Sums don’t add up on decentralisation

Sums don’t add up on decentralisation

Op Ed from our Chair Glenn Keys


Imagine someone came to you and offered you the ‘opportunity’ to relocate your family, but the move would cost you a million dollars, your children would end up behind their peers in terms of their schooling, and your career would stagnate for a couple of years.

Would you consider this a good deal? Would it be something you could see value in taking up?

It seems likely anyone who did the sums would conclude this was a losing wicket and they are better off staying put.

Yet, when the Federal Government does the same calculation in relation to decentralisation of public service departments, it does not even try to convince us this decision will benefit the nation, it says only that it will benefit the regional city that is the potential location.

We have the current situation with the planned relocation of the Australian Pesticides and Veterinary Medicines Authority (AVPMA) from the ACT to Armidale.

A study found this move has no material economic advantages and is in fact likely to cost the agricultural crop sector between $64 million and $193 million per year due to loss of experienced staff and delays in approval of new chemical products.

The argument for relocation is based on building regional centres and bringing jobs to areas outside our capital cities.

Yet even the National Farmers’ Federation, who have to be considered experts on, and one of the greatest advocates for, rural and regional Australia, has opposed this proposal because it just doesn’t add up: for the Agency, the staff, their families, let alone the nation as a whole.

We also know that public service staff turnovers in regional areas are significantly higher than major centres, such as the ACT region, meaning lower productivity and reduced output of those departments leading to increased workloads on those staff that are there.

Now we have the Federal Government talking about further decentralisation of Commonwealth departments, a decentralization that does not drive an improvement for the nation.

If this were to occur, no region would be harder hit than the ACT Region.

About 57,500 public servants, or 37.5 per cent of the federal bureaucracy, work in Canberra.

While public sector employment as a proportion of all local employment is declining, currently it accounts for about a third of the region’s employment. It is still a major industry for the ACT and many of the region’s private sector jobs flow from it. The regional centres where public service driven employment spreads include Yass, Goulburn, Queanbeyan, Bungendore, Murrumbateman, Yarrangobilly and Captains Flat.

When the worst happened and car manufacturing halted in Australia, it was estimated the industry provided direct employment for about 45,000 people and another three to six people per direct job were employed in supporting industries. The majority of these jobs were in Victoria and South Australia.

In response to the closures, the Federal Government pumped $101 million into a Growth Fund to assist workers, businesses and regions affected by the change.

Yet rhetoric around public service cuts, closures and relocations never seems to include any suggestion of adjustment packages of this type for the ACT and those regional towns that would be hard hit by people currently working in Canberra and enjoying the many benefits of rural life losing their jobs, The Leader of the National Party often celebrates the advantages of rural living, but is backing a plan that could devastate many regional centres.

Decentralisation also runs counter to the Federal Government’s own policy and record on innovation.

To drive innovation, the Federal Government, and governments around the country, are encouraging industry ‘clustering’. The idea is that benefits stem from the networking and knowledge sharing that occurs when businesses are co-located in a dynamic environment.

The innovation eco-systems that are created see interdependent and inter-related organisations working and collaborating together.

While it seems to be seldom recognised in Australia, the current clustering of Commonwealth agencies has created an innovation eco-system.

With public service departments generally located in the ACT Region, we have seen other professional bodies locate near them and led to a free-flowing and effective sharing of ideas resulting in innovative and successful policy initially, and then onto businesses that have developed innovative solutions that deliver benefit not only to the local economy but are exporting those solutions around the world.

This co-location of Government agencies with commercial innovation organisations is recognised elsewhere around the world and has resulted in terrific benefits to national economies in countries as diverse as Israel and Scandinavia.

Find it hard to believe that this has worked and Australia has an innovative public service? A report last year by the Centre for Workplace Leadership at the University of Melbourne found public sector organisations are more likely to have reported higher levels of radical innovation than the private sector.

This innovation has enabled Australia to survive, and in fact prepare and stay ahead of, major challenges such as the global financial crisis and the contraction of our mining sector.

Non-government organisations, research organisations and businesses interact with many departments on a daily basis to help identify potential issues and solutions to them, and then implement those solutions often not just for the Australian Government, but for other international customers.

It is unlikely any one Commonwealth department is solely responsible for policy development in the field in which our NGOs, and even commercial organisations, can provide specialist input.

For example, the Australian Medical Association (AMA) might have close associations to the Department of Health and the National Farmers’ Federation to the Department of Agriculture, but you can bet they also work regularly with others.

Therefore, the question is what would be the impact of decentralisation on innovation? If the Department of Health moved to Alice Springs, would the AMA go too? If not, would the department have less access to industry expertise than it has today and would the health of our nation be impacted as a result?

When Minister Nash announced the decentralisation plan at the National Press Club she opened with the successes of regional businesses to grow and export their capabilities and products around Australia and the world. And then she diverted into decentralisation.

Rather than moving the deck chairs of Government departments, at an enormous cost and negative impact on the nation, why not invest in support, job training and new business growth in regional areas? Why not grow new jobs, new businesses and new export dollars in regional and rural Australia? Why not add to the national economic pie, create reasons for businesses and people to develop or move there, rather than force departments and people to go?

While efforts to increase employment in regional centres are to be applauded, even the worst mathlete would find it difficult to make the decentralisation calculation come out positive, from any perspective. Let’s use job and economic creation, not job relocation, as a way to drive our economy, and benefit every Australian, not just those in a few Coalition electorates.

Glenn Keys – Chair Canberra Business Chamber

Leave a Reply