Royalties for Regions policy
Encyclopedia
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.
Following the 2008 state election
, the National Party used its balance of power
in the WA parliament to form government with the Liberals
led by Colin Barnett
, by trading Nationals support in exchange for spending guarantees under the policy.
In 2006-07, the state received royalties totalling $2.1 billion (2007-08 forecast:$2.5 billion, 2008-09:$2.7 billion). This data suggests that $675 million of annual funding could be assigned under the policy.
.
which would cause an increase in the cost of short-term funding. Under Treasurer Tim Marney said that the plan would cost $2.8 billion 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. The state budget is currently in surplus with $203 million 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 $500 million museum redevelopment and the suburban rail extension to Ellenbrook
which was expected to cost $850 million.
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
.
National Party of Western Australia
The National Party of Western Australia is a political party in Western Australia. It is affiliated with the National Party of Australia but maintains a separate structure and identity....
in 2008 which involves the redirection of government
Government of Western Australia
The formation of the Government of Western Australia is prescribed in its Constitution, which dates from 1890, although it has been amended many times since then...
spending from the major population centres, particularly Perth
Perth, Western Australia
Perth is the capital and largest city of the Australian state of Western Australia and the fourth most populous city in Australia. The Perth metropolitan area has an estimated population of almost 1,700,000....
, 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.
Following the 2008 state election
Western Australian state election, 2008
A general election was held in the state of Western Australia on Saturday 6 September 2008 to elect 59 members to the Legislative Assembly and 36 members to the Legislative Council...
, the National Party used its balance of power
Balance of power (parliament)
In parliamentary politics, the term balance of power sometimes describes the pragmatic mechanism exercised by a minor political party or other grouping whose guaranteed support may enable an otherwise minority government to obtain and hold office...
in the WA parliament to form government with the Liberals
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...
led by Colin Barnett
Colin Barnett
Colin James Barnett , Australian politician, is the leader of the Western Australian Liberal Party, the 29th and current Premier of Western Australia since the 2008 election and served as the Treasurer of Western Australia in 2010. He was sworn into office by Governor Ken Michael on 23 September 2008...
, by trading Nationals support in exchange for spending guarantees under 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 $1 billion 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 Government initiatives that boost and leverage regional growth and investment,
In 2006-07, the state received royalties totalling $2.1 billion (2007-08 forecast:$2.5 billion, 2008-09:$2.7 billion). This data suggests that $675 million of annual funding could be assigned under the policy.
Responses
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 ratingCredit rating
A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise such as a corporation or a government. It is an evaluation made by a credit rating agency of the debt issuers likelihood of default. Credit ratings are...
.
which would cause an increase in the cost of short-term funding. Under Treasurer Tim Marney said that the plan would cost $2.8 billion 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. The state budget is currently in surplus with $203 million the forecast surplus for 2011-12.
Nationals leader Brendon Grylls
Brendon Grylls
Brendon John Grylls is an Australian politician and is currently the Member for Central Wheatbelt in the Western Australian Legislative Assembly, as well as the Leader of the National Party of Western Australia. Grylls has been the Minister for Regional Development and Minister for Lands in the...
stated that the ratio blowout could be avoided by reassessing major capital projects in Perth, such as the proposed $500 million museum redevelopment and the suburban rail extension to Ellenbrook
Ellenbrook, Western Australia
Ellenbrook is a northeastern suburb of Perth, Western Australia, about 21 km from Perth's Central business district , located within the City of Swan. Ellenbrook, and its neighbouring suburbs of The Vines and Aveley, are unusual for Perth in being a significant distance from neighbouring suburbs...
which was expected to cost $850 million.
Critics of the proposal have suggested that the idea of the Nationals siding the Australian Labor Party
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
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
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...
.