Parliamentary Secretary to the Treasurer Steven Ciobo confirmed the closure, first reported by Fairfax Media on Thursday, saying there was no longer a compelling case to keep the 103-year-old agency. Staff were told on Thursday they faced redundancy or redeployment in their parent-department, the Australian Taxation Office.

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The public sector union has criticised the decision, saying the cuts show the Abbott government is turning its back on regional Australia.

Acting opposition finance spokesman Andrew Leigh said the Abbott government had given no warning of the cuts when it was in opposition, and had not consulted with staff before axing their agency.

“The decision smacks of an ideological preoccupation with cutting government services without regard to their effectiveness,” he said.

The Community and Public Sector Union is calling for an urgent meeting with Public Service Minister, Senator Eric Abetz, following the announcement, which will mean $34million of work is offloaded to the private sector.

CPSU national secretary Nadine Flood said the government was turning its back on regional Australia through the closure, which would affect workers in towns including Young, Bowral, Wagga Wagga, Lismore and Mildura.

“Given the growing number of jobs disappearing in regional Australia, these workers are going to find it tough to find another job,” she said.

“This government said it was in the business of creating jobs, not destroying them.”

Workers in Canberra, Melbourne, Sydney, Adelaide and Perth will also be affected by the closure, which comes on top of the 900 public servants the Tax Office was already planning to cut this financial year.

Dr Leigh said the government ought to reveal why it had made the decision.

“Scrapping a century-old institution deserves a proper report, not just a short press release from the Parliamentary Secretary to the Treasurer,” he said.

In the release, Mr Ciobo blamed the closure on the AVO’s declining revenue, outdated technology and decreased use by other government departments.

“A compelling case for the Commonwealth providing its own valuation services no longer exists, particularly given there is a highly competitive market of private sector providers,” Mr Ciobo wrote.

In the release, Mr Ciobo paid tribute to those who had worked in the AVO.

“The organisation has a rich history and has assisted organisations over many years to meet policy outcomes and financial reporting requirements,” he said.

The move has also been criticised by former employees such as Graeme Addicott, who described the closure as a loss to the public sector and the valuation profession.

The long-time employee, who served as the Northern Territory’s valuer-general for 10 years, said the AVO had long been a training ground for valuers who played substantial roles in government policy.

“From land taxation to native title, along with financial reporting and Centrelink means testing valuations, the valuation branch responded to, and helped develop, government policy over 100 years,” he said.

“This decision robs the Australian taxpayer of a highly experienced, professional and independent valuation service and check on government spending.”

Mr Addicott also voiced concerns for the potential for conflicts of interest in outsourcing the work previously done by “independent, experienced professionals”.

“The AVO had no vested interest,” he said.

“It simply worked for the federal government and, at different stages, the state governments.”  with Noel Towell, Ben Westcott