The National Archives has ruled out building its new preservation offices in Goulburn, arguing that it would be too expensive to connect the regional city to a government communications network.
Some archives staff have also baulked at the suggestion that they could be forced to travel an extra 90 kilometres to work.
The archives has run out of space for classified documents at its Mitchell preservation building and wants to lease yet-to-be-commissioned, purpose-built storage quarters nearby.
The owners of Goulburn's Southern Distribution Hub have previously suggested that it could be cheaper for the archives to acquire offices there to store the nation's public records.
But National Archives management has told a parliamentary committee that it would not be practical to locate the repository outside the Canberra district.
The issue highlights the potential challenges of relocating public service offices to regional areas.
National Archives assistant director Cheryl Watson said it would cost $10,000 a kilometre to connect a Goulburn-based repository to the fibre-optic Intra Government Communications Network that connects government offices in Canberra.
''It would cost about $10 million to connect to a facility in Goulburn.
We also had some staff consultations in this area,'' Ms Watson told the Parliament's public works committee earlier this month.
''A concern is that we have specialist conservators, archivists and people like that. We may have some staff reductions with a move further away and possibly additional costs that relate to staff reductions.''
Basing the storage in Goulburn would also increase the time taken to courier requested research documents to the archive's head office in Parkes.
''There is the further travelling. There are security risks, accident risks and also environmental imprint risks because of the servicing of the head office,'' Ms Watson said.
Members of the public works committee expressed concerns about the cost of the proposal to lease a new building in archives, which was estimated to be $97.9 million over 30 years.
Liberal National Party MP Karen Andrews asked if the archives was proposing to lease a purpose-built building because it could not afford to pay for offices upfront.
''Yes, the archives does not have the money upfront,'' Ms Watson said.
The new building on Vicars Street would have enough shelves to hold 74.2 kilometres of standard and 20.5 kilometres of classified paper documents.
The archives' Greenway site will close in 2016 and the Mitchell preservation facility will be gutted and refurbished once its contents are sent to the new site. The older building would then be able to accept more records.
Ms Watson said the new Mitchell site was close to other cultural agency storage sites.
''It gives us some opportunity to look at what we can do in a shared arrangement,'' she said.