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Western AustralianRegional Development Trust
ANNUAL REPORT 2010-2011
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PILBARA
GASCOYNE
MIDWEST
WHEATBELT
PEEL
PERTH
SOUTH WESTGREAT SOUTHERN
GOLDFIELDS-ESPERANCE
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Table of contents
Statement of Compliance 2
Chair’s Introduction 3
The Western Australian Regional Development Trust 4 ResponsibleMinister 4
EnablingLegislation 4
ObjectoftheRoyaltiesforRegionsAct2009 4
Functions 4
Role 5
TheFund 5
ProvisionofservicesandfacilitiestotheTrust 5
Membership 6
Trust Meetings 9 Ordinarymeetings 9
SpecialMeeting 9
Attendance 9
Regional Observations 10
Trust work program 2010-2011 10
Advice and recommendations 11AdvicetoamendtheAct 12
The25%Issue 12
The$1billioncap 13
Technicalamendment 15
Advicetocreateastrategicregionaldevelopmentfund 15
Astrategicregionaldevelopmentfund 16
Apotentialsurplus 18
Advicetodevelopahumancapacitybuildingprogram 18
OECDinsightsintotheimportanceofbuildinghumancapacity 19
Buildinghumancapacity 20
Adviceonawaterprogram 21
AdviceonRoyaltiesforRegionsbudgetproposals 22
Advicerequired 22
Improvements 23
Adviceongovernance 25Governancereview 25
RDL’sresponsetothekeygovernanceconclusions 25
AdviceontheFundbeingusedtoretireStatedebt 30
AdvicetoreviewtheCountryLocalGovernmentFund 31
Othermatters 32Planning 32
Targetedinvestment 34
Trust Internal Governance 36 TrustOperatingBudget 36
TrustMember’sRemuneration 36
TravelExpenditure 36
TrustGovernanceFramework 36
Charter 36
CodeofConduct 36
ConflictofInterestPolicy 37
TrustAdministrativeFunctions 37
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Statement of Compliance
HonBrendonGryllsMLAMinisterforRegionalDevelopment
DearMinister
Inaccordancewithsection28oftheRoyalties for Regions Act 2009,IherebysubmitforyourinformationandsubmissiontoParliamentthefirstannualreportfortheWesternAustralianRegionalDevelopmentTrust,forthefinancialyear2010-2011.
Section28(1)(b)oftheActrequiresthereporttocontainanyotherinformationrequiredbytheMinister.On28June2011theMinisteradvisedtheTrustthattherewasnofurtherinformationrequiredbytheMinisterinadditiontothatrequiredbysection28(1)(a).
AndrewMurrayChair
15September2011
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Chair’s Introduction
Section28(1)(a)oftheRoyalties for Regions Act 2009(Act)requirestheWesternAustralianRegionalDevelopmentTrust(Trust)tosubmitareporttotheMinisterforRegionalDevelopment(Minister)thatcontainsinformationabouttheactivitiesoftheTrustduringthefinancialyear.
InsummarytheTrustspentitsfirstyearofexistenceinestablishingitsmethodofoperation,andgettingtogripswithWesternAustralia’sregions,regionaldevelopment,theAct,RoyaltiesforRegions,andtheDepartmentofRegionalDevelopmentandLands’(RDL)roleandfunction.
TheActisspecificastotheworktheTrustmustdo.ThemeasureoftheTrust’sworkwillbeoutcomes;namely,therange,natureandcontentofadviceithasprovidedtheMinister,theresponsetothatadvice,andtheconsequenceofthatadvicebeingaccepted.
TheTrustisestablishedbystatuteasanindependentadvisorybodytotheMinister.TheTrusthasbeentaskedtoperformabroadoversightroleontheRoyaltiesforRegionsprogramandtoprovidehighlevelindependentandimpartialadviceandrecommendationsonthepolicy,allocationandmanagementofexpenditurefromtheRoyaltiesforRegionsFund(Fund).
TheTrustdoesnotinvolveitselfintheselectionofspecificprojectsandprogramsforfunding,oradviseinthatregard,becauseitconsidersthatwouldconflictwithitsdutiesundertheAct.NeitherdoesitattempttoregulateoraudittheFund,asthisisoutsideitsremit.
Earlyon,theTrustdeterminedthatitwouldavoidadesk-topapproachtoitsdutiesandensurethatitvisitedtheregionsandconsultedwidelywithindividualsagenciesandentitiesconcernedwithregionaldevelopmentandRoyaltiesforRegionsprojects.TheTrustisgratefultothemanyindividualsandorganisationsthathavesharedtheirwisdomandviewswithit.
TheworkoftheTrustaffectsthewayinwhichRDLandtheMinisterdevelopandadministerRoyaltiesforRegionspolicyandprojects.TheTrusthasbeenimpressedbythepositiveandcooperativeattitudeofboththeMinisterandRDLtoitsviewsandfindings,andbyaprofessionaldesireforcontinuousimprovement.
TheTrustisdependentonthequalityexperience,backgroundandindependenceofitsmembers,anditsstaffmember.InthatrespecttheTrustiswellserved,andithasthereforebeenapleasuretoChairtheTrustin2010-11.
TheTrustlooksforwardtothechallengesandopportunitiesof2011-12.
AndrewMurrayChair
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The Western Australian Regional Development Trust
Responsible MinisterHonBrendonGryllsMLAMinisterforRegionalDevelopment.
Enabling LegislationRoyaltiesforRegionsAct2009.
ExceptingforParts3and5,theActwasproclaimedon27March2010toprovidefortheoperationoftheRoyaltiesforRegionsFund.PriortotheproclamationoftheAct,theRoyaltiesforRegionsprogramoperatedpursuanttosection10(a)oftheFinancialManagementAct2006.
Parts3and5oftheActwereproclaimedonthe13July2010,andconcerntheTrust.Followingproclamation,thenewlyconstitutedTrusthelditsfirstmeetingon16July2010.
Object of the Royalties for Regions Act 2009 TheobjectoftheActistopromoteandfacilitateeconomic,businessandsocialdevelopmentinregionalWesternAustraliathroughtheoperationoftheRoyaltiesforRegionsFund.
FunctionsPursuanttosection12oftheActthefunctionsoftheTrustare–
(a) toprovideadviceandmakerecommendationstotheMinisterforthepurposesofsections5(2)and9(1);and
(b) toprovideadviceandmakerecommendationstotheMinisteronanyothermatterrelatingtotheoperationoftheFundthatisreferredtoitbytheMinister.
Section5(2)oftheAct–theTreasurer,ontherecommendationoftheMinister,istodeterminefromtimetotimethewayinwhichmoneystandingtothecreditoftheFundistobeallocatedbetweenthesubsidiaryaccounts.
Section9(1)oftheAct–theMinister,withtheTreasurer’sconcurrence,mayauthorisetheexpenditureofmoneystandingtothecreditoftheFundforthefollowingpurposes–
(c) toprovideinfrastructureandservicesinregionalWesternAustralia;
(d) todevelopandbroadentheeconomicbaseofregionalWesternAustralia;
(e) tomaximisejobcreationandimprovecareeropportunitiesinregionalWesternAustralia.
Section9(2)oftheAct–TherearetobechargedtotheFund–
(a) expenditureauthorisedundersubsection(1);and
(b) expenditureincurredintheadministrationoftheFund;and
(c) expenditureincurredintheadministrationoftheTrust,includinganyremunerationorallowancespayabletoitsmembers;and
anyotherexpenditureincurredintheadministrationofthisAct.
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RoleTheTrustisanindependentstatutoryadvisorybodytotheMinisterontheFund.TheTrustperformsanoversightroleandprovidesindependentandimpartialadviceandrecommendationsontheallocationoffundsfromtheFund.
The FundSection5(1)oftheActstatesthattheRoyaltiesforRegionsFundistoconsistofthefollowingsubsidiaryaccounts:
(a) theCountryLocalGovernmentFund;
(b) theRegionalCommunityServicesFund;
(c) theRegionalInfrastructureandHeadworksFund;
(d) anyotheraccountdeterminedbytheTreasurer,ontherecommendationoftheMinister,tobeasubsidiaryaccount.
In2010-11,thebudgetofthefundwas$760.4million,allocatedasfollows:
theCountryLocalGovernmentFund
$68.204million
theRegionalCommunityServicesFund
$210.410million
theRegionalInfrastructureandHeadworksFund
$468.997million
anyotheraccountdeterminedbyTreasurer/Minister
$2.374million
administrationoftheFundandTrust–RDL
$10.458million
Table1RoyaltiesforRegionsFund2010-11AllocatedBudget
Provision of services and facilities to the TrustPursuanttosection27oftheActRDLprovidestheTrustwithservicesandfacilitiesnecessaryfortheTrusttoperformitsfunction.
