Public servants from the nation's chemical regulator are being forced to work from a local McDonald's in the northern New South Wales city of Armidale, due to a lack of office space.

The Federal Government has decided to relocate the Australian Pesticides and Veterinary Medicines Authority (APVMA) from Canberra to Armidale, a move championed by Deputy Prime Minister Barnaby Joyce.

The $25-million move sparked allegations of pork-barrelling, given Armidale is in Mr Joyce's electorate of New England.

Yesterday, a Senate Estimates hearing heard APVMA staff have been working out of the local fast food outlet because no building was available.

Nationals MP Andrew Broad defended the situation, saying it would not be a permanent arrangement.

"I guess much public policy is constructed in coffee shops around Canberra by public departments," he said.

"So the very principle of moving people out into the regions and working on issues that are important to the regions makes a lot of sense."

Treasurer Scott Morrison also defended the relocation of the APVMA and decentralisation of government departments.

"Our regional centres have a continued strong basis for growth and the Deputy Prime Minister has led the charge on getting jobs out into regional areas," he said.

"This is an important part of the process and I think that is a good decision for that part of New South Wales."

APVMA chief executive Kareena Arthy told Senate Estimates yesterday the chemical regulator would need to build a new facility in Armidale because there was no site big enough to hold it.

Dr Arthy said it was unclear how much the new building might cost.

But Mr Joyce today labelled that claim as "ridiculous", saying there was plenty of available office space.

"Armidale was the first city to get the NBN, so this idea that you have to work out of Maccas, that's a choice they've made," he said.

"I've been overwhelmed by people saying 'that's ridiculous, there is office space here if they want it'."

Shedding staff as scientists quit

Dr Arthy also told the Senate Estimates hearing the APVMA had been shedding staff, with scientists choosing to quit rather than leave Canberra.

APVMA staff have been moved from Canberra to a fast food restaurant in Armidale. ( ABC News: Ian Cutmore )

The APVMA boss said 20 per cent of regulatory scientists had left the agency.

"When we talk to people, it's just purely they've made the decision they don't want to move to Armidale," she said.

"They don't want to work remotely, which is one of the offers that I've made for the regulator scientists, and they want to provide certainty for their families now."

Last year it was estimated as many as 85 per cent of the 100-strong workforce would choose to take redundancies, rather than make the move from Canberra to Armidale.

The Government also conducted its own $272,000 cost benefit analysis, which found there was no material economic advantages to support the relocation.