What's the business case for federal Treasury offices beyond Canberra's bubble?

By Stephen Easton

July 27, 2015

Both major parties want to open regional offices of the federal Treasury, but it’s been tried before and a detailed business case is yet to be made for why things are different now.

There’s nearly $16 million budgeted for Treasury to set up shop in Sydney, where it will reportedly move most of its markets division. The opposition supports that policy and pledges to go further if it wins government, spending another $2.8 million on a Perth outpost with 15 staff.

Treasury had regional offices for a few years in the 1990s before they were closed again to save money, but the idea returned to favour once again after last decade’s international financial meltdown. Joe Hockey grumbled about the accuracy of the department’s forecasting in opposition and shortly after he became treasurer, The West Australian reported the Sydney move was on the cards with offices in Melbourne and Perth likely to follow.

“To go beyond the ABS data, you talk to people, go to forums, meet with people on boards — people who have to keep their fingers on the pulse.”

Supporters of the idea say regional offices close to where most of the economic action takes place would allow more consultation with key private sector players, leading to better policy and more accurate forecasting. It is also often suggested that talented staff would be easier to attract and retain if moving to Canberra wasn’t always part of the deal.

Lynne Pezzullo
Lynne Pezzullo

Lynne Pezzullo, managing partner of Deloitte’s Canberra office, says another reason could be regional development, as is the case with the National Disability Insurance Agency in Geelong. However, she says that and the aforementioned justifications, while valid, might not outweigh the extra overheads of a more spread-out Treasury.

“In terms of being located close to business, of course the main work that Treasury does is policymaking, and monitoring and forecasting,” she told The Mandarin. “Those are often tasks that don’t necessarily require physical co-location, and stakeholders are quite numerous and spread out.”

Pezzullo suggests supplemental benefits like reduced travel as well as proximity to state treasuries or other key stakeholders like the Reserve Bank in Sydney are not likely to add much to the business case.

While a case could be made for teams in Sydney and Perth, real estate is quite expensive in these locations and, for a small department like Treasury, she strongly doubts it would be worthwhile to open more than three offices, and certainly not one for each state capital, unless shared services with other departments could be negotiated to reduce overhead costs.

Percy Allan
Percy Allan

Public policy and management consultant Percy Allan sees value in having some of Treasury’s forecasting staff working outside the insular “one-company town” that is Canberra, but only in very small numbers and only in the major economic centres.

The former New South Wales Treasury secretary says the department’s policy advisory work is best done within the seat of government, and suggests that very small outposts could provide monitoring and forecasting functions with the on-the-ground intelligence that would help them do a better job.

“The point is that larger companies have offices in Sydney and Melbourne and by talking with economists in those companies they could be closer to finding out what’s really happening in the economy,” he told The Mandarin. “To go beyond the ABS data, you talk to people, go to forums, meet with people on boards — people who have to keep their fingers on the pulse.”

While Labor’s Chris Bowen imagines a 15-strong outpost and Hockey’s Sydney office could house a couple of hundred, Allan thinks a smaller number could get the job done.

“At the same time they’ve got to contain [the department’s overall] size, so I just hope this doesn’t become a kind of exercise where they have to be in every state,” said Allan. Business — especially big business — can generally be expected to welcome the move and he says it is the informal exchanges that take place within the business milieu that are often the most revealing.

On the other hand, communications technology has diminished the value of a physical presence significantly since the federal Treasury last had regional offices in the 1990s. They were shut to reduce administration costs, which Hockey and his colleagues claim to be cutting back all over the public service.

“There’s a risk of spreading themselves far and wide when they’re preaching austerity, so it’s a balance really, making sure they have some presence outside Canberra, so they have a feeling of the real economy, but not dispersing so far that it becomes a costly exercise and they splinter their economic resources,” said Allan.

“There is also an advantage to getting all the forecasting experts in the same room so they can brainstorm.”

Why Perth?

One of the special reasons for a Perth office is the strong ties between its business sector and big east Asian markets and, as pointed out by Labor’s Chris Bowen, the fact it is in the same time zone as lots of that region’s powerhouse cities.

