbon
MP found that just four regional centres met the criteria set out in the
order—Rockhampton and Townsville in Queensland, and Bathurst and Armidale in
The committee also received research prepared for Senator Bridget McKenzie by
the Parliamentary Library which indicated that seventeen communities would be
eligible for relocation of a Commonwealth agency under the order.
The key difference between the two pieces of research is that Mr Fitzgibbon's
research was undertaken on the basis that the distance from a capital city (150
kilometres) was calculated from the outskirts whereas Senator McKenzie's
research calculated the distance from the GPO centre of the capital.
Under either analysis, this order would exclude many regional
communities from hosting a decentralised government department. As an example,
the town of Lithgow (NSW) would not be considered a regional community under
the government's policy as it is less than 150 kilometres from Sydney CBD and
does not have a university campus in town. Another example is the town of Dubbo
(NSW) which, despite being nearly 400 kilometres from both Canberra and Sydney
and having a university campus, is also not eligible, as its university campus
does not provide coursework or research in agricultural science.
The prescriptive approach taken by the government in this order goes
beyond a general view of promoting decentralisation of government functions to
regional areas. The order specifies how far such entities must be from capital
cities and their proximity to regional universities with expertise in the
'research and teaching' of 'agricultural science'.
Some submitters, such as Cessnock City Council, disagreed with the prescriptive
Council takes the view that strategic centres such as
Cessnock LGA [Local Government Area] would not need to be in such close
proximity to the main campus of a University due to a number of factors, such
as proximity to markets, digital advancements, investment in the NBN [National
Broadband Network] and critical transport and connectivity infrastructure.
Further, the Order is for the relocation of corporate
Commonwealth entities to regional communities as stated under “(1) a. in a regional community”.
This appears totally incongruent with (1) b. above, as regional
areas generally have greater geographical distribution of business, population
and service centres and excluding University towns, many regional centres would
be unable to meet this very restrictive criteria.
Table 1.1 provides a timeline of key events that led to the making of
the order and the announcement of the APVMA's relocation to Armidale.
1.1: Timeline of key events leading to the making of the order and the
announcement of the relocation of the APVMA to Armidale.
puts forward broad policy to relocate Commonwealth agencies from Canberra to
12 May 2015—Letter from
the Deputy Prime Minister and Minister for Agriculture and Water Resources the
Hon Barnaby Joyce MP (the Minister) to Ms Kareena Arthy (APVMA CEO) proposing
the relocation of the APVMA from Canberra to Armidale or Toowoomba, and seeking
the feedback of the APVMA to this proposal
15 May 2015—The Minister
announces commencement of consultation with stakeholders for relocation of a
number of Commonwealth agricultural agencies from Canberra to regional
locations. The Minister flags that the APVMA may be relocated to either
Armidale or Toowoomba.
31 July 2015—Letter from
Ms Arthy (CEO APVMA) to the Minister noting the APVMA's reluctance to relocate;
however, also noting that if it were to be relocated, that the APVMA would
prefer to relocate to Toowoomba instead of Armidale.
January 2016—Letter from
Minister to Ms Arthy informing the APVMA that a cost-benefit analysis would be
undertaken on the relocation from Canberra to Armidale.
3 May 2016—Department of
Agriculture and Water Resources (DAWR) commissions Ernst and Young (EY) to
conduct a cost-benefit analysis (EY cost-benefit) on the relocation of the
APVMA from Canberra to Armidale
9 June 2016—The Minister
announces the Coalition policy that the APVMA will relocate from Canberra to
1 August 2016—EY
cost-benefit provided to the DAWR.
2 November 2016—Cabinet
decision to relocate Commonwealth entities (agricultural policy or regulatory)
from Canberra to regional communities
10 November 2016—Letter
from the Minister to Ms Arthy informing the APVMA of the cabinet decision to
relocate the APVMA to Armidale and seeking advice on the draft order
18 November 2016—Letter
from Ms Arthy to the Minister advising of the APVMA's plans and strategies
relating to the relocation.
23 November 2016—Minister
for Finance makes the PGPA (Location of Corporate Commonwealth Entities) Order
which required the APVMA to relocate to a regional community (more than 150km
from Canberra and less than 10km from regional university specialising in
agricultural science). This order came into effect on 25 November 2016.
5 November 2016—The
Minister publicly announces that the government has settled implementation of the
relocation and that $25.6 million would be made available to fund the
25 November 2016—EY
cost-benefit is publicly released.
