Lobby groups defend royalty dollars

06 Mar, 2018 04:00 AM
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The Nationals WA leader Mia Davies has questioned the motivation of the Langoulant report and vowed to stand by the party's flagship Royalties for Regions program.
The Nationals WA leader Mia Davies has questioned the motivation of the Langoulant report and vowed to stand by the party's flagship Royalties for Regions program.

WA's State farming organisations are standing by Royalties for Regions (RfR), after a scathing report was handed down on the program and several other Barnett government projects last week.

However while throwing their support behind RfR,WAFarmers and the Pastoralists and Graziers Association of WA (PGA) have welcomed recommendations calling for increased accountability, transparency and improved businesses cases for projects funded through the program.

It comes after former WA Treasury boss John Langoulant delivered a report, commissioned by the McGowan government last Tuesday, which examined 31 key projects of the former Liberal National government.

Among those was The Nationals WA flagship RfR policy, which sees 25 per cent of the State's forecast annual mining and onshore petroleum royalties hypothecated into a fund capped at $1bn per year.

The fund is separate to the consolidated account, and has seen close to $6.7bn allocated to driving regional development since its inception after the 2008 State election.

According to the Langoulant report, only five out of the 50 assessed RfR projects were found to have adequate businesses cases, and more than two thirds of the projects failed to achieve either social or economic outcomes.

The report found the RfR program was responsible for the destabilisation of the government's financial management processes, and declared it presented a case study of "how not to go about" introducing and managing a new program of large expenditures across regional WA.

The Langoulant report recommended a major overhaul of RfR, and called for funding allocations to be linked to the budget process.

The report also urged the government to reconsider the program's $1bn expenditure cap.

The Labor Party has condemned the former government for its mismanagement of the fund, but vowed to continue to support the RfR program.

Despite recommendations, Premier Mark McGowan said RfR would continue with a hypothecated account with significant improvements to its management.

Agriculture and Food Minister Alannah MacTiernan said the program would progress under a new rigorous oversight regime.

"We accept that there is real merit in a focus on the bush and we recognise that RfR has created an environment where the needs of the bush are looked at seriously and that is why before the last election we committed to preserve the RfR," Ms MacTiernan said.

"We are rusted on to RfR but we absolutely will be administering this in a very different way.

"We have already restored proper ERC (Expenditure Review Committee) processes, proper governance, working together with the regional development portfolio, working constructively with all of the line agencies to make sure that what we have is coherent, well-structured projects that come out for funding."

Meantime, the Liberal Party has supported the Langoulant report's recommendation to abolish the $1bn commitment to the hypothecated fund.

Liberal leader Mike Nahan said it was time for RfR to evolve, and be treated "like other budget line items".

"It is important Royalties for Regions is subject to the volatilities of the budget, as other core areas of the budget are subject to, such as spending on education, health and law and order – this pool of money cannot be sacrosanct and immune from budget volatilities," Mr Nahan said.

"The Royalties for Regions brand name intimates the only spending in the regions comes from the fund yet significantly more was spent in the regions under the previous government than the Royalties for Regions component.

"Investing in regional WA will continue to be essential for Western Australia's ongoing development and funding – from both the Royalties for Regions pool and consolidated revenue – will be scrutinised like every other aspect of government expenditure."

The Nationals WA has condemned the Liberal Party for abandoning RfR, and said Mr Nahan's comments had created a "wave of concern" across regional WA.

Party leader Mia Davies said the report was politically motivated and has rejected criticism of the program.

"Royalties for Regions was hard fought, it has transformed our State, and it is not unreasonable that the people who generate the lion's share of WA's wealth have a government which prioritises spending back in those regions," Ms Davies said.

"The McGowan government is killing RfR by stealth, having stripped $861m out of Royalties for Regions to fund core government services since last year's election, while the Liberals want it culled completely.

"Regional Western Australians can be assured that if The Nationals are in government, RfR will be a central part of our policy platform."

Following the political fallout of the Langoulant report, PGA president Tony Seabrook has commended the McGowan government for its support of RfR and expressed the PGA's disappointment in the Liberal Party's position.

Mr Seabrook said while the RfR fund had been extremely beneficial to regional WA, greater management was required.

"If you consider the amount of money that's been spent here, wasted or not, and then put the other side of story that if it hadn't been spent, rural WA would look a lot weaker," Mr Seabrook.

"Some of these things are a bit overdone but at the end of the day, there's a hell of a lot of infrastructure out here that would never have been here if it hadn't of been for The National Party.

"I don't think you can deny the fact that in the past a lot of it was thrown around the place without any regard to the return, it hasn't been as well managed as well as it ought to have been.

"I commend the minister for the statement that there has to be a business case, that every one of these amounts of money that gets spent needs to be spent in a way that brings back a very serious either economic return or return to the community."

Mr Seabrook said he hoped RfR funding would remain true to its purpose, and not be used to fund projects typically funded through consolidated revenue.

"The big issue is I think is that we don't want to see money from Royalties for Regions being spent on what ought to be recurrent expenditure which is normal budgetary stuff," Mr Seabrook said.

"They could easily say 'we won't spend the money from the department on that we'll just bang a bit of Royalties for Regions in there' so that would be a disappointing outcome."

WAFarmers president Tony York has also backed RfR, describing it as a "critical policy piece for regional WA" that had contributed significantly to the development of the State's agriculture sector.

Mr York said RfR should remain intact, but welcomed the report's recommendations to improve accountability and transparency across the fund.

However, Mr York said WAFarmers hoped that the McGowan government didn't go too far in creating unnecessary red tape.

"While WAFarmers supports increased accountability with the fund, the membership does express concern in regards to the creation of additional committees or the involvement of other government departments," Mr York said.

"Having more bureaucratic involvement with Royalties for Regions increases the opportunity for red tape and administration costs to occur – the fund should be maximised for on the ground projects wherever possible."

Mr York said WAFarmers would welcome the opportunity to be a key stakeholder on future funding decisions on matters pertaining to agriculture and regional development.

He said the changes to the fund could open opportunities for the agriculture industry.

"There is great opportunity for the fund to benefit agriculture with the machinery of government changes, now that regional development is paired with agriculture," Mr York said.

"This along with what we hope will be a collaborative approach from the development commissions will provide an opportunity for agricultural needs to be raised frequently and attract the much needed funding the sector requires."

FarmWeekly

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NO ships with live animals should be leaving Australia. This industry is animal abuse and animal
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we are happy to have Aldi in katanning doing business with WAMCO we also wanted and in great
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This is a disgrace but what can you expect from a Liberal Government that insists on making