Premier Mark McGowan has this week dashed all hopes that a state government agency will relocate to Mandurah.
The City of Mandurah has led the push for an agency as a way to battle high unemployment and shake up the economy.
In a pre-election commitment, the WA Liberals promised to relocate the WA Country Health Service government agency to Mandurah.
WA Labor didn't match the commitment at the time.
Mr McGowan has now confirmed that moving a government department to Mandurah wasn't a part of the state government's agenda.
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"We put $10 million into the Mandurah CBD and it looks magnificent through there," Mr McGowan said.
"I know it's always talked about moving government departments out of the city but it's always difficult to do and sometimes there's a lot of disruption to do with the operations of moving the agency.
"Moving a government department is not a part of our agenda at this point in time even though I know every time I go somewhere whether that be Mandurah, Albany or Bunbury it's always raised with me.
"It has a lot of complexity to it."
The push for an agency related to the Peel region's unique waterways was a part of the Transform Mandurah plan to revitalise the City and diversify the economy.
The plans include revamping the foreshore, city centre redevelopment, and a tourism precinct.
Mandurah mayor Rhys Williams said although the outcome was disappointing the City was looking into other ways to diversify the economy.
"The Transform Mandurah agenda is a really large program and it's still really early days right now," he said.
"We'll continue to work towards our goals and try to align all three tiers of government."
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According to a City of Mandurah spokesperson, the City is in the early stages of working with the state and federal government on various components of the Transform Mandurah plan.
"One part of this comprehensive plan is the attraction of quality, professional jobs to Mandurah, both private sector and government," the spokesperson said.
"There are various ways this can happen and we are continuing to explore all opportunities as we work to further develop and realise this long term plan for Mandurah.
"We are already seeing huge levels of interest from the private sector looking to invest in Mandurah, having recognised the significant investment of over $470 million already being made by all levels of government across various infrastructure projects such as the waterfront and the significant expansion of the Peel Health Campus."