Parliament's select committee on decentralisation was established to consider the relocation of business and federal public service jobs away from Sydney, Melbourne and Canberra.

The inquiry, established at the height of Barnaby Joyce's failed bid to decentralise the federal government, says Malcolm Turnbull should extend his signature city deals policy to include smaller towns and regional communities.

The report, released amid disappointment from regional communities that the May federal budget failed to deliver promised relocations of government jobs, said improved planning, infrastructure spending and amenity were needed to encourage business to move away from capital cities.

Nearly nine million people live in rural and regional areas, including about one third of the workforce and 40 per cent of the national economic output.

Committee chairman Damian Drum called on big business to consider decentralisation moves to escape crowded infrastructure and high operating costs.

He said the right policy conditions were needed from government, including improved spending on regional services and communications connectivity.

He said the Coalition had not lost its appetite for decentralisation, despite Mr Joyce's resignation as deputy prime minister and former Nationals' deputy leader Fiona Nash being removed from Parliament because of dual citizenship.

"While the public sector movements from government agencies out to regions is sort of like the face of decentralisation, those benefits are absolutely dwarfed by what happens in the private sector," Mr Drum said.

"We need to set that environment so the private sector can take advantage of regional Australia."

Deputy chair Meryl Swanson lashed Mr Joyce's forced move of the government's pesticides authority to his electorate of New England, leading to a haemorrhaging of staff and a dip in productivity.

Mr Joyce was accused of pork barrelling for moving the Australian Pesticides and Veterinary Medicines Authority to Armidale and locating the Regional Investment Corporation, dubbed "Barnaby's bank", in Orange.

"We did hear evidence that whenever you move a government department to a regional area, it needs to be a good fit and there needs to be good purpose," Ms Swanson said.

"You can't just drop an agency in somewhere for political short-termism. You have to ask is it a good fit? Are the workforce there currently and into the future? This is the long-term strategic thinking key to decentralisation."

The report recommend that every federal government agency should assess the possibility for relocation when appropriate, but always when new units, agencies or organisation are created, when mergers take place or significant property breaks like lease terminations occur.

Public servants working in relocated agencies should be given short-term incentives to move and flexible working arrangements including telework options when appropriate.

The report recommended no caps be placed on senior public service jobs in any relocated agencies and said decision makers should be located close to communities and businesses served by their agencies.

Decentralised agencies should be subject to evaluations after one year, five years and ten years periods to ensure value for money and effectiveness in their operations.

In May the Coalition endorsed a report calling for an extra 3000 migrants a year to be added to country towns to stop population decline and curb labour shortages.