Key points on this timeline are discussed in greater detail below.
In its submission to the committee, the Department of Finance noted
For the purposes of the PGPA Act, a policy of the Australian
Government is a policy that is approved by the Government, usually by Cabinet,
the Prime Minister or the Minister responsible for the policy acting in their
area of delegated authority.
Prior to the federal election in July 2016, the Liberal and National
parties (the Coalition) released a policy relating to the creation of centres
of excellence in agriculture. This policy stated that:
The Coalition will establish Centres of Excellence in
Agriculture in regional areas, with government agencies partnering with
regional universities and industry research organisations to become
agricultural research hubs.
Within the first year of re-election, the Coalition will
proceed with the relocation of the Australian Pesticides and Veterinary
Medicines Authority to Armidale, New South Wales.
The Coalition will also commence formal consultations with
other government agencies to examine relocation options to other regional towns
As noted in a letter from the Deputy Prime Minister and Minister for
Agriculture and Water Resources, the Hon Barnaby Joyce MP to the Minister for
Finance on 23 November 2016, this policy was formalised in early November 2016:
As agreed by the Cabinet on 2 November 2016, it is the
government's policy that a corporate Commonwealth entity with agricultural
policy or regulatory responsibilities is to be located in a regional community
and within 10 kilometres by road of the main campus of a regional university
that is recognised for research and teaching in the field of agricultural
Ernst and Young cost-benefit
On 3 May 2016, the DAWR commissioned an 'independent cost, benefit and
risk analysis of the relocation of the APVMA to Armidale, NSW' (the analysis).
The analysis was completed on 1 August 2016
but not publicly released until 25 November 2016.
The analysis examined the following two options:
option 1: Status quo – this option represents the current
prevailing situation (i.e. assumes that the APVMA will continue to operate as
it currently does in Canberra); and
option 2: Relocation of the APVMA to Armidale with the
maintenance of current functions – this option examines the impact of moving
the APVMA to Armidale.
Option 2 has been modelled to reflect two scenarios reflecting different
mechanisms for accommodating the APVMA. Scenario 1 includes the construction of
a purpose built facility co-located at the University of New England in
Armidale. Scenario 2 involves renting an existing building, the WJ McCarthy
Building, in the Armidale CBD.
Under scenario 1, if the APVMA is relocated to Armidale, the analysis
estimated an economic cost to the federal government of $23.19 million over 20
years, with this cost being driven by the 'cost of constructing a new building,
moving costs and costs associated with recruitment, training, redundancy and
oversight'. The cost of accommodation for the APVMA in Armidale is a
significant component of the economic cost in scenario 1.
In comparison, scenario 2 is instead estimated to have an economic cost of
$11.54 million over 20 years.
The analysis concluded that 'the strategic and operational benefits of
having the APVMA operate out of Armidale appear to be limited'. Significantly,
the analysis concluded 'that there is no material economic benefit associated
with enhanced proximity to end users and other agricultural researchers and
this aspect has therefore been excluded from the cost benefit analysis
In its submission, the Department of Finance highlighted that:
The Finance Minister must, before making a GPO, be satisfied
that the [Minister responsible for the policy] has consulted the body or bodies
to which it will apply on the application of the policy.
DAWR submitted that the 'Finance Minister made the order following the
Deputy Prime Minister's consultation with the Chief Executive Officer of the
This consultation was formalised in correspondence between the Minister for
Agriculture and Water Resources and the APVMA Chief Executive Officer (CEO) Ms
Kareena Arthy prior to the issuance of the order.
During the 2013 election, the Coalition flagged an election commitment for
'Commonwealth agencies or functions to be relocated in whole or part from
Canberra to regional areas'. A number of agricultural agencies were put forward
including the APVMA. DAWR noted that this election commitment was progressed in
On 15 May 2015, the Deputy Prime Minister announced the
commencement of consultation with staff and stakeholders on the potential
regional relocation of these select portfolio agencies. The Deputy Prime
Minister consulted the University of New England, the University of Queensland
and the University of Southern Queensland about the merits of their university
as a potential co-location for the APVMA. The Deputy Prime Minister also wrote
to CropLife Australia, the Veterinary Manufacturers and Distributers Association,
Animal Medicines Australia, the National Farmers' Federation and the NSW
Farmers’ Association encouraging them to engage with the APVMA on the potential
In its submission, the DAWR noted its consultation with a wide range of
stakeholder groups for the draft scope of work for the cost-benefit analysis.
