Royalties for Regions: Accountability and Sustainability

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Abstract

To determine whether the Western Australian (WA) Government’s ‘royalties for regions’ policy will enhance economic welfare it is necessary to: know the net fiscal transfer that the community wants the State Government to provide between Perth and regional WA; and determine whether the royalties for regions policy brings the Government closer to, or further away from, that goal. In recognition of this, it is recommended that the State’s public accounts be complemented by a new budget paper that reports on public finances for ‘Perth’ and the ‘Regions’ separately, which will improve government accountability, and classifies mineral royalties as ‘capital’ revenues, which will enhance sustainability provided these capital revenues are hypothecated for expenditure on capital projects. In the lead up to the Western Australian (WA) election held on Saturday, 6 September 2008, the State’s National Party, under the leadership of Brendon Grylls, campaigned as an independent political party. The National Party’s election platform centred on its ‘royalties for regions’ proposal under which 25 percent of the State’s royalties would be paid into a special fund each year and hypothecated for expenditure on regional investment. One outcome of the election was that the National Party acquired the balance of power in the WA’s Legislative Assembly. After negotiations with both major political parties, the National Party entered into a power sharing arrangement with the Liberal Party, which facilitated the appointment of the Liberal’s Colin Barnett as the Premier of WA. At this still early stage in the Barnett Government’s first term, the ‘royalties for regions’ program remains a general agreement on underlying principles. The aggregates are broadly known, as one quarter of the State’s royalties equates to about $675 million and total funding under this program will be capped at $1 billion per year (Grylls 2008). However, the details of the program are still being finalised. Local press reports have suggested that
Original languageEnglish
PublisherUWA Business School
Publication statusPublished - 2009

Publication series

NameEconomics Discussion Papers
No.5
Volume9

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