Public service decentralisation: the APVMA is no Sydney Opera House

By David Donaldson

Friday April 21, 2017

Barnaby Joyce seems to have a distaste for cost-benefit analyses.

Discussing his government’s policy of moving more public servants out to the bush — which his colleague, Minister for Regional Development Fiona Nash, said would be informed but not dictated by cost-benefit analyses — the deputy prime minister was dismissive of the stock placed in calculating the net cost of forcing bureaucrats to move:

“If you say we will premise everything purely and solely on cost benefit analysis, I tell you what will happen. We wouldn’t be having this press conference in Canberra because Canberra would not exist. It certainly would not have passed a cost-benefit analysis in 1913.”

Public transport, the Sydney Opera House and new year’s eve fireworks displays would never happen if tested with a cost-benefit analysis, he reckons.

Joyce has form in ignoring what the pointy heads say, pushing ahead with the relocation of the Australian Pesticides and Veterinary Medicines Authority to his own electorate, despite a report showing it would not generate a net benefit, and indeed would be subject to moving costs and lost output as most of the workforce was replaced.

Even the APVMA’s boss, Kareena Arthy, has decided she’s not interested in moving her whole life 750km north, according to the Canberra Times. You can hardly blame her.

Leaving aside that Destination NSW has actually calculated the return on Sydney’s new year’s eve firework display, finding it generates $133 million for the local economy, and Joyce’s bizarre claim that public transport doesn’t pass the test, he has a point: not everything should come down to an economic sum. Most would agree the Sydney Opera House is worth more than the tourism dollars it brings in, and most local fireworks shows would probably struggle to bring in more value than they cost.

It’s unclear though, how exactly the Opera House is relevant to shifting government departments around the countryside. Is the APVMA going to hire a visionary successor to Jørn Utzon to design its new digs? Perhaps the decision to move it will come to be seen not as a pork barrelling exercise but a symbolic assertion of Armidale’s modern, self-confident cultural identity on the world stage?

Government agencies exist for a reason, after all. They’re not there to look nice, or to boost local demand, they exist to serve the Australian public, whether that’s by providing services, managing the tax system or researching how to increase crop yields — a job that’s made difficult when perhaps 85% of their employees need to be replaced, meaning the work can’t be done. CropLife, the peak body representing the agricultural chemicals and plant science industry, believes the APVMA’s most recent KPIs show its performance is already being affected.

The report on the APVMA’s relocation wasn’t just a tally of how much it cost to fit out a new office and hire some new staff. It found the benefits for the Australian economy “are modest”, it says. That’s “because the strategic and operational benefits of having the APVMA operate out of Armidale appear to be limited.” Plus there is “no material economic benefit associated with” two oft-touted reasons for the change: locating regulators and researchers closer to farmers, and co-locating them with the University of New England.

So is there some intangible benefit here, as Joyce suggests, or is the taxpayer just paying more for less?

And what if you can’t find enough executives, managers and technical staff among the 24,000 people living in Armidale? You either end up recruiting them from elsewhere — and probably paying a significant salary premium — or the jobs stay where they were originally.

Unsurprisingly, the Productivity Commission isn’t wild about the idea of using departmental relocation as a form of regional aid. While it can work, it can also result in unintended consequences, so each case should be considered individually.

“The nature of the skills required in relocation proposals is critical. Where the skill requirements are highly technical and specific, relocation to a region might diminish the organisation’s effectiveness,” says a PC draft report released this morning.

Noting that the ASIC registry employs 350 people in Traralgon, in Victoria’s depressed Latrobe Valley, the PC states:

“It may be that the types of jobs required by the ASIC registry can be easily found in Traralgon, but finding qualified scientists for the APVMA in Armidale might be problematic. … There is an increased risk that the move to Armidale will weaken the APVMA, increasing the costs borne by the Australian Government and taxpayers, and hampering the organisation’s work.”

Moving too many public service jobs out of the capital also has the potential to undermine one of Canberra’s strengths: that there are a lot of people who know how to make government work concentrated in a small area.

The Grattan Institute is sceptical too, arguing in a 2011 report that decentralisation of the public sector has “had little material impact on regional economic development.” Canberra — which, ahem, many would consider to be a country town itself — “is an exception where the scale of the federal government has created a city in its own right,” says the think tank.

Locating federal public sector jobs outside the ACT isn’t necessarily a bad idea. Nearly two-thirds already are. Around 1200 ATO employees work in Albury, and Geelong is carving a name for itself as a hub for human services. Defence personnel are scattered around the country.

The cost-benefit analysis is, after all, just one tool to assist in decision making. Plus there are some good arguments for trying to convince people to move away from over-priced Melbourne and Sydney (not that these arguments are any more likely to work now, when private sector jobs are increasingly located in the inner city, than all the other times governments have tried to decentralise the economy).

But it’s little wonder there is concern over the absence of evidence in policymaking among those in the research sector, as seen at an Academy of the Social Sciences in Australia event earlier this week, where former PM&C deputy secretary Meredith Edwards, Dr John Hewson and the Guardian’s Katharine Murphy weighed in on why evidence isn’t being given a chance.

If the government’s handling of the APVMA move is any indication of what is to come under this new push to send agencies down to the country, it looks like we’re only going to be getting more expensive, less effective government, regardless of what Barnaby thinks of the cost-benefit analysis.

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