The APVMA also sought to consult on the relocation by appointing a number of
key stakeholders to its APVMA Relocation Advisory Committee (ARAC).
The cost-benefit analysis and the ARAC are discussed further in the next
At the committee's Townsville hearing, the Australian Public Service
Commission (APSC) could not confirm whether it was consulted in relation to the
policy order prior to it being made. However, after the order had been made,
the APVMA sought the advice of the APSC in relation to staffing issues and
The APSC advised that this engagement began on 15 February 2017.
With the exception of Armidale Regional Council (ARC), no local
governments and regional organisations that appeared as witnesses before the
committee were approached by the federal government to put forward or 'pitch' a
case for the relocation of the APVMA to their region. Many of these groups
stressed the need for transparency is any process of decentralisation.
This contrasted with a description by Mr Tony Broomfield of ARC of a formal
meeting between the ARC General Manager and Mr Joyce in December 2014. At this
meeting, the possibility of relocating federal agencies to regional areas was
discussed. During the next six months, both the ARC and the Toowoomba Regional
Council travelled to Canberra and met with the APVMA 'to put a case forward' to
move the APVMA to their respective cities.
Consultation with the states and
As noted above, the APVMA was formed by agreement between the
Commonwealth and the states and territories. At the committee's Canberra public
hearing, the department noted that the states and territories were not consulted
prior to the decision being taken to relocate the APVMA. Notwithstanding this,
consultation has occurred with states and territories since the announcement.
Consultation with staff
It appears that staff at the APVMA were made aware of plans to relocate
the organisation from Canberra to Armidale through the media. Mr Ron Marks,
CPSU delegate at the APVMA explained:
through the media—a statement by the minister. It then gathered momentum as
that was repeated. It led to a staff survey by the APVMA, and that was in May
or June 2015. That was used in the CEO's letter to the minister to explain...what
the impact could be. There was this slow but gradually increasing burn that
unsettled people. Clearly they started to vote with their feet between 1 July
2015 and 30 June 2016 because 48 people left in that time period, which is well
above the usual separation rate.
Mr Marks noted that the uncertainty continued for an extended period of
time before staff were finally formally notified of the relocation:
There was not very much that management could do for staff
other than to hold regular briefs, and the CEO did that. But, because there was
no decision, no plans could be put in place. Until there was a decision and
there was a knowledge of how much money might be available, if indeed it was
going to happen, then policies could not be put in place for retention until
the lights got turned off or relocation. Once the decision was announced in
late November last year, the CEO very quickly informed staff and started the
process of consultation with staff to generate a relocation and a retention [plan]
until the 'lights off' policy. 
The role of the Finance Minister
In evidence to the committee, Dr Stein Helgeby, Deputy Secretary at the
Department of Finance provided background to the making of GPOs and the Finance
minister's role in the making of the GPO.
Dr Helgeby noted that prior to 2008, individual ministers not the
Finance Minister, were able to make GPOs. This posed difficulties, as the 'cost
implications' were not visible to the Finance Minister.
However, despite transferring the authority to make GPOs to the Finance
Minister to ostensibly improve the visibility of the costs associated with the
making of a GPO, the evidence indicates that neither the Finance Minister nor
his department applied financial or policy scrutiny to the application from the
Deputy Prime Minister. Dr Helgeby said:
We support the minister in the making of the GPO. There was a
decision made by government that there be a GPO. We supported the minister and
he signed it—because he is the only one who can—and that is about it.
Other options to implement the
In its submission, DAWR noted its examination of a number of 'potential
statutory mechanisms to bring the APVMA's move into effect, including whether
there were options under the Agricultural and Veterinary Chemicals
(Administration) Act 1992 and the PGPA Act'.
Were other locations considered?
A key component of the APVMA's relocation to Armidale is as part of a
broader centre of excellence in agriculture. The centre will be established at
the University of New England and allow the APVMA to co-locate and partner with
the UNE and its established agricultural research units. The APVMA will also
partner with the UNE to develop a regulatory science course.
In his May 2015 letter to Ms Arthy, the Deputy Prime Minister indicated
that both Armidale (NSW) and Toowoomba (QLD) would be considered as potential
locations for the APVMA. In her July 2015 response, Ms Arthy highlighted the
APVMA's opposition to the move; however, if the move were to proceed Ms Arthy
expressed the preference of the APVMA to relocate to Toowoomba instead of
Ms Arthy was quite clear on the reasons why Toowoomba was preferred:
Given that more [APVMA staff] would consider Toowoomba and
the greater potential to source skilled staff, I would recommend Toowoomba as
the preferred location should the APVMA relocate.