Inthe2010-11financialyearRDLprovidedtheTrustwiththeservicesofafull-timeExecutiveOfficerandpolicyandadviceservicesasrequired.
Aspersections9(2)(c)andsection27oftheAct,RDLprovidestheTrustwiththefundsfortheexpenditureincurredintheadministrationoftheTrust;includingremunerationandallowancestoTrustMembers.Pursuanttosection10oftheActinformationabouttheoperationoftheFundisincludedinRDL’sAnnualReport.However,furtherdetailregardingTrustMembers’remunerationandsomeadministrativecostsfortheTrustisprovidedinthesectiononTrustInternalGovernanceinthisreport.
0%1%
9%
28%
62%
Country Local Government Fund - $68.204 (9%)
Regional Community Services Fund - $210.410 (28%)
Regional Infrastructure and Headworks Fund - $468.997 (62%)
New Regional and Statewide Initiatives - $2.374 ($0%)
Administering the Royalties for Regions Fund - $10.458 (1%)
Royalties for Regions Fund 2010-11 Allocated Budget in Millions
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MembershipTrustmemberswereappointedbytheMinisterinJune2010andaninitialinductionmeetingwasheldon16June2010.TheinauguralformalmeetingoftheTrustwason16July2010.TheTrustheldfiveformalmeetingsandonespecialmeetingin2010-2011.
InFebruary2011subsequenttoMrTimShanahan’sresignationasChairpersonofthePilbaraDevelopmentCommission,MrPeterRundle–ChairpersonoftheGreatSouthernDevelopmentCommission,wasappointedastherepresentativeontheTrustfromaregionaldevelopmentcommissionaspersection13(1)(a).MrShanahanwasre-appointedtotheTrustasamemberundersection13(1)(b)oftheAct.
Asat30June2011themembershipoftheTrustisasfollows:
Andrew MurrayChair–3yearappointment,expires7June2013(appointed
aspersection13(1)(b)oftheRoyalties for Regions Act 2009)
AndrewMurrayisaRhodesScholarandformerbusinessmanwhowasaSenatorforWesternAustraliafrom1996to2008.
Andrew’ssenatecareerfocussedonfinance,banking,accounting,audit,economic,business,industrialrelationsandtaxissues;onaccountability,governanceandelectoralreform;andoninstitutionalisedchildren.Andrewisanexperiencedlegislatorandpolicymakerwithastrongfocusonaccountability.
Andrewhasastrongandvariedbusinessbackgroundasanexecutiveanddirectorinpublicandprivatecorporationsaswellasowningandmanaginghisownbusinesses.Hehasalsochairedandbeenamemberofcommunitybusinessandpoliticalboards,committeesandassociations,includingparliamentarycommitteeswithstatutoryobligations.
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Sue MiddletonDeputyChair–3yearappointment,expires7June2013
(appointedaspersection13(1)(b)oftheRoyalties for Regions
Act 2009)
SueMiddletonwastheRuralIndustriesResearchandDevelopmentCorporation(RIRDC)RuralWomanoftheYear2010.In2003SuewasawardedtheCentenaryMedalforservicesto
regionalandruralAustralia.Sueandherhusband’sfamilymanageadiverserangeoffarmingoperationsincludingacitrusorchard,grainandporkenterpriseintheCentralWheatbelt.
SuealsocontributessignificantlytocommunityprojectsandhasbeeninvolvedinkeyleadershipgroupsincludingtheNationalRegionalWomen’sAdvisoryCouncil,theNationalRuralAdvisoryCouncilandtheRegionalSolutionsBoard.Suespecialisesincommunitydevelopment,strategicplanning,projectdevelopmentandisaprofessionalfacilitator.
Paul RosairTrustMember(appointedaspersection13(1)(b)and13(3)of
theRoyalties for Regions Act 2009)
PaulRosairistheDirectorGeneraloftheDepartmentofRegionalDevelopmentandLandsandamemberoftheTrust.PaulpreviouslyheldthepositionofDirectorofMajorRegionalProjectswithintheDepartmentof
LocalGovernmentandRegionalDevelopment,whereheestablishedandrolledouttheRoyaltiesforRegionsprogram.Priortothat,PaulheldthepositionofDirectorofRegionalOperationswithintheDepartmentofWaterandpreviouslytheDepartmentofEnvironment.
Paulhasworkedformorethan35yearsinnumerousseniorgovernmentrolesacrosstheregionaldevelopment,environment,water,landmanagement,indigenouscapacitybuilding,infrastructure,planningandnaturalresourcesmanagementportfolios.HealsohasextensiveexperienceworkingacrossthestateandabroadperspectiveonissuesofparticularimportancetoregionalWesternAustralia.
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Peter RundleTrustMember–1yearappointment,expires27February2012
(aspersection13(1)(a)oftheRoyalties for Regions Act 2009)
PeterownsandrunsamixedenterprisefarminKatanning(sheep,canola,barleyandcrossbredlambs).PeterisChairmanoftheBoardoftheGreatSouthernDevelopmentCommission,anditisbyvirtueofthispositionthathehasbeen
appointedtotheTrustforthestatutoryperiodof1year.
PeterhaspreviouslybeenaBoardMemberofAQ2Smartaflow,aKatanningcompanywhichhaspioneeredlow-flowwaterchlorinationequipmentanddistributesAustralia-wide.HehasalsobeenamemberoftheWaterCorporation’sCustomerAdvisoryCouncil.
PreviouslyPeterworkedinthesharemarket,andmanagedWesfarmersShareDepartmentwhileworkingforErnst&YoungShareRegistryandlaterComputershare.
Tim ShanahanTrustMember–3yearappointmentexpires7June2013
(originallyappointedundersection13(1)(a),re-appointedas
persection13(1)(b)oftheRoyalties for Regions Act 2009)
TimShanahanhasastrongprofessionalandmanagerialbackground.TimwasinitiallyappointedforoneyeartotheTrustbyvirtueofhispositionastheChairofthePilbara
DevelopmentCommission.SincehisresignationfromthatpositionhehasbeenreappointedasamembertotheTrust.TimhasawealthofexperiencefromhisworkinregionalandlocalgovernmentpolicyandadvocacyaswellaswithindustryincludingastheformerChiefExecutiveoftheChamberofMineralsandEnergyofWesternAustraliaandhiscurrentpositionastheinauguralDirectoroftheEnergyandMineralsInitiativewiththeUniversityofWesternAustralia.
TimwasawardedthePublicServiceMedalin2001andtheCentenarymedalin2003bothforservicetoLocalGovernment.TimisaDirectoroftheLocalGovernmentSuperannuationPlanandthePresident,RoyalAutomobileClubofWA.
TheTrustformallymeetsapproximatelyeverytwomonthsandonotheroccasionsasrequired.Inthe2010-2011periodtheTrustformallymetonthefollowingoccasions:
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Ordinary MeetingsDate Location
MeetingOne 16July2010 WestPerth
MeetingTwo 9September2010 WestPerth
MeetingThree 12November2010 WestPerth
MeetingFour 9February2011 WestPerth
MeetingFive 7April2011 Geraldton
Special MeetingBudgetDiscussionwithMinister–21March2011,WestPerth
AttendanceFollowingistherecordofattendanceofTrustMembersfortheformalTrustMeetingsin2010-11.TrustMembersarerequiredtoattendformalTrustmeetingsandarerequiredtohaveanyleaveofabsenceapprovedbytheChair.
Andrew MurrayAttendanceatallsixTrustmeetings.
Sue MiddletonAttendanceatallsixTrustmeetings.
Paul RosairAttendanceatallsixTrustmeetings.
Peter RundleAttendanceatthetwoformalTrustmeetingsheldsincehisappointmenton28February2011.
Tim ShanahanAttendanceatfiveTrustmeetings.
Trust Meetings
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Regional Observations Trust Work Program 2010-2011
TheTrustconsidersitimportantthatTrustmemberspersonallyappraisethemselvesofconditionsandprospectsandRoyaltiesforRegionsprojectsinregionalWesternAustralia.BetweentheTrustmembers,allnineregionsofWesternAustraliawerevisitedduringtheyear,somemorethanonce.
Forthe2010-11year,theTrustorganiseditsworkunderthebroadheadingsof:
• Governance
• RoyaltiesforRegionsproject/programselection
• RoyaltiesforRegionsproject/programexecution
• Regionaldevelopment
• Finance
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Advice and Recommendations
Section12(a)oftheActrequirestheTrusttoprovideadviceandmakerecommendationstotheMinisterforthepurposesofsections5(2)and9(1).Insummary,thosesectionsrefertotheallocationofFundmoniestothevarioussubsidiaryaccounts;and,towhereFundexpenditureshouldbedirected.