Vicki Stylianou
Vicki Stylianou

Vicki Stylianou, who left the federal Treasury after five-and-a-half years in 2007 for a senior role at the Institute of Public Accountants, doesn’t think that justification really stacks up. Both she and Pezzullo question if a two or three hour difference, depending on daylight saving, is really a big obstacle for the department. It draws a sceptical response from Allan as well.

“I don’t think that’s a valid enough view to go and spend all that money when you think … there are fantastic people who already work in Canberra at Treasury and are happy to be there.”

Stylianou, a former West Australian who happens to be speaking with The Mandarin from Perth, says a much better reason is that the west coast often harbours very different attitudes to federal economic policies than those found on the east coast.

“Sydney and Melbourne do not represent Australia,” she said. “So I think a more valid reason if you were going to open up an office in Perth, in particular, is that you need to capture more accurately the views of people on the west side of the country — and I think that would be more valid than the time zone.”

“Whether or not it’s enough of a justification to open an office is another question; I would say maybe, you could make a case for that.”

Stylianou is familiar with the argument around attracting and retaining staff, but isn’t so sure it’s on the money.

“That is one view, but I think a lot of people who genuinely want to contribute to the public service might be happy to move to Canberra,” she said.

“Personally, I don’t think that’s a valid enough view to go and spend all that money when you think — and I know for a fact — there are fantastic people who already work in Canberra at Treasury and are happy to be there.

“Whether it would attract lots of other people, whether it means you would open it up, sure, it’s a good argument, but I don’t know if it necessarily justifies the money.”

Stylianou says Treasury staff travel a lot and do consultation in other cities, especially Sydney and Melbourne, and doesn’t think many of them need to be in either city all the time to have a good understanding of the views held by their respective residents. And, she points out, the big stakeholders also come to Canberra quite often to stalk the corridors of power and make sure their views are known to politicians and senior bureaucrats alike.

“Treasury often goes to Sydney or Melbourne to consult; others go to Canberra to consult. There’s a lot of two-way movement, so I don’t think that’s necessarily a good argument about capturing those interests.”

Give time for consultation

She suggests one thing Treasury could certainly do to allow more input from business into its work is to extend the periods of time it allows for feedback on various proposals:

“I think the shortest that I’ve had recently was 11 days. Or they’ll give you two weeks and if you get three weeks you’re doing well, which I think is absolutely ridiculous.”

Treasury has heard this complaint repeatedly, and even committed to giving more time for consultation in the past, but the short deadlines keep coming.

Stylianou says for any regional outpost of the federal Treasury, she would expect there to be strong business case, explaining exactly who will work there, what they will do, and why that is worth the cost.

“The [proposed] Perth office in some ways has more of a legitimate argument, because I think there is very much a different kind of idea and approach about policy that you would get from the west than you would get from Sydney or Melbourne,” she said. “For me Sydney and Melbourne are almost interchangeable.”

The bulk of the department’s work will remain in Canberra, and while potential star recruits staff may prefer staying in Sydney or Melbourne, Stylianou points out those who aspire to the top levels of Treasury need to work in its headquarters.

“I’d want to see the cost-benefit analysis before it went ahead. I’d want to see exactly what the objectives are going to be for those staff, what exactly are they going to be there to do? What are they going to feed into policy development? What level is that staff going to be? And, how is it going to work in terms of the advocacy work that is already going on?

“The vested interests and stakeholders are still going to want to talk to people at a certain level, people with influence. So does it mean they’re not going to have to go to Canberra to talk to the right people?

“It’s not necessarily a bad idea, but you’d want to see the detail.”

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7 years ago

This is a constant pulse in organisational management. One generation will spread out head office to be closer to customers. The following generation will centralise to improve communication. The same goes with splitting and re-combining public service departments – see DMO and Defence for the latest example.

Policy is about the interchange of ideas. If the markets group moves to Sydney, the markets group might get some benefits from the external world but it will lose the benefits of interplay with the rest of Treasury and government.

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