Tipping Point – when does Canberra cease to be viable as a national capital?

Tipping Point – when does Canberra cease to be viable as a national capital?

The Turnbull Government appears to have created a constitutional paradox at the heart of the Federation; it wants to devolve responsibilities away from the centre but this requires a strong...

by Mark Evans

The Turnbull Government appears to have created a constitutional paradox at the heart of the Federation; it wants to devolve responsibilities away from the centre but this requires a strong national capital with strategic policy capability. This is a significant problem for those who fear the accretion of the power of Commonwealth government. But like it or not, Canberra is a great icon of modern nation building in Australia. It represents a governance tradition that is as resonant today as it was at foundation. An Ozminster tradition of ministerial responsibility, public service independence and strong strategic policy capability played out in a neutral territory at arms-length from state interference.

Why then would an Australian government want to dismantle the crucible of Australian Federalism; the national capital? The Government’s concerns with the present state of Australian Federalism are well-founded. The need to reduce waste and duplication, allocate clear roles and responsibilities to different levels of government and clarify their areas of autonomy and political accountability are all components of a fundamental national conversation that we still need to have on the future of the Australian Federation. But the evidence suggests that the downgrading of the national capital will only serve to weaken Australian Federalism.

Are we not already close to a tipping point whereby Canberra as a national capital ceases to be viable? Given that over 60 per cent of federal employees (and this is currently increasing) are already located outside Canberra (see Figure 1) and 78.6% of these are based in state or territory capitals, is the driver for change really about the need to renegotiate Australian Federalism or is it more about responding to the political imperative of appeasing independents in the Senate or pandering to marginal constituencies; an example of porkbarrelling rather than conviction politics.

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Figure 1. The location of Commonwealth public servants in 2016

In a recent report Should they stay or should they go? Relocation and the Australian Public Service, we analysed the economic and governance benefits from Commonwealth Australian Public Service (APS) agencies remaining in Canberra. We found considerable evidence in support of crafting a New Federalism in Australia but the strengthening of Canberra was viewed as critical to its achievement. The report was founded first on debunking some popular myths perpetuated by populist politicians and a sceptical media and secondly reviewing international and national evidence on relocation.

Debunking popular myths

Myth 1: Canberra is characterized by a bloated federal bureaucracy characterized by excess and waste.

Not true, as noted above the vast majority of Commonwealth jobs are located outside Canberra. The Federal bureaucracy in the ACT is only the fourth largest in Australia. The ACT accounts for only a quarter of total Federal spending and a third of all Federal employment in Australia.

Myth 2: Australians don’t like the federal bureaucracy.

Not true, the survey evidence consistently demonstrates that Australians don’t trust federal politicians and political parties: only 27 per cent were clear that the Government could be trusted to do the right thing “usually” or “sometimes” compared to a high point of trust in 1996 when 48 per cent of Australians expressed trust in government. Indeed only five per cent were clear that governments could be trusted to do the right thing. On average only 20% of Australians trust political parties, 28% MPs but 39% trust public servants (Evans et al., 2015 & 2016). 92.7 per cent of Australian also think it desirable that “different levels of government be able to collaborate on solutions to problems” and 49.9 per cent believe that Australian governments do not do this “at all well” (GCVS 2014, p.9). Hence it is federal politicians and the absence of cooperative federalism that is the problem.

Myth 3: The relocation measures introduced so far have been informed by a clear strategic approach.

Not true, they have corresponded to short-term political imperative. All relocations have been directed to either marginal constituencies or to constituencies held by independents whose support is important for maintaining the Coalition’s legislative programme.

Myth 4: Canberra doesn’t deserve to be the nation’s capital.

The international evidence suggests otherwise. The OECD’s 2014 Wellbeing Report ranked Canberra the world’s most livable city. This is testimony to the historic investment in the national capital. 

The international evidence on relocation

History is not on the government’s side; reform experiments in the past that have undermined strategic policy capability have not been successful. Relocation is only justified from the perspective of enhancing the quality of public service productivity if it focuses on enhancing public service delivery (normally through maximizing the benefits from digitalization) or the delivery of specialized functional tasks which do not require interaction with the Canberra policy community.

Our report provides demonstrable evidence of the benefits which could be accrued to enhancing the quality of service delivery in Australia in terms of medium to long-term efficiency savings from premises and labour costs; modernisation of working practices in the light of new technology; and contributions to promoting wider Government imperatives, such as regional growth, regeneration and devolution. However, these benefits will require significant upfront investment which the Federal budget is unable to sustain at present.