Section12(b)requirestheTrusttoprovideadviceandmakerecommendationstotheMinisteronanymatterrelatingtotheoperationoftheFundthatisreferredtoitbytheMinister.
Inthefinancialyear2010-2011,onitsownmotionunderSection12(a),theTrustprovidedadviceandmaderecommendationstotheMinisteronthefollowingmatters:
• 1October2010:toamendtheAct
• 25October2010:tocreateastrategicregionaldevelopmentfund
• 16February2011:todevelopahumancapacityprogram
• 20March2011:onRoyaltiesforRegionsbudgetproposals
• 21March2011:onawaterprogram
• 27April2011:toreviewtheCountryLocalGovernmentFund
TheTrustalsoadvisedRDLon:
• 9February2011:governance
Inthefinancialyear2010-2011,underSection12(b)theTrusthadthefollowingmattersreferredtoit:
• 28June2011:ontheFundbeingusedtoretireStatedebt
• 28June2011:toreviewtheCountryLocalGovernmentFund
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Advice to amend the ActAsaresultofitsroleinoversightingtheRoyaltiesforRegionspolicyandtheActtheTrustidentifiedanumberofissuesthatitsoughttoclarifyrelatingtothefinancearrangementsfortheFund.
The 25% issueTheTrustunderstandsthattheRoyaltiesforRegionspolicyformallyagreedtoattheformationofthecurrentGovernmentwasthat25percentoftheactualminingandonshorepetroleumroyaltiesduetotheStateGovernmentinafinancialyear(FY)wastobecreditedtotheFundeachFY.
RDLhadadvisedtheTrustthattheintentofthatinter-partyagreementwasreflectedintheRDLCabinetsubmissionofthe29September2008andtheCabinetdecisiondated13October2008.
AnyRoyaltiesforRegionsbudgetestablishedatFYcommencementbasedonapercentageofroyaltieswhoseactualquantumcanonlybeknownaftertheFYendsisofnecessitybasedonaforwardestimate.
FortheRoyaltiesforRegionspolicyintentthentoberealised,ayear-endreconciliationbetweenestimatedandactualroyaltieswouldbenecessary.
Theeffectoftheomissionof‘actualroyaltyincome’intheActistochangethepolicyintent.TheTrusthasrecommendedthattheActbeamendedtoinclude‘actualroyaltyincome’.
AsTable2belowshows,theeffectofnottakingactualroyaltiesintoconsiderationcanbeconsiderable.Basedonbudgetaryexperience,overthetermofagovernmentFundincomederivedfromroyaltyforecastsorestimateswilldiffermateriallyfromFundincomederivedfromactualroyaltyrevenue,tosumsofconsiderablemagnitude.
Total Royalty Income - Operating Statement
Year Budget Actual Variance
$m $m $m %
2000-01 535.4 700.6 165.2 30.9
2001-02 643.9 651.1 7.2 1.1
2002-03 669.7 706.8 37.1 5.5
2003-04 669.5 675.8 6.3 0.9
2004-05 750.8 863.9 113.1 15.1
2005-06 1,153.2 1204.5 51.4 4.5
2006-07 1,527.5 1,484.2 -43.3 -2.8
2007-08 1,829.8 1,679.6 -150.2 -8.2
2008-09 2,645.9 2,348.2 -297.7 -11.3
2009-10 2,576.9 2,323.6 -253.3 -9.8
13,002.6 12,638.4 -364.2 -2.8
Note:AllyearsandroundsofestimatesareonanAASB1049basis.
Pleasenotethatcompletedfiguresforthe2010-11periodwerenotavailablewhenthisreportwenttoprint.
Table2TotalRoyaltyIncome-OperatingStatement
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InFY09-10theroyaltyestimateatyear-startexceededtheactualroyaltiesreceivedbytheStateatyear-end.
TheoriginalRoyaltiesforRegionspolicyintentwouldhavemeantthisexcessshouldhavebeen‘paidback’totheState’sConsolidatedAccount.TheAct’somissionof‘actualroyaltyincome’meansthattheamountbywhichtheforecastroyaltyincomeexceedstheactualroyaltyincomeinanyFYcannotbe‘paidback’totheState’sConsolidatedAccountfromtheFund.
NeithertheActnoranyotherActauthorisesanyexcessamountassessedbecause‘forecastroyaltyincome’exceedactualroyaltiestobechargedtotheFundandreturnedasacredittotheConsolidatedAccount.Conversely,thereisalsonoprovisiontoautomaticallyauthoriseanyshortfallamountassessedbecause‘forecastroyaltyincome’waslessthanactualroyaltyincome,tobecreditedtotheFund.
TheTrustconsidersboththeseoverandunder-estimateoutcomestobecontrarytothepolicyintent.
The $1 Billion CapSection8oftheActimposesa$1billioncapontheFund.1TheTrustconsidersthecapunnecessary,andhasrecommendedthatitberemoved.
Thepurposeofthe$1billioncapwasoutlinedbytheHonWendyDuncanMLCintheParliamentarydebateontheBill.2Thisquoteindicatesthatthe$1billioncapwasdesignedtohastenexpenditureofalltheroyaltiesduetotheFund,nottoacttopreventtheFundreceivingtheroyaltiesatall.
TheTrustisawarethatvariousoptionshavebeenmootedtoaddsubsidiaryaccountstotheFund,ortoconsiderpotentialsourcesofadditionalfundingtotheFund.Section7(1)(b)oftheActonlyrequiresthatmoneybe‘lawfullymadeavailabletotheFund’,whichmeanstheFundcanbeenlarged.Sowhether,forinstance,CommonwealthgrantscanbemadeavailabletotheFundwilldependonthetermsandconditionsoftheGrant.
TheeffectofthecapistorestrainthepotentialdevelopmentoftheFund,asanycontemplationofabreachwillhaveachillingeffectastheFundshouldnotexpandiftheeffectislikelytocauseabreachofthecap.
1Section8LimitonamountinFundThe Treasurer is to ensure that the amount of money standing to the credit of the Fund at any time does not exceed $1 billion.
2TheHonWendyDuncanMLCintheParliamentarydebateontheBill: “The $1 billion cap guarantees that the funds allocated are spent according to set timelines, and negates delaying tactics for projects or stockpiling for elections.”
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TheexperienceoftheFundtodateisthat:
• Firstly,fundsaccumulatefasterthanexpenditure,principallybecauseroyaltiesareregularlycreditedtothefund,butapplication,selectioncommencementandcompletionofprojectsnaturallylags;and
• Secondly,royaltiesarenowamuchlargersourceofstaterevenueandsothe25percentshareismuchgreaterthanwhenthe$1billioncapwasintroduced.
If,attheendofaFY,lessthan25percentoftheforecastroyaltyincomehasbeencreditedtotheFundbutcannotbecreditedtotheFundbecausethecaphasbeenreached,thenthereisnostatutoryrequirementforthedifferencetobecreditedtotheFund.
ParliamentcouldappropriatetheshortfallamountforthepurposeoftheFundinafutureyearoryears,ifthebalanceoftheFundfellsufficientlybelowthecap.However,thereisnoobligationonParliamenttodoso.
TheTrustconsidersthissituationtobecontrarytothepolicyintentandtheActshouldthereforebeamended.
The$1billioncapincludesallocatedbutunspentmoneyintheFund.ItisonlywhenauthorisedexpenditureischargedtotheFundthatitceasestobeincludedinthecalculationofthecap.
WhiletheActallowstheMinister,withtheTreasurer’sconcurrence,toauthorisetheexpenditureofmoneyoutoftheFundevenifthemoneywillnotbeexpendeduntilfuturefinancialyears,subjecttofurtheradvice,theTrustisoftheopinionthatRDLmightbeobligatednottocontemplateexpenditureonprojectsagainstanticipatedFundincomeifthecapislikelytobebreachedbeforethefullamountofcommittedfundingisrequired.
IftheTrustisrightinthisopinionthenexpenditurethatisrecurrentordirectedtolargeprojectsthatextendedoveranumberofyears,mightbeatrisk.
TheTrustdoesnotacceptthatthecapshouldpotentiallyoperatetoimposeabarriertothefullroyaltiesduetotheFundbeingeffectivelybudgetedintheout-years.AvoidingthisriskrequirestheActtobeamended.
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Technical amendmentMembersoftheTrustareappointedundersection13oftheAct.Section13(1)(a)requirestheTrusttoincludethechairpersonofaregionaldevelopmentcommission(RDC),whosetermis12months,undersection15(2).ThatappointmentbytheMinisterissubjecttoCabinetratification.
