Delivering infrastructure to regional WA isn’t simple, even with a $6 billion Royalties for Region budget.
Delivering infrastructure to regional WA isn’t simple, even with a $6 billion Royalties for Region budget.
With a budget of more than $6 billion and seven years to spend it in regional WA, Royalties for Regions is a complicated beast.
Dispersed through three main funds, the money is being used to catch up to unmet infrastructure demand in some regions (like the Pilbara) and to pre-empt future demand in others with mining royalties between 2008 and 2015.
The Country Local Government Fund takes care of infrastructure that is part of strategic plans of local governments, such as improving regional governance services.
The Regional Community Service Fund aims to improve access to community services in the regions by investing in programs and organisations such as the Royal Flying Doctors Service.
And the Regional Headworks Infrastructure Fund contributes to large-scale strategic regional infrastructure like increasing the capacity of wastewater treatment facilities and the Nickol Bay Hospital Upgrade project.
Royalties for Regions reporting is complex, with the allocation of funds broken down by the three major fund streams, as well as by region. Projects also fall under one of four major projects that are commonly associated with Royalties for Regions: Pilbara Cities, SuperTowns, Gascoyne Revitalisation Plan and the Ord East Kimberley Expansion.
Pilbara Cities aims to develop the infrastructure required to take Karratha and Port Hedland to cities of 50,000 people and grow Newman into a sub-regional centre of 15,000, all by 2035, costing $3 billion in total – $1.2 billion coming from Royalties for Regions and the rest from local and federal governments and private investors.
It will also focus on bringing infrastructure up to date in Tom Price, Onslow, Wickham, Paraburdoo, Roebourne, Pannawonica, Point Samson, Marble Bar, Nullagine, Cossack, Shellborough, as well as a number of indigenous communities.
Projects funded in the $254 million Pilbara region budget this year included $43 million to the Pilbara Underground Power Project (see page 28), $40 million to housing for workers and decommissioning the Port Hedland waste water treatment facility to increase the capacity of the South Hedland plant and free up the land in Port Hedland.
SuperTowns was launched last year and is a program aimed at pre-empting growth and infrastructure requirements in the southern half of the state.
Boddington, Collie and Manjimup were named among nine towns with the right economic drivers that would be likely to lead to future growth and, once they have outlined strategic plans for community growth and associated projects, will share in $85 million funding.
The Gascoyne Revitalisation Plan aims to upgrade infrastructure and prepare for growth in the region.
For regional development minister and Royalties for Regions caretaker Brendon Grylls, the project is about learning from past mistakes.
“We have our Mid West revitalisation, making sure we don’t make the same mistakes that were made in the Pilbara where no work was done before the regional sector growth came. So in the Mid West we are doing that work now and setting that community up to take advantage of the mineral provinces into the future,” he said.
Funding was allocated to the management of marine parks ($3.9 million), $10 million went to the Gascoyne Food Bowl and $35 million went to the Gascoyne Development plan, among the $107.1 million of projects in the region this year.
The Ord East Kimberley expansion will receive $311 million Royalties for Regions funding in total to increase the Ord irrigation area by 15,000 hectares and substantially grow the region’s agricultural sector.
The state government is currently working through 14 expressions of interest in the land from international proponents, local farmers and national companies.
The federal government is funding 27 projects in the East Kimberley in tandem to the Ord Irrigation expansion with $195 million.
Royalties for Regions funded $212.5 million of projects in the Kimberley region this year, including $3 million to indigenous visitor hostels and $8.2 million to the Kununurra courthouse.
Chicken or the egg
Prioritising projects across regional WA is a tricky business, with a backlog of works in the billions of dollars.
Mr Grylls said while demand is high for both social and essential infrastructure, he has been focused on delivering liveability through Pilbara Cities and SuperTowns to offer an alternative to Perth for a growing population.
