'Lay off' Royalties for Regions: Redman

27 Nov, 2014 01:00 AM
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Nationals WA leader Terry Redman launched an impassioned defence of Royalties for Regions last week.
"I don't think we can afford as a State to retract from the significance of those investments.
Nationals WA leader Terry Redman launched an impassioned defence of Royalties for Regions last week.

WA National Party leader Terry Redman has launched an impassioned defence of Royalties for Regions (RfR), saying his party's signature policy won't be made a scapegoat or "culprit" for softening State budget income.

The RfR policy underpinned the historic balance of power negotiations that unfolded after the 2008 WA election when Brendon Grylls was party leader.

Labor made a strong bid to retain government by making several bold promises in its dealings with the Nationals, offering incentives over and above Colin Barnett's Liberals.

However, the Liberals ultimately held sway to form a unique power sharing arrangement that has seen RfR become synonymous with regional development, while reversing a previous long-running trend of government under investment.

RfR also sparked a political resurgence by the WA Nationals as they continue a push to claim all non-metropolitan seats and hold the balance of power at every election.

On the anniversary of his first year as party leader, Mr Redman told Farm Weekly about $5 billion had gone into the RfR program since being formalised about six years ago.

He said his first challenge as party leader and Regional Development Minister was to successfully secure a budget position for RfR in the 2014-15 budget cycle, brought down in May.

The program is capped at $1b per year despite having a 25 per cent flow from mining and petroleum royalties.

"We secured $1b a year in the four-year forward estimates as an expense limit," Mr Redman said.

However, with revenue from mining royalties in decline this year, the regional infrastructure program will face an increasing attack from the opposition and other critics who bluntly describe it as a pork barrelling regime.

Mr Redman launched into a stirring counter-campaign by telling a WA Nationals' business breakfast in Perth last week he wouldn't accept RfR being made a "culprit" for heightening budget woes.

"The mid-year review is coming up and that's the first snapshot the public gets of the state of the State budget, since it was brought down in May," he said.

"Iron ore prices are $71 per tonne - that's about 40 to 45pc below what it was in the State budget - and therefore that's had a big impact on revenue flowing into the budget.

"Royalty flow is still high - it's still a big portion of our revenue - but of course it's a figure that's coming down compared to the budget position, so there is pressure on the budget.

"I've heard some comments from the opposition and I've certainly heard some comments from the public about RfR being extravagant, or something that shouldn't be there, which I fundamentally dismiss.

"That's wrong. It's making a big difference.

"It's an important program and is growing a part of the State that has had significant under investment for a long period of time."

Mr Redman said RfR represented only a 28th of WA's budget revenue or about 3.5pc which is "relatively small".

He said the State's net debt is more than $20b but the capital works program is significant for a State with an expanding population of about 1000 people per week.

Mr Redman said spending on that program to build hospitals, schools and other infrastructure was demand-driven and would support population growth.

"I don't think we can afford as a State to retract from the significance of those investments," he said.

"If you look at our spend up until June this year (on RfR) it's about $5b in total and 40pc of that is capital, which means it goes onto our asset base and doesn't contribute to net debt.

"So at worst, if we borrowed (that money) it would contribute $3b to a net debt position in-excess of $20b.

"So it's a relatively small part of the State budget (but) very, very important and relevant.

"If there's criticism or further criticism - and the opposition and others choose to build on comments they've made so far - I will defend very rigorously the fact that RfR is not the culprit when it comes to the State budget position."

Mr Redman said to help meet the challenge of a softening economy, the WA government was considering asset sales to overcome a lag-time of a couple of years in a GST "kickback" payment.

He said Western Power was a "significant asset" that had some merit in being sold.

Mr Redman said in the past year he'd been fine-tuning decision-making processes within his department and associated agencies and how they link in with others such as health, education and transport.

"I'm getting a better handle on all the things that are happening in the agency and hopefully setting some directions that help the agency play a good supporting role in delivering that program," he said.

Mr Redman said the Vasse by-election was the most recent "litmus test" indicating what WA voters think of the WA Nationals' performance.

Liberal candidate Libby Mettam defeated Nationals candidate Peter Gordon to replace outgoing member and former Liberal treasurer Troy Buswell.

Mr Redman was buoyed by gaining about 29pc of the primary vote to record a 7pc increase on the last poll.

"It doesn't matter whether you're in our heartland in the Wheatbelt, or whether you're in the Labor-held seats or you're in the Liberal strongholds in the South West, the Nationals are getting traction and I think the Vasse by-election shows that," Mr Redman said.

"We got nearly 29pc of the primary vote and if you had asked me whether we could have won on that (percentage) going into the election I would have said 'yes'.

"We missed out and I'm sure Libby Mettam will make a fantastic member of parliament but I think the outcome indicates the Nationals' position is not waning and is in fact strengthening."

Mr Redman promised the Nationals would run candidates in all non-metropolitan seats at State and federal elections, including O'Connor and Durack at the 2017 Federal election.

He said the Nationals could regain O'Connor, which was won by Liberal Rick Wilson at the 2013 election following Nationals incumbent Tony Crook's retirement.

"Tony Crook made the decision to retire from politics - he found it challenging for a whole range of reasons - but I would argue that if Tony Crook ran he would have won that seat," he said.

"I dismiss the point that you go in for one term and then go out; I don't accept that.

"We took a long time to win that seat and we won it on the back of Tony Crook and the Nationals running a very solid campaign on the back of our strength at a State level.

"And I think we've got the potential to do that again; there's no question about that.

"We want to run good, solid, grass-roots campaigns and deliver outcomes and it's on the back of delivering those outcomes that hopefully we're gaining more support in regional communities."

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Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media

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