In addition, Ms Arthy noted the higher availability of Queensland
Government scientific staff in both Toowoomba and Brisbane.
Mr Joyce's own letter noted that not only is the University of Southern
Queensland—with agricultural science research and teaching—located in
Toowoomba, but the University of Queensland has a campus less than 40 kilometres
to the east in Gatton:
The Gatton campus is a leading research provider in the field
of agricultural and veterinary science, with a range of new and advanced
faciltiies, including a Wind Tunnel Research Facility for spray drift studies.
The campus also hosts one of the best veterinary schools in the country.
Some submitters felt that the establishment of the centre should not be
contingent on the relocation of the regulator. Many submitters and witnesses
felt that establishing a regulatory science course would be good for workforce
development for all Australian regulators including the APVMA.
Mr Bernard Lee of Chemistry Australia stated that it would be better to invest
the funding for the relocation into the establishment of the centre of
excellence and the regulatory science course:
I think you could have spent the $28 million investing just
in the University of New England. I have obviously been in the room listening
to the evidence of others talking about the general lack of [a] regulatory
science course, particularly in the agricultural area. In Australia there is
none. We have looked globally and, in the agricultural space, there is not much
in terms of regulatory science education in universities. In the United States
there is a fair bit of regulatory science education associated with
pharmaceuticals, but not other products, be they industrial chemicals,
agricultural chemicals or veterinary medicines. Our view was that the $28
million or however much money is being spent—you could have had a win-win. You
could have left the APVMA where it was and you could have invested $28 million
in the University of New England building a centre of excellence on its own. In
our opinion, it does not need to be co-located with the APVMA to be a centre of
New policy of decentralisation
Since the initiation of this inquiry into the move of the APVMA, the
Minister for Regional Development announced in April 2017 that 'departments
will need to indicate that they're suitable to move to the regions or justify
why all or part of their operation is unsuitable.
The next day, the Deputy Prime Minister ruled out moving entire departments
before the creation of the template that would be used to assess suitability
As indicated in Chapter 1, the committee received a number of
submissions and form letters that have considered either the government’s new
announcements regarding decentralisation, or the broader policy issues of
decentralisation of government functions to regional areas.
The committee does not consider it appropriate or necessary to discuss
these aspects of the submissions in light of the narrow focus of its terms of
reference. However some submitters gave evidence about the interaction between
the government’s new policy of decentralisation and the move of the APVMA. This
evidence is canvassed below.
As noted earlier, none of the local councils were consulted before the
order was made to relocate the APVMA. Similarly, none of the witnesses representing
local councils at the Townsville public hearing were aware of any consultation
with the government in relation to its broader decentralisation policy.
Councillor Mulholland, President of the Northern Rivers Regional Organisation
of Councils expressed her confusion at the approach taken by the government:
...with the APVMA, there is looking at
relocating that, but I guess from our perspective one of the key questions
would be around—Mr Joyce has come out and said that the agriculture portfolio
will not be one of these agencies to be decentralised. However, in the order,
it states that agricultural policy specifically will be decentralised. I would
like clarification around that as well, please.
At the committee's recent budget estimates, the government's broader
decentralisation agenda was canvassed. The Finance Minister confirmed that this
agenda had not been developed beyond the announcement by the Minister the Hon
Fiona Nash in a speech, a press conference and three listed criteria in the
the supply of skills or policy connection between the potential
host regions and the operations of specific entities;
telecommunications capability, services and infrastructure
available to support the relocation of entities and accommodate their staff; and
specialist staff retention and associated impacts on the specific
The Finance Minister could not confirm whether the relocation of the
APVMA met any of these criteria, and conceded that any future decentralisation
process would be implemented under a 'more structured process for assessment'
compared to the approach used to relocate the APVMA. The committee heard that
the Department of Finance is developing a business case template to assist
individual agencies and departments in putting forward a case as to whether
these agencies or departments should be relocated from Canberra to a regional
The Finance Minister could not confirm whether a cost-benefit analysis would
form part of that template.
The committee was also told that portfolios have until the end of this
year to present a case to government as to why they should or should not be
moved, and that these decisions will flow into the 2018–19 federal Budget. It
is not clear when the business case template will be completed and ready for
The next chapter details the significant effects that relocation will
have on the performance of the APVMA.
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