Section15(1)statesthatallothermemberstermofofficeisto“benotlongerthan3years”.WhytheRDCChairhastohaveaspecifiedshortertermisunclear,assection15(1)wouldallowtheMinistertoappointanymemberforashortertermthanthreeyears.
Moreimportantly,section15(4),readwithsection16(1),meansthatifanRDCChairresignsorisremovedfromofficebeforehis/herreplacementisappointedbytheMinisterandratifiedbyCabinet,thentheTrustwouldnotbeproperlyconstitutedundersection13.
TheActneedstobeamendedtoresolvethisissue.
Advice to create a strategic regional development fundTheTrustexaminedthepotentialestablishmentofanon-metropolitanregional‘futurefund’undertheAct.TheTrustdidadesk-topreviewofthevarioustypesofinternationalanddomesticfundsofthistypeandofthepoliciesthatdrivethem.
Incommonparlance,anyWesternAustralianGovernmentfundcouldbetermedafuturefundifitsintentionistotargetexpenditureoutsideofthebudgetfour-yearcycle,butinpolicytermsafuturefundusuallyhasaspecificmeaning.
Futurefunds,andtheir‘policycousins’sovereignwealthfunds,aregenerallynationalgovernmentpolicyinstruments.Adesk-topreviewoftheliteratureindicatesthatfuturefundstypically:
• areverylongterm(30yearsplus);
• comprisetensofbillionsincapital;
• haveindependentgovernanceoversightandmanagement;
• havegovernmentmandatedinvestmentpolicies3;
• areaccumulationfundsthataresavingsratherthanspendingmechanisms;and
• expenditureisgenerallydrawnfromnetinvestmentreturns;ifcapitalisexpended,itisgenerallydelayeduntilthefundsreachacertainsize,andeventhen,isspreadoverthelongerterm.
OnpresentinformationtheTrustisoftheviewthatadditionalorsurplusincometotheexistingRoyaltiesforRegionsfunds,evenifsupplementedbyotherpublicorprivatesources,isunlikelytobeoftraditionalfuturefundsize.
3-TheAustralianFutureFundhasalong-termbenchmarkforreal(afterinflation)returnsof4.5-5.5%.
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TheremitofRDLandtheActisfordevelopment.TheWesternAustralianGovernmenthasdeterminedthatthestateneedstocatch-uponabacklogofneededregionalsocialandeconomicinfrastructureandservicesexpenditure.Thismeansanemphasisoncapitalexpenditure,againnotafeatureoffuturefunds.
TheTrustconcludedthattherewasnocasefortheestablishmentofafuturefundundertheAct.
TheTrustdidrecommendthatastrategicregionaldevelopmentfund(SRDF)beestablishedundertheAct.
A strategic regional development fundSection5(1)oftheActstatesthattheFund4istoconsistofthefollowingsubsidiaryaccounts:
• TheCountryLocalGovernmentFund(CLGF);
• TheRegionalCommunityServicesFund(RCSF);
• TheRegionalInfrastructureandHeadworksFund(RIHF);and
• AnyotheraccountdeterminedbytheMinisterandtheTreasurer.
TheCLGFismodestinsize(presentlyaround$100millionpa)andistoassistnon-metrolocalgovernmenttobuildandrenewlocalcommunityinfrastructure.
TheRCSFisalsomodestinsize(presentlylessthan$100millionpa)andistoimproveaccesstoservicesintheregions.
TheRIHFistosupportlarge-scaleregionalinfrastructureprojectsthatareofstrategicimportancetoWesternAustralia(presentlyaround$470millionpa).
ThekeydifferencebetweentheRIHFandtheproposednewSRDFisthattheRIHFisanon-cumulativefundforlarge-scaleconstruction-readyprojectsthatneedfundswithinthebudgetcycle,andtheproposednewfundwillbeacumulativefundforverylargeasyetunidentifiedfutureregionalprojectsthatwillneedfundsbeyondthebudgetout-years.
WhiletheTrustconsidersanewfundundertheActisdesirable,thisrecommendationiscomplicatedbypresentRoyaltiesforRegionspolicy.
4-TheFundisaspecialpurposeaccountestablishedunders10(a)oftheFinancial Management Act 2006andconstitutessubsidiaryaccountsasitemisedins5oftheRoyalties for Regions Act 2009.
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Presentpolicyisthatallthefundsestablishedundersection5(1)oftheActarefundsrequiredtobespentbysetdeadlinesintheshorttomediumterm,withinthebudgetfour-yearcycle.Ifanewaccumulatingfundforfutureprojectsisrequiredforexpenditureinthemediumtolongerterm,extendingbeyondthebudgetout-years,RoyaltiesforRegionspolicywillneedtochangetoaccommodatethenewfund.
AcceleratingWesternAustralianroyaltiesandthepossibilitythatsignificantnon-royaltyincomecouldbepartneredintotheRoyaltiesforRegionsfundsbothraisetheprospectofsubstantialadditionalmoniesbeingavailableforRoyaltiesforRegions.WhileintheorysuchadditionalmoniesshouldbecapableofbeingaccommodatedintheexistingthreeRoyaltiesforRegionsfundsratherthananewfund,thedesignofthesefundsandthesection8$1billionlimittoFundsizemakesthisdifficult.
Asoutlinedabove,thenewfundisintendedforadifferentpurpose.Theexistingfundsarenon-cumulativeandtheirspecificprogramsandprojectsaretobespenttosettimelinesovertheshorttomediumterm.
TheTrustisoftheopinionthatneithertheCLGFnortheRCSFissuitableindesign,intentionorprospectsfortheadditionoflargeincreasesinincome.WhiletheRIHFisnotionallysuitable,itisdesignedforconstruction-readyprojectsthatmust5bespentintheshorttomediumterm.
TheTrusthasrecommendedthattheproposedSRDFbeinitiallyfundedbytheallocationofmoniesfromtheexistingsubsidiaryaccountsandfromnewroyaltiesincome,asdeterminedbytheMinisterontheadviceofRDLandwiththeconcurrenceoftheTreasurer.Suchfundscouldbesupplementedbyadditionalcentralbudgetallocations,RoyaltiesforRegionspartnershipcontributionsfromotherprivatesources;andRoyaltiesforRegionspartnershipcontributionsfromtheCommonwealth.
5-Seefootnote2.
ThisproposednewfundissimilarinconcepttothefundsestablishedundertheNation-buildingFundsAct2008toprovidefinancingresourcestomeettheCommonwealth’scommitmenttoAustralia’sfuturebyinvestmentincriticalareasofinfrastructuresuchastransport,communications,energy,water,education,researchandhealth.
Theshortfallordeficitininfrastructureisoftenthesubjectofpolicyanalysisandpubliccomment.Thereisaneedforlargeandcostlylong-termstrategicregionaldevelopmentprojectstobeabletobeconsideredbytheFund.Suchprojectsmayincludeprimaryinfrastructureorsupportiveinfrastructure.
OfparticularrelevancetotheobjectoftheActisthepotentialforafuturedevelopmentfundtosupportthedeliveryofsocialinfrastructurethatdeliverenhancedbenefitstotargetedlocalcommunitiesassociatedwithprioritystate-significantprojects.
Concept-readybutnotconstruction-readylargerregionaldevelopmentprojectsarecharacterisedbylongleadtimesandconstructionoverseveralyears,makingsuchprojectsmediumtolongertermincharacter,andpossiblyextendingbeyondthefouryearsofabudgetarycycle.
Fromaresponsiblebudgetperspectivesuchlonger-termstate-significantprojectsareoftenbestfacilitatediftheyaresignificantlyorfullypaidfromreserves.Thisprudentcostingapproachrequirestheaccumulationofconsiderablefundspriortoprojectconsiderationandcommencement.
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A potential surplusRoyaltiesforRegionsincomebeingreceivedaheadofexpenditurecreatesanunallocated‘surplus’whichonpresentroyaltyrevenueindicationsislikelytoincreaseatafasterrate.AnyFundbalanceofthisnatureisreportedatFYend.
BynatureoftheActanyunallocatedRoyaltiesforRegionsmoniesmustbespentinatimelyandresponsiblemanner.Prudencedictatesthatanytemptationshouldbeavoidedtohastentheexpenditureofa‘surplus’inwaysthatmaybeconsideredelection-orientedornottobeapriorityornottofulfilastrategicneed.
InternationalandAustralianexperiencehasindicatedthatitisbetterbudgetpracticetosecure‘surplus’fundsformeasuredandstrategicconsideration.ThepotentialRoyaltiesforRegions‘surplus’doesrepresentanopportunitytoaccumulatefunds.Withrespecttotheneedforlonger-termlargeregionaldevelopmentprojectstobeconsideredunderRoyaltiesforRegionsthatarenotpresentlycontemplatedbytheFund,any‘surplus’intheFundprovidesanopportunitytoconsiderlargefutureprojectsthatwouldnotnormallybepossible,andtosatisfyanunmetneed.
