Royalties for Regions policy

Royalties for Regions policy

Royalties for Regions is a political policy formulated by the National Party of Western Australia in 2008 which involves the redirection of government spending from the major population centres, particularly Perth, into the rural areas of the state. This spending would be funded by setting aside 25% of the state's mining and petroleum royalty revenue.cite web|url=http://www.brendongrylls.com/policies/0807_RfR.pdf|work=www.brendongrylls.com|title=Royalties for Regions|accessdate=2008-09-10]

The National Party seeks to use its balance of power in the WA parliament in negotiations with the major governing party, by trading Nationals support in exchange for spending guarantees under the policy. Following the 2008 state election, it became apparent that the Nationals would in fact achieve their balance of power and would exercise their position to implement the policy.

Main policy features

* 25% of all royalty payments to the state to be set aside for reinvestment into regional WA
* Funds to be held in a special investment fund (SIF), capped at $1billion annually
* Disbursements from the SIF to be over and above consolidated revenue allocations for the regions
* SIF funds to be distributed on an agreed formula to:
** Regional councils for local projects;
** Regional projects developed and prioritised with the involvement of Regional Organisations of Councils and Regional Development Commissions;
** Statewide projects developed and prioritised by the Regional Development Council; and
** State Govemment initiatives that boost and leverage regional growth and investment,

In 2006-07, the state received royalties totalling $2.1billion (2007-08 forecast:$2.5billion, 2008-09:$2.7billion). This data suggests that $675million of annual funding could be assigned under the policy.cite web|url=http://www.wabusinessnews.com.au/en-story/1/66311/Nationals-regional-policy-to-cost-2-8bn|title=Nats' plan threatens WA's credit rating|date=10-September-08|work=Western Australian Business News|accessdate=2008-09-10]

Responses to the policy

On 10 September 2008, WA's Department of Treasury and Finance issued a public statement saying that the policy could threaten the state's AAA sovereign credit rating.cite web|url=http://www.dtf.wa.gov.au/cms/uploadedFiles/dtf_media_sytatement_impact_of_royalties_for_regions_policy.pdf|title=Impact of Royalties for Regions|date=10-September-08|work=WA Department of Treasury and Finance|accessdate=2008-09-10] which would cause an increase in the cost of short-term funding. Under Treasurer Tim Marney said that the plan would cost $2.8billion in additional expenditure over the next four years, and in the absence of offsetting changes, take the net debt to revenue ratio to around 53% by 2011-12. 47% is the financial target adopted by Treasury to maintain the rating. [cite news|url=http://www.watoday.com.au/wa-news/aaa-credit-rating-could-be-at-risk-under-nats-policy-treasury-20080910-4dqe.html|title=AAA credit rating could be at risk under Nats policy:Treasury|work=WA Today|date=September 10, 2008|accessdate=2008-09-10] The state budget is currently in surplus with $203million the forecast surplus for 2011-12.

Nationals leader Brendon Grylls stated that the ratio blowout could be avoided by reassessing major capital projects in Perth, such as the proposed $500million museum redevelopment and the suburban rail extension to Ellenbrook which was expected to cost $850million.

Critics of the proposal have suggested that the idea of the Nationals siding the Australian Labor Party to achieve the outcome was a betrayal of the historical conservative leanings of the party as it has previously generally formed coalitions with the Liberal Party. The policy is pivotal in the discussions between the Nationals and the major parties seeking to form a government.

See also

*Economy of Western Australia

References


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