The underwhelming response, from the 19,000-strong revenue agency to requests for expressions of interest in transfers to Gosford, raises the prospect of forced relocations for more than 400 Tax Officials to the regional town.

The revelation comes as the Coalition defended its policies intended to push hundreds of Canberra-based public servants to rural and regional Australia.

The policy of moving federal public servants to Gosford has been controversial since it was first announced as the Coalition tried to win the seat from Labor before the 2013 election.

The Tax office took some time to determine what it would actually do with the $72 million new building it was told to occupy but Commissioner of Taxation Chris Jordan said in early 2016 that it was never the intention to move large numbers of public servants to Gosford from Canberra or anywhere else.

Rather, it was hoped the occupants of the building could be recruited "from the local area".

But there could be a large shortfall on the numbers needed, after ATO staff were advised this week that only 129 of their colleagues had put up their hands for a Gosford Transfer.

"The Expression of Interest for transfer at level to the Gosford site has now closed, with a total of 129 applications received," a staff newsletter reported this week.

"The assessment of applications has commenced and candidates will be notified of decisions by mid-March.

"The Gosford site is on track for the scheduled opening in November 2017."

The central coast project is separate to the program of forced public service relocations from Canberra that the Nationals are driving in the Agriculture portfolio they control.

Under the Nationals' policy the Rural Industries Research and Development Corporation is moving to to Wagga Wagga and the Grains Research and Development Corporation is going Toowoomba, Dubbo, Northam and Adelaide.

The Fisheries Research and Development Centre will open an office in Adelaide and most controversially, the Australian Pesticides and Veterinary Medicines Agency is being forced to move to Armidale.

Nationals Deputy Leader Fiona Nash told the Senate on Wednesday that the policy was here to stay.

"We are a Government that wants to invest in those communities and to invest in their futures," Ms nash said.

"We want those communities to have good jobs, high paying jobs and have better access to services. Part of our commitment to growing jobs outside of our major capital cities is to look at opportunities to decentralise Government agencies to rural and regional areas.

"We never apologise for taking decisions that are going to provide a sustain future for regional communities, to provide more jobs – and part of that is looking to decentralise to get those public sectors jobs out into the regions where they deserve that investment because it is regional Australia that drive this country."