Advice to develop a human capacity building programTheTrusthasrecommendedthatRoyaltiesforRegionsengagemoreinthedevelopmentofhumancapacityintheregions.
Section4oftheActstatesthattheRoyaltiesforRegionsFundistobeusedtopromoteandfacilitateeconomic,businessandsocialdevelopmentinregionalWesternAustralia.Section9(1)oftheActisspecificastothedirectionofexpenditurerequired:
(a) to provide infrastructure and services in regional Western Australia;
(b) to develop and broaden the economic base of regional Western Australia;
(c) to maximise job creation and improve career opportunities in regional Western Australia.
TheActrequiresregionaldevelopmenttobedeliveredthroughRoyaltiesforRegionsexpenditureinbuildingphysicalcapacityandinbuildinghumancapacityinthenineregionsofWesternAustralia.Tobuildacanal,toburypowerlines,tobuildaswimmingpool,takesmonthsorafewyearsandisvisible.Buildinghumancapacityislessvisible;insomecasesitmaytakeafewyearsbutfrompre-schooltoanexperiencedengineercantaketwoandahalfdecades.
IthasnotbeensurprisingthatFundexpendituretodatehasbeenstrongeronbuildingphysicalcapacitythanonbuildinghumancapacity.Giventhepressuresforinfrastructure‘catch-up’,thishasbeentherightpriority.
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OECD6 insights into the importance of building human capacityTheTrustdoesyethavesufficientevidenceorexperienceinregionaldevelopmentinWesternAustraliatodrawfirmconclusionsastowhatparticularcombinationofexpenditurepolicyandprogramswillbeofgreatestlong-termbenefitinregionaldevelopment,butsomeindicatorsfromtheOECDareuseful.
Ina2009policybriefonhowregionsgrow,theOECDoutlinedsomebroadprinciplesforsuccessfulregionaldevelopmentpolicies.Theseareasfollows(italicsaddedtoemphasisetheimportanceofdevelopinghumancapacity):
• Provide infrastructure as part of an integrated regional approach.Theanalysissuggeststhatinfrastructurealonehasnoimpactonregionalgrowthunlessregionsareendowedwithadequatelevelsofhumancapitalandinnovation.Inotherwords,infrastructureisanecessary,butinsufficient,conditionforgrowth.Theanalysisalsorevealsthatittakesaboutthreeyearsforinfrastructuretopositivelyinfluencegrowth.
• Invest in human capital. Regions with well-educated populations will grow.Investmentsintertiaryeducationtakeaboutthreeyearstohaveapositiveimpactonregionalgrowth.
• Emphasise innovation and research and development.InvestmentsinR&D[researchanddevelopment]haveapositiveeffectonpatentactivityinallcategories,asdoR&Dexpendituresbybusinesses,thepublicsector,higher-educationinstitutionsandtheprivatenon-profitsector.However,innovationisalonger-termprocessandappearstohaveapositiveinfluenceonregionalgrowthonlyafterfiveyears.Theanalysissuggeststhatascapitalandtalentagglomerate,theytendtopositivelyinfluencegrowthinneighbouringregions.However,innovationremainsahighlylocalisedelement.
6-34leadingcountriesconstitutetheOrganisationforEconomicCo-operationandDevelopment.
• Focus on integrated regional policies.Agglomerationeconomiesarepartlyresponsibleforregionalgrowth.Sourcesofgrowthfromwithinregions,suchashumancapitalandinnovation,aremoreimportantthanaregion’sphysicaldistancefrommarkets.Althougharegionwithgoodaccessibilitytomarketshasanaddedadvantage,itsgrowthdependsonthepresenceofhumancapital,innovation,infrastructureandeconomiesofagglomeration.Regionsperformwellwhenlocalactorsinaregionalinnovationsystemcancommunicateeasilywitheachother.Indeed,oneregion’sperformancestronglyinfluencesneighbouringregions,suggestingthatinter-regionaltradeandinter-regionallinkagesplayanimportantroleinregionalgrowth.7
Internationalevidenceindicatesthattobeeffective,regionaldevelopmentisalong-termendeavour,sometimesstretchingoverdecadesforfullrealisation.Thisisparticularlythecasewithbuildinghumancapacity.
7-OrganisationforEconomicCo-operationandDevelopmentMarch2009PolicyBriefHowRegionsGrowp6.
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Building human capacityItwouldbehelpfulforadditionalanalysistobeundertakenbeforeamorecomprehensivepolicyonbuildinghumancapacityisadopted.TheTrustaskedthattheMinisterorRDLestablishaprocessofformalreviewtodetermineprinciplesprojectsproposalsandprioritiestoadvancehumancapacitybuildinginregionaldevelopment.TheTrustisawarethatanumberofotherfederalandstateMinistriesandentitieshavedoneworkintheseareas,whichshouldallowforeasieranalysis.
AtthispreliminarystagetheTrusthasidentifiedfivesubjectheadsunderwhichregionalandruralhumancapacitybuildingcouldbeconsidered:
• Leadershipdevelopment
• Skillsdevelopmentandretention
• Entrepreneurial/innovationdevelopment
• Addressingunemployment-andunder-employmentandexcesscapacity
• Theneedsofnewregionalpopulationsresultingfromregionaldevelopment
TheTrustconsideredthatRoyaltiesforRegionshumancapacitybuildingshouldstartwithleadershipdevelopment.TheTrustconsideredtherewasmeritincommunityleadershipandcapacitybuildingprogramsbecomingregionaldevelopmentprojects.Buildingsocialandhumancapitalintheregionsisvitalforregionaldevelopment.8ItisalsoapriorityfortheRegionalDevelopmentCouncil.9
8-InadditiontoreportssuchastheEconomicAuditCommittee’sFinalReportPutting the Public First: Partnering with the Community and Business to Deliver Outcomes December 2009,DepartmentofTrainingandWorkforceDevelopment’sSkilling WA: A Workforce Development Plan for Western Australia December 2010;Structuring Regional Development for the Future – A Review of the Functions and Responsibilities of Regional Development Commissions November 2010hasasectionRealisingHumanCapital(Section8.6)
9-Priority6:LeadershipandDecisionmaking.Regional Development Council : Regional Development Policy Framework : An Action Agenda for Regional DevelopmentJanuary2011.
Existingorganisationsinandservicingtheregionsexhibitorexpressaneedforqualityleadership.Thiswillnotoccuroptimallywithoutassistance.Thereisacorrespondingneedforhighqualityleadershipdevelopmentprocesses.
Theprincipleofsubsidiarity10issupportedbyWesternAustralia’sGovernment,andisdiscussedinrecentreportssuchasthoseoftheEconomicAuditandtheReviewoftheRegionalDevelopmentCommissions.Forsubsidiaritytobeaneffectivepolicy,itrequirescompetence,abilityandskillinthosewhoaretomakelocalorregionaldecisions.
TheMinisterrespondedpositivelytotheTrust’sadvice.The2011-12RoyaltiesforRegionsbudgetincludedkeyinitiativestoimprovesocialinfrastructure,whichincludedkeythemeareasofinvestmentineducation,skillstraining,AboriginalinitiativesandtheRegionalCentresDevelopmentPlan(SuperTowns).
10-Subsidiarityistheprinciplethatdecisionsshouldbetakenascloseaspossibletothecitizen.InWesternAustraliathatmeansthatacentralauthorityshouldonlyperformthosetaskstowhichitcanaddvalueorwhichcannotbeperformedeffectivelyattheregionalorlocallevel.
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Advice on a water programGettingWesternAustralia’swaterpolicyintegratedintoastate-wideregionaldevelopmentstrategyremainsachallenge.TheTrusthasrecommendedthatwaterpolicyandprojectsbegivengreateremphasisinRoyaltiesforRegions.
Section4oftheActstatesthattheFundistobeusedtopromote and facilitate economic, business and social development in regional Western Australia through the operation of the Fund,andsection9oftheActisspecificastothedirectionofexpenditurerequired.Self-evidently,regionaldevelopment,broadeningtheeconomicbase,andcreatingjobscannotoccursustainablyunlessthebasicdevelopmentunderpinningsareavailableofwater,power,transportation,communications,andhousingandsocialresources.
Ofthese,waterisoftenthebiggestchallengetoregionaldevelopment.
InWesternAustralia,tworegionalstrategiesarepresentlyapparentwithrespecttowater.Thefirstisadefensiveorreactivestrategytodealwiththeeffectsofdroughtanddryingregions,orconversely,theeffectsoffloodsandextremeweatherevents,onestablishedregionalpopulationsandindustries.Thesecondisanoffensiveorproactivestrategytocaterforgrowingandornewregionalpopulations,suchasinresourcesdevelopment,intheOrd,andinPilbaraCities.Botharenecessarystrategicapproaches.
