WESTERN Australian National party leader Terry Redman has launched an impassioned defence of Royalties for Regions (R4R), saying his party’s signature policy won’t be made a scapegoat or “culprit” for softening State income.
The R4R 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 their 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 R4R become synonymous with regional development, while reversing a previous long-running trend of government underinvestment.
R4R has 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 Fairfax Media about $5 billion had gone into the R4R 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 R4R in the 2014-15 budget cycle, brought down in May.
The R4R program is capped at $1 billion per year despite having a 25 per cent royalty-flow from mining and petroleum royalties.
“We secured $1 billion a year in the four-year forward estimates as an expense limit,” Mr Redman said.
Pork barrelling accusations
However, with revenue from mining royalties in decline this year, the regional infrastructure program is set to 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 R4R 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 45 per cent below what it was in the State budget - and therefore that’s had a big impact on revenue flowing into the State 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 State budget.
“I’ve heard some comments from the opposition and I’ve certainly heard some comments from the public about R4R being extravagant, or R4R being something that shouldn’t be there, which I fundamentally dismiss.
“That’s wrong; it’s making a big difference,” he said.
“It’s an important program and is growing a part of the State that has had significant underinvestment for a long period of time.”
Mr Redman said R4R represented only one twenty-eighth of the State budget’s revenue or about 3.5pc, which is “relatively small”.
He said the State’s net debt is currently more than $20 billion 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, to support that 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 R4R) it’s about $5 billion in total and 40 per cent of that is capital, which means it goes onto our asset base and doesn’t contribute to net debt.
“So at worse, if we borrowed (that money) it would contribute $3 billion to a net debt position in excess of $20 billion.
“So I’m making the point 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 that R4R is not the culprit when it comes to the State budget position.”
Asset sales on the table
Mr Redman said to help meet the challenge of a softening economy, the WA government was also 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 the past year he’s been fine-tuning decision-making processes within his department and associated agencies and how they link in with others like 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 recent Vasse by-election was the most recent “litmus test” or formal polling result, indicating how the WA Nationals are performing among WA voters.
Vasse by-election indicators
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 have 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 National’s position is not waning and is in fact strengthening.”
Mr Redman also promised to 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 also regain O’Connor, won by Liberal Rick Wilson at the 2013 election following Tony Crook’s retirement after one term.
“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, grassroots campaigns and deliver outcomes, and it’s on the back of delivering those outcomes that hopefully we’re gaining more support in regional communities.”