On the impact of relocation on the Canberra economy

The evidence suggests that relocation will destroy the economy of one of Australia’s and the world’s most livable cities. The size of the Federal public sector in ACT has substantially contributed to the ACT economy and stimulated the development and expansion of the other sectors of the economy, in particular the housing sector. Any reduction in the size of the Federal public sector in the ACT will not only directly impact the ACT economy but indirectly through flow-on impacts on other linked sectors of the economy. We developed a macro model of the ACT economy to compute the changes in Federal employment on the ACT’s GDP. The model finds that for every reduction of 1,000 employees in Federal employment, this would cause a decline in ACT GDP of $150 million per annum. If measured from the 2013 baseline, this amounts to a reduction of 0.4%. A reduction of 2000 Federal employees is expected to cause a decrease in ACT GDP of $300 million per annum, a decline in GDP of 0.8 percent from the 2013 level, and so on.

Since the model excludes some indirect impacts, the adverse impact of the reduction in Federal employment in the ACT on the ACT economy is likely to be underestimated. Hence this is a conservative estimate.

On governance impacts

We assessed the potential governance impacts of relocation drawing on a series of focus groups with present and former members of the Senior Executive Service of the APS and a sample of 56 recently recruited graduates to the APS.

The evidence suggests that there is a need for administrative devolution of delivery functions to other jurisdictions but national strategic policy and regulatory capability needs to be strengthened for this to work. The majority of our sample of present and former federal public servants recognize the need for devolution and subsidiarity of delivery functions to other jurisdictions; but argue that national strategic policy and regulatory capability would need to remain in Canberra for this to work. This would actually mean some agencies now based in state capitals moving back to Canberra.

 

The benefits of the status quo are overwhelming: Canberra has co-evolved with the public service and the potential costs of terminating that evolutionary process are unimaginable; Canberra has developed a policy community that is integral to good policy-making; and, the APS also benefits significantly from the local knowledge economy.

Our report identified the key ingredients of a high performing APS and notes that relocation: will adversely impact on the ability of the APS to attract the best and the brightest in a globally competitive market place (when asked the question; would you have joined the APS if you had known at the outset of your career that you could be located in regional or rural Australia, 56% of our sample of graduates said ‘No’); drive-up administrative costs in the short-term; will affect the ability of Commonwealth departments to deliver the government agenda for at least two years; will impact adversely on policy coordination across Commonwealth departments; will reduce access to knowledge institutions and affect the Commonwealth’s ability to affect strategic learning; lessen learning and development opportunities for APS staff; and, generate additional resettlement and infrastructural costs including ICTs. Simply put, relocation will undermine Budget repair and is at odds with its own fiscal strategy.

Parting shots

The way forward for the New Federalism is not to weaken Canberra but to strengthen it in at least two respects. Firstly, Canberra on the basis of reputable international metrics is a success story as a young national capital. It has therefore proved its case as a focus for nation-building but the next stage of this project requires an inclusive approach. Canberra needs to connect up better with everyday Australian citizens outside the national capital. Its remoteness from the everyday lives of ordinary Australians is its fundamental weakness and the key source of its political vulnerability. Secondly, Australian Federalism will only work effectively if the strategic policy capability of the APS is improved i.e. if it is allowed to become a centre of excellence for policy innovation and enterprise.

As a final parting shot, following Le Goff (2005), we advocate the development of a framework which includes decision-making criteria to inform relocation that is not shaped by the interests of politics but rather by the needs of sound governance. He proposes three considerations for selecting agencies to relocate: (1) they should be relatively independent or specialised, so that the move does not impair their interaction with their partner departments or agencies; (2) they should not have continual interaction with political officials or develop public policy on a daily basis; otherwise, they should not be located outside the capital city; and (3) special attention should be paid to the demographic and professional characteristics of employees asked to move.

Sources

Evans, M. et al., (2015), Should they stay or should they go? Relocation and the Australian Public Service, Canberra, IGPA.

Evans, M., Stoker, G. and Halupka, M. (2016), ‘A decade of decline: How Australians understand and imagine their democracy’. In Chris Aulich (ed) From Abbott to Turnbull. A New Direction? West Geelong: Echo Books, pp. 23-41.

Griffith University (2014), Australian Constitutional Values Survey, available on-line at: www.griffith.edu.au/federalism.

Le Goff, P. (2005), Moving Public Servants to the Regions, Parliament of Canada, Ottawa, March 2005.

IGPA reports are available at: http://www.governanceinstitute.edu.au/research/publications/recent-reports

Mark Evans, Institute for Governance and Policy Analysis

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