The state government's regional relocation scheme would do little for Wollongong other than export some of the region's unemployed, Illawarra Regional Information Service boss Simon Pomfret said yesterday.
Under the revised scheme, Wollongong residents prepared to move to the country for at least two years and who have a job to go to will be eligible for cash handouts of up to $10,000.
If you don't have a job the government will give you $7000 to relocate to country or regional areas. Recipients must buy a property in their new location and it must be at least 100 kilometres from their current home.
Those eligible for the $10,000 can rent or buy.
Mr Pomfret believed Wollongong might actually be worse off under the scheme.
"We could lose capacity in our labour force, which in the past has been a competitive advantage for us in terms of having a strong skilled workforce in technical areas of our manufacturing and mining sectors," he said.
"It's always a concern when those industries downsize, but you can't have your cake and eat it too. Those individuals, if they can't get a job locally, need to go and source opportunities elsewhere."
But he doubted the scheme would even put a dent in the region's unemployment level, which is 7.5 per cent - 2 per cent higher than the national average.
"I don't think it will have any visual impact on our unemployment rate," he said.
"With the previous scheme the take-up rate was very low. I can't see it making much of difference as I don't think the incentive is strong enough."
There were many reasons residents chose to live in Wollongong, including lifestyle and family, which would deter people from making a move despite the financial gain.
Another possible impact on the region could be in the building industry.
"The scheme might reduce some of the strain on our rental market and reduce strain on our housing stock but that's not really an advantage because it will hurt the building industry," Mr Pomfret said.
He added key regional centres like Wagga, Orange and Dubbo would fare better under the grants.
The scheme was set up to alleviate some of the rental pressure in metropolitan areas - with Wollongong and Newcastle placed in this category for the purpose of the scheme.
Since it was introduced two years ago, two Wollongong families moved less than two kilometres - from Windang to Lake Illawarra and from Haywards Bay to Albion Park Rail - while 52 residents moved to Shellharbour.
The government has amended the rules of the original scheme forcing recipients to move 100 kilometres.
NSW opposition spokesman for regional and rural affairs Mick Veitch criticised the relocation scheme yesterday as being "a dud from the start".
"It was ill-conceived and poorly implemented," Mr Veitch said. "Deputy Premier Andrew Stoner has conceded some grants have been awarded for people literally moving a few kilometres down the street into another suburb."
Despite initially budgeting for 7000 grants a year over four years - only 2531 grants had been taken up since 2011.
The scheme has now been capped at $10.4 million a year, a significant reduction from the original allocation of $49 million a year.
Mr Veitch said the money should go on maintaining employment and creating new employment opportunities in regional NSW.
Mr Pomfret said if the government wanted people to move out of Sydney they should transfer critical government departments out of the CBD to regional areas.