Newtechnologyandinnovationinmoreefficientandsustainableuseofgroundandsurfacewater,desalination,recyclingandwastewaterhavealsobeenveryusefulinregionaldevelopment.RDLhasbeenactivelyengagedinsuchissues,andtheRoyaltiesforRegionsFundhasmadesomesignificantinvestmentsinwaterprojects.
WiththeexperiencegainedbyRDLandRoyaltiesforRegionstodate,theTrustisoftheviewthatRDLshouldmovetoamorefocussedplannedandstrategicapproachforwaterintheregionaldevelopmentcontext.
TheTrustrecognisesthattheDepartmentofWater(DoW)andWaterCorporation(WC)aretheprimeagenciesinWesternAustraliaforwater,andthatRDLalreadyworkscloselywiththem.Nevertheless,thoseagenciesnecessarilyhaveresourcelimitationsandtheirownpriorities.ThesecanaffectthetimingandoutcomesofRDL’sandRoyaltiesforRegion’sregionaldevelopmentprogramsandpossibilities.
Fromthematerialithasreviewed,theTrusthasconcludedthatovermanyyearstheGovernmenthasunderinvestedinprocuringandconsolidatingcomprehensivedetailedwaterresourcedata.GiventhesizeofWesternAustraliaitisnotsurprisingthatwatermappingisnotcompleteformuchofWesternAustralia,butalackofadequatedatacananddoesaffectsignificantdevelopmentproposals.
Further,newpolicyandprogramsinitiatedundertheActandbyRDLmaynotalwaysbeadequatelycoveredoffinpresentplanningandinvestmentbyDoWandWC.
RoyaltiesforRegionshastoinvestoncurrentwaterinformation,butforbetteroutcomesmustelicitbetterwaterresourcedataandexplorewateropportunitieswhereitcan,onaselectandstrategicbasis,sothatRoyaltiesforRegionsFundexpenditurecanbefocussedonthoseareaswhereWesternAustraliacangetthemostproductiveregionaldevelopment.
RDLneedstodeterminetheareaswhereanadequatesustainablewatersourcedoesormightexist,tobeutilisedforsignificantregionaldevelopmentopportunities.InRDL’ssearchforsignificantregionaldevelopmentopportunities,theTrustappreciatesthatdecidingonappropriateandsustainablewaterallocationandusewillbeaffectedbyvaluesotherthanthoseofregionaldevelopment.
Thereisalsothequestionofwhatdevelopmentstrategiestoadopttohelpfacilitatebetteroutcomesforalready-developedwater-stressedregionalareasinWesternAustralia.
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TheTrustrecommendedthattheMinisterconsidergivingRDLadirectiontodevelopanappropriatewaterstrategyforRoyaltiesforRegions,withtwoprimarygoals.ThefirstistosupplementexistingorplannedwaterinvestmentbyDoW,WCandotheragencies,ortheprivatesector,inordertomaximiseproductiveoutcomesinRoyaltiesforRegionsprojects.Thesecondistoidentifyprioritygeographicareaswherebetterwaterdataandwaterinvestmentcouldprovidefororacceleratemajorregionaldevelopment.
TheMinisterrespondedpositively,withthe2011-12RoyaltiesforRegionsbudgetincludingexpenditureonwaterandNaturalResourceManagementinitiatives.Thefourkeythemesofthebudgetfundingallocationare:
• Regionalwateravailabilityplanningandinvestigation;
• Regionaleconomicdevelopment–wateropportunities;
• Gascoynefoodbowl,includingfloodmitigationmeasures;and
• Regionalnaturalresourcemanagement.
Advice on Royalties for Regions budget proposalsAdvice requiredS12(a)oftheActrequirestheTrusttoprovideadviceandmakerecommendationstotheMinisterforthepurposesofsections5(2)and9(1).Insummary,thosesectionsrefertotheallocationofFundmoniestothevarioussubsidiaryaccounts;and,towhereFundexpenditureshouldbedirected.
TheseprovisionsrequiretheTrusttoconsultwiththeMinisterconcerninghisRoyaltiesforRegionsbudgetproposals.TheTrustdidthat.
TheTrustwasconstitutedinJuly2010.SincethenandpriortotheformulationoftheMinister’sRoyaltiesforRegions2011-12budgetproposals,theTrusthasexpressedviews,andformallyprovidedadviceandrecommendationstotheMinister,onarangeofissues,thataffectormayaffectRoyaltiesforRegionsbudgetprocessesanddecisions.
TheTrustrecognisesthattheMinisterandRDLhaveonlyhadashortperiodinwhichtoreacttoorimplementtheTrust’sadvice,someofwhichisquiterecent.
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Suchviewsandadvicehaveincluded;
• TheneedforRDLtodevelopamoreadvancedevidenceandexperience-basedregionaldevelopment,philosophy,policyanddestinationtoassistinitsdecision-making.
• TheneedforRDLtodevelopregionaldevelopmentprioritiesagainstspecificcriteria.
• TheneedforcoordinatedandholisticregionalplanningtoinformRoyaltiesforRegionsprojectandprogramselection.
• TheneedforRoyaltiesforRegionsprogramsandprojectstobeoutcomes-based,andtoincludetimelinesanddeadlines,whereverfeasible.
• TheneedforRoyaltiesforRegionsprogramsandprojectstohavebusinesscases,andcost/benefitanalyseswheresensible.
• RoyaltiesforRegionsbudgetsshouldinclude‘themes’designedtoaddressspecificareasofneed,transformation,orpolicy.
• Theneedforgreaterattentiontobuildinghumancapacityintheregions.
TheTrustconductedahigh-levelreviewofthe2011-12RoyaltiesforRegionsbudgetproposalsandconcludedthatthosebudgetproposalsmettherequirementsoftheActandRoyaltiesforRegionspolicy.
TheTrustdidnottakeaviewwithrespecttoindividualline-items.TheTrustdidnotconductadetailedreviewofthematerialandprocesssurroundingbudgetlineitems.TheTrustbudgetviewsneedtobeplacedinthatcontext.
ImprovementsTheTrustconsidersthatimprovementstoRoyaltiesforRegionsbudgetdecision-makingandprocesscanbemade.TheTrustindicatedanumberofareasitwillreviewandareasthatitwouldliketoseeaddressedinthepreparationofthe2012-13budget.Theseinclude:
Planning:TheTrustviewsregionalstrategicplansandawhole-of-governmentWesternAustraliaregionaldevelopmentpolicyasessentialaidstosoundregionaldevelopment,andwouldrecommendtheybeconcludedforuseinthe2012-13budgetprocess.TheTrustisconcernedbytheabsenceoflocallydeveloped,holistic,co-ordinatedregionalstrategicandinvestmentplansandframeworksforeveryregion,thathavebeenadoptedbyGovernment.SuchplanswouldhavethebenefitofaffectinginformedandstrategicRDLRoyaltiesforRegionsdecision-making.TheTrusturgedtheMinisterandRDLtocontinueitseffortstorectifythisplanningdeficiency.TheTrustnotesthatthisdirectionisstronglyadvocatedbytheReviewoftheFunctionsandResponsibilitiesofRegionalDevelopmentCommissions.
Process:Withrespecttoinvitingsubmissionsfromstateagencies,whiletheTrustconsidersRDL’sbudgetapproachausefulone,thetimelineforthisprocessforthe2011-12budgetwastooshort.TheTrustsuggeststhatthebudgetprocesscouldbeinitiatedearlier.TheTrustisoftheviewthattheinteragencyprocessforconsiderationofbudgetbidsshouldbereviewedandmoretimeprovidedforreviewofthevariousproposalsagainstRoyaltiesforRegionspolicy.Thisshouldalsoassistinensuringlessvarianceinthequalityofbusinesscases.
Productivity:TheTrustnotesthattheEconomicAuditreportcommissionedbytheGovernmentputproductivityasahighpriority.TheTrustconsidersthatproductivityshouldbeformallyincludedinthecriteriaforconsiderationforRoyaltiesforRegionsbudgetproposalsfor2012-13.
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Asastillrelativelynewagency,RDLhasmadegreatstridesinunderstandingregionaldevelopmentandindevelopingandexecutingRoyaltiesforRegionsregionaldevelopmentprojects.TheTrustconsidersthatthe2011-12RoyaltiesforRegionsbudgethasbenefitedfromexperienceandprocessimprovements,andbettersystemsofgovernance.
MinisterialjudgementandRoyaltiesforRegionsbudgetdecision-makingisassistedbyextensivecommunityinput,bysoundRDLprocesses,byCabinetapprovalsforallproposalsandbyparliamentaryandpublicscrutiny.Nevertheless,theonusontheMinisterremainshigh.
Hisdecision-makingisnotassistedwhentherearedeficienciesininformation,11alackofstrategicregionalplansandtheabsenceofawhole-of-governmentregionaldevelopmentpolicy.
Experiencedoesallowforcontinuousimprovementinregionaldevelopmentpolicy.Priortothenextbudgetround,RDLneedstodevelopanimprovedrevisedregionaldevelopmentpolicytoassistinstrategicdecision-making.
TheTrustadvisedtheMinisterofthreeissuesitwishestoreviewfurther.
Firstisamatterofaccounting.TheParliamentandtheGovernmentdeterminethefinancialframeworkunderwhichRoyaltiesforRegionssits.RoyaltiesforRegionsincomeandexpenditurewillaffecttheGovernment’sfinancialstatements,andaffectdebtandsurpluslevels.TheTrustrecognisesthattheTreasurerandtheDepartmentofTreasury(DoT)areentitledtooversightRoyaltiesforRegionseffectsonstatefinances.
11-Waterresourcedataisacaseinpoint.
TheTrustisconcernedthatmechanismsforRoyaltiesforRegionsprojectbudgetingandaccountingmaybedictatedbytheGovernment’soverallfinancepolicyratherthanbythemeritsandnatureofRoyaltiesforRegionsprojects.TheTrustconsidersthatthe70/30recurrent/capitalsplitdeterminedbytheGovernmentappearstobeartificialinconstruct,andwishestodetermineitseffect.
Secondisamatteroffinancialprudence.WhileintheoryallRoyaltiesforRegionsprojectsandprogramsareonlycommittedtoandfundedintothebudgetout-years,thereisahighprobabilitythatongoingprogramssuchasthePensionerFuelCard,PatientAssistanceTravelSchemeandtheRegionalWorkersIncentivewillcontinueforyearsbeyondtheout-years.
Royaltyrevenueisvariable,butsmoothedlongtermtrendlinesareavailablefromDoT.TheTrustisoftheviewthat,asadiscipline,RDLshouldensurethatprojectslikelytocontinuebeyondthebudgetout-yearsremain,inaggregate,considerablywithinthelong-term[25percentof ]royaltytrendline.Thisprudentmeasurewillenablegovernmenttocontinuetofundsuchprojectswithinlong-termanticipatedroyaltyrevenue.
Thirdly,thereistheissueofcontractualcommitments.ItwasnotcleartotheTrustwhatquantumofthebudgetproposalswasalreadycontractuallycommitted.Contractualcommitmentsusuallymeanthatbudgetproposalsarenotcapableofrejectionoradjustment.TheTrustconsidersthatinanyfuturebudgetprocessthesplitbetweencontractuallycommittedandnon-contractuallycommittedpartsoftheprogramshouldbeidentified.
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Advice on governanceGovernance reviewTheTrustconsideredthattheoperationalexperiencegainedbyRDLofRoyaltiesforRegionsfrom2008onwardsmadeitpracticaltoreviewtheirgovernancemechanisms.TheTrustadvisedRDLofitsgovernanceconclusions,whichRDLdiscussedwiththeMinister,whoadvisedhisacceptanceofthoseconclusionsonthe27June2011.
RDL’s response to the key governance conclusions TheTrust’sgovernanceconclusionswere:
• RDLmustbeclearinexpressionandunderstandingofwhatitmeansbyitsgovernancearrangements.
• Thegovernancearrangementsmustberelevanttoandsupportiveofsection4oftheActtopromoteandfacilitateeconomic,businessandsocialdevelopmentinregionalWesternAustralia,asexpandeduponbysection9.
• RDLmustbeclearinexpressionandunderstandingofwhatitmeansbydevelopment,andenunciateitsregionaldevelopmentphilosophy,policyanddestination.
• Strategicholisticregion-basedplanningisessentialtoeffectiveregionaldevelopment.
• Allregionaldevelopmentprojectsandprogramsmustbeoutcomesbased.
RDL’sresponsetoeachisoutlinedbelow(inbluetext)
RDL must be clear in expression and understanding of what it means by its governance arrangements.
RDLhasthenecessarygovernancesystemsinplacebutwillcontinuetoimproveitsarrangementstomeetthefollowingintent:
RDLRoyaltiesforRegionsgovernancewillprovideoversightandaccountabilityofRoyaltiesforRegionspoliciesprogramsandprojects.ItwillprovidesystemstomonitorrecordandauditRoyaltiesforRegionsactivity,toidentifycomplaintsandshortcomings,takestepstoensurecompliancewithagreedpoliciesandprocesses,provideforcorrectiveaction,evaluateoutcomes,andmanagerisk.Projectswillbeassessedastowhethertheybuildcapacitywithinaregionaldevelopmentcontext,accordwithRoyaltiesforRegionspolicyandbudgets,areoutcomes-basedand,wheneverfeasible,includetimelinesanddeadlines,andproductivitymeasures.Businesscaseswillberequiredforallprojectsandcost/benefitanalyseswillberequiredwhererelevantandfeasible.Governancewillbetailoredtoensurethatcompliancecostandtimeisnotexcessiveandisrelevanttocost,risk,andtheprojectandentityconcerned.
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The governance arrangements must be relevant to and supportive of section 4 of the Act: to promote and facilitate economic, business and social development in regional Western Australia, as expanded upon by section 9.
RDLagrees.
RDL must be clear in expression and understanding of what it means by development, and enunciate its regional development philosophy, policy and destination.
RDLrecognisesthataclearerWesternAustralian-relevantregionaldevelopmentphilosophypolicyanddestinationisneeded.AtpresentpolicyprioritiesandstrategiesaredeterminedbysixGovernmentrequirements:Buildingcapacityinregionalcommunities;Retainingbenefitsinregionalcommunities;Improvingservicestoregionalcommunities;Attainingsustainability;Expandingopportunity;and,Growingprosperity.
RDLnotesOECDevidencethateffectiveregionalpoliciesshould:provideinfrastructureaspartofanintegratedregionalapproach;investinhumancapital;emphasiseinnovation,researchanddevelopment;and,focusonintegratedregionalpolicies.
Strategic holistic region-based planning is essential to effective regional development.
RDLagrees,andisworkingwithinRDLandwithinstateandfederalgovernmenttoprogressthisaim.
All regional development projects and programmes must be outcomes based.
RDLagrees,andwillimplementthisapproachasnewRoyaltiesforRegionsprojectsappear.
Changing the six governing objectives:
AtpresentRoyaltiesforRegionspolicyprioritiesandstrategiesaredeterminedbysixgoverningobjectives:
• Buildingcapacityinregionalcommunities
• Retainingbenefitsinregionalcommunities
• Improvingservicestoregionalcommunities
• Attainingsustainability
• Expandingopportunity
• Growingprosperity
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TheseRoyaltiesforRegionsobjectivesaresimplebroadandclear.TheyhavenotactedasarestraintonRoyaltiesforRegions,butneitherhavetheyindicatedwhichobjective/smightbeapriorityatthistime,orwhichdeservegreateremphasis.TheTrusthasnotfoundthatindividualRoyaltiesforRegionsprogramsorprojectsareassessedagainstwhichobjectivetheymeetandhow.RDLwillneedtoconsiderwhetherthisisnecessarywhenitintroducesoutcomes-basedprocesses.
OfgreaterimportandstatusistheAct.ThereisanobligationonRDLtoensureRoyaltiesforRegionsoutcomesconformwithsections412and913.
TheTrusthasindicatedthatinplanning,RDLwillneedtodeterminewithinthesesixobjectives,andwithinsections4and9oftheAct,whatthebalanceemphasisorpriorityshouldbeinfuture.Certainlytheseobjectivescouldbereviewedandrefreshednolaterthanthenextelection.
RDL proposals for making further progress
Asaresultofthediscussionabove,RDLformallyadvisedtheTrustofitsproposalsformakingfurtherprogress.
12-Section4–Object
TheobjectofthisActistopromoteandfacilitateeconomic,businessandsocialdevelopmentinregionalWesternAustraliathroughtheoperationoftheFund.
13-Section9–ApplicationofFund
TheMinister,withtheTreasurer’sconcurrence,mayauthorisetheexpenditureofmoneystandingtothecreditoftheFundforthefollowingpurposes-
toprovideinfrastructureandservicesinregionalWesternAustralia;
todevelopandbroadentheeconomicbaseofregionalWesternAustralia;
tomaximisejobcreationandimprovecareeropportunitiesinregionalWesternAustralia.
Redefining principles, policy objectives and outcomes
TheRoyaltiesforRegionsprogramhasasignificantleverageopportunity,oftenpartneringwithfederalandstateagencies,toworkcollaborativelywithregionalandremotecommunitiestogrowanddevelop.Thebroadvisionistocreategrowthopportunities,addressmarketfailure,buildregionalcapacity,andremovebarrierstogrowthinwaysthatreflecttheneedsandgoalsoftheregionsandregionalcommunitiesthemselves.
Keytosuccessfulsustainableandeffectiveregionaldevelopmentisregionalcapacitybuildingandregionaldecisionmakingwhichfindsexpressioninanintegratedcomprehensivestrategicplanforeachregion.Intheabsenceofsuchregionally-derivedplans,RDLhastorelyonitsowndepartmentalplanningprocesseswithrespecttoregionaldevelopment,informedbyexternalplansandreports.
Takingintoaccounttheabove,arevisedsetofoutcomesandprinciplesforRoyaltiesforRegionsinregionalWesternAustraliaisproposed;
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ProposedOutcomes
Tobeconductedwithin2011-12,integratedregionalplanningagainstprioritysettingwilldirectRoyaltiesforRegionsandotherinvestmenttolargeandsmalltransformationalsocialandeconomicdevelopmentprojectswiththefollowingoutcomes:
• Newandrevitalisedregionalinfrastructuresupportsincreasedgrowth,reducedcostsandincreasedproductivity
• Productivityandeffectivenessofregionaleconomiesareincreased.
• Communitiesgrowandprosperthroughemploymentandbusinessdevelopment.
• Housing,landandessentialservicesareaccessibleandaffordable.
• Humanservicesaredeliveredatastandardequivalenttoorbetterthanthoseinmetropolitanareas.
• Communitiesenjoygoodqualityamenityandlifestyles.
• Capacitybuilding(particularlyforleadership)isenhanced.
ProposedPrinciples
• StrategicandtransformationalprojectsinregionalWesternAustraliaareapriority.
• Localplanninganddecision-makinginregionalareasisfundamental
• StateGovernmentagenciesshouldsupportintegratedregionalplanning,prioritysettingandinvestmentdecision-makingforregionalareas
• RoyaltiesforRegionsfundsmaybedirectedtobringingforwardStateGovernmentinitiativesthatareplannedforbutwherenobudgetallocationcurrentlyexists
• RoyaltiesforRegionsfundssupplementbutdonotsupplantexistingStateGovernmentfunds.
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Issues for further consideration
Assessingbusinesscasesandmanagingrisk
TheTrustnotesthatinassessingfundingapplications,RDLneedstodefinetheirpositiononriskmanagement.Apreferredapproachisonewhichavoidsbeingriskaversewhilesensiblyandresponsiblymanagingandminimisingtheeffectofidentifiedrisk.
Submissionsshouldindicatewhetherbusinesscasesareavailabletoassistwithstrategicfundingdecisions.Itisimportanttonotehoweverthatsomeprojectsaredifficulttoarticulateincost/benefittermsbecausetheyarearesponsetoagenuinebutperceivedneed,orarevaluebased.Theeconomiceffectonregionalcommunitiesinthissituationisnearlyimpossibletoassessandotherdecision-makingtoolsneedtobeconsidered.
TheoperationalexperienceofRoyaltiesforRegionsforthepasttwoyearshasshownthatmanybusinesscasesreceivedhavebeenstatementsofintentratherthanfundingrationalesinresponsetounmetneed.
Businesscasesthatlendsupporttofundingarethosethat:
• MakeaclearcasefortheprojectwithinthecontextoftheRoyaltiesforRegionspolicyobjectivesincludingtheoutcomestheprojectistoachieve.
• IdentifythefundingrequirementsfortheprojectincludingtheextentofRoyaltiesforRegionsfunding.
• Identifytherisksinvolvedinrelationtotheprojectandwhatriskmanagementstrategieswillbeemployedie.public/privateleverage
• Identifythemeasuresthatwillbeusedtoassesstheextenttowhichtheprojectoutcomesareachieved.
Consistentwiththeprincipleoffosteringlocaldecision-makingandcommunityempowerment,RDL,throughthepassingonofknowledge,hasaroletoassistapplicantsdevelopsoundbusinesscases.
Incaseswherestrategicprojectfundsarebeingprovidedeitherthroughgovernmentagenciesordirectlytonotforprofitcommunitybasedorganisations,risksassociatedwithpotentialcostshiftingandalackofcongruencybetweencorebusiness,governmentagencyprioritiesandregionalprioritiescanoccur.Inaddition,questionsinrelationtoprojectsustainabilitycanariseiffundshavebeenallocatedtoaserviceforwhichanotherdepartmenthascorefundingresponsibility.
Developmentofacommunityownedintegratedregionalplanningframework
TheprinciplesunderlyingtheRoyaltiesforRegionsprogramprovideanopportunitytotakeaplacebased,locallevelapproachtofosterpublic/privatepartnershipsandintegratenewstakeholdersandresourcesintothedevelopmentprocess.
TheOECD14suggeststhatthislocallydrivenapproachassistsindevelopingacultureofcross-sectoralco-operationwithincentralandlocalgovernmentsandthusmorecoherentpolicyinitiatives.Theyalsosuggestthatthereisarecognitionthataplace-basedapproachrequiresmorebottom-upasopposedtotop-downinitiatives.Thisproducesnewwaysofco-ordinatingverticallyacrosslevelsofgovernmentandabetteruseoflocalknowledge.
AnemergingchallengeforRDListoworkwithitskeystakeholderstoformulateanintegratedlocal,regionalandstateregionaldevelopment-planningframework,whichwillstrategicallyinformfundingdecisionsintothefuture.
14-OECDPolicyBriefOctober2006,ReinventingRuralPolicy
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Advice on the Fund being used to retire State debtTheMinisterreferredthematteroftheeffectoftheincreaseinironoreroyaltiestotheTrust.
WesternAustralia’sGovernmenthasdeterminedthattherewillbeaphasedendtotheroyaltyconcessionon‘fines’producedfromironore,sothatitequatestotheroyaltyratefor‘lump’ironore.Ithasestimatedthatthisroyaltyadjustmentwillproduceanestimatedadditional$1.923billioninStaterevenuefrom2012-13to2014-15.
Governmentpolicyistoquarantinetheadditionalroyaltyrevenuetobereceivedforthisfour-yearperiod,forStatedebtreductionpurposes.AsamemberofStateCabinettheTrustrecognisesthattheMinisterisobligedtosupportGovernmentpolicy,buttheActpreventscertainoutcomesinthisregard.
Undersection6oftheAct,eachfinancialyeartheRoyaltiesforRegionsFundistobecredited25percentoftheforecastroyaltyincomeforthatyear.TheincomeoftheFundisderivedfromrevenue,andnopartofitconstitutesdebt.25percentoftheestimatedroyaltyincreaseof$1.9billionis$475million.
TheincomeduetotheFundiscalculatedeachfinancialyear,andlegallycannotbelessthan25percentoftheforecastroyaltyincome.Thatmeansaportionofthat25percentcannotbewithheldfromtheFundforanyotherpurpose,includingdebtreduction.
TheActisclear.TheFundisdueitsshareofroyaltiesasspecifiedbytheAct,andforthepurposesdeterminedbytheAct.TheportionoftheroyaltiesduetotheFundcannotbequarantinedfordebtreduction;itmustbepaidtotheFund.
ExpenditureundertheActmustmeettherequirementsofsections4,5(1)and9(1).AlthoughtheActdoesnotspecificallyrefertouseoftheFundfordebtreductionpurposes,neitherdoesitprohibitit.Thequestionistherefore:couldthis$475millionduetotheFundforexpenditurethatmeetstherequirementsofsections4,5(1)and9(1)belawfullyexpensedbytheFundforStatedebtretirement?
IntheopinionoftheTrust,theanswerisyes,iftheStatedebtwasincurredforpurposesthatmirrortheprovisionsofsections4,5(1)and9(1).
AnimportantfeatureofRoyaltiesforRegionsisthatithasbeenestablishedtosupplement,notsupplant,normalstateexpenditure.TheTrustisstronglyoftheviewthatanyapplicationtodebtretirementofthisRoyaltiesforRegionsFundincomethathasbeenenhancedbytheseroyaltyincreasesshouldpassthetestofbeingacontributiontoandadditionaltonormaldebtretirement,andnotrepresentacost-shifttotheFund.
ItisimportantthatdebtforavalidRoyaltiesforRegionsregionaldevelopmentprojectinthesecircumstancesisgenuinelyincurred,andthatitspaymentbytheFunddoesnothavetheperceptionofbeingmanufacturedtosatisfythedebtreductionpolicy.
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Advice to review the Country Local Government FundOn15December2008,