“People often make this argument, is it all about housing and sewage and power or do you have to make sure you have the liveability and amenities right otherwise you don’t need power and water and infrastructure because no one wants to live there,” he said.
“We want people to live in a community, raise their family in a community, retire in a community rather than just go there because there is good money and then come back to Perth at the end of it.”
The Pilbara Cities Office was established in 2009 to manage the $1.2 billion fund and general manager Chris Adams said the office went about setting out a detailed strategic approach.
“We work very closely with resource companies and the private sector to see how we can work together to deliver what are seen as the most critical infrastructure issues in the region,” he said.
The announcement from Rio Tinto last week that it will fund a $300 million expansion of Wickham to add 600 people to the current population of 2,000 is an example of that collaboration, along with the soon-to-be-open $33 million Port Hedland recreational centre, equally funded by the local government, Royalties for Regions and BHP Billiton.
Pilbara Cities conducted research into why people won’t move to or why they leave the Pilbara and prioritised infrastructure accordingly. The reasons included lack of education choice, health specialist accessibility, housing affordability and community facilities.
“For us to build Pilbara Cities we need people, and if people aren’t coming up for those four reasons, we need to tackle those issues,” he said.
Andrew Murray, former federal senator for the Democrats, is the chair of the Regional Development Trust, the independent body put in place to oversee the management of the Royalties scheme.
According to Mr Murray, mapping out the priorities for investment across the state is best done by government departments working collaboratively.
“The result of the partnership approach to spending money does mean an increasingly sophisticated appraisal of regional needs, sub regional needs, local needs and is the best way of getting better outcomes,” he said.
“Is the state as an organisation doing that at its peak and optimal capacity? No, it isn’t. They are still getting there and the best way to do things is still being worked out. But by and large, the judgement of the trust is that Royalties for Regions has been spent effectively and well.”
The recent report from the trust on the management of the Country Local Government Fund made headlines after opposition leader Mark McGowan claimed the review showed funding was being deliberately flowed into Mr Grylls electorate and surrounding region.
Mr Murray simply said the review led to a determination for the CLGF to become more targeted, prioritised and more outcomes-focused with a better overall assessment of what is required.
A two step governance process for approving every project under Royalties for Regions is in place and Mr Grylls points to it as proof funding isn’t simply being thrown around; each project under the scheme has to gain notional approval from cabinet in the budget round followed by final cabinet approval once a business case is put forward for the project.
“It does add more time, and more governance and compliance but I think the success of the Royalties for Regions program is based on that,” he said.
“You don’t do it all at once; one of the early criticisms is that we would just go and spend the money and try to get some political gain out of it. I have planning documents for Karratha that stand about a metre tall, I have planning documents for Hedland that stand a metre tall… we apply very rigorous governance.”
Ahead of the game
Mr Murray told WA Business News the problem that the government has is that it lacks a clear picture of the total infrastructure needs of the state over the medium- to long-term.
In the case of the Pilbara region, Pilbara Cities Office general manager Chris Adams said research from planning had shown infrastructure in excess of $3 billion is required over a 15-year time frame.
The Pilbara Cities project is evolving, and the first 12 to 18 months was spent updating the region with what Mr Adams refers to as ‘catch up’ projects.
“The Pilbara was missing really basic infrastructure that people take for granted in places like Perth. When you walk out of your house in Perth you have a footpath, a streetlight and a good quality park within 400 or 500 metres. That wasn’t the case in the Pilbara,” he said.
“That basic community infrastructure is at a reasonable level now and investment for Pilbara Cities is focused on transformational projects now, things that will transform the region from having country towns to regional cities.”
Mr Grylls said when it came to balancing supply and demand, the work being done was meeting needs.
“I think we are keeping up and, given the high demand, we are doing a lot of just-in-time infrastructure,” he said. “We actually can’t afford to be five years ahead of the infrastructure demand curve, we have to be able to supply just-in-time because demand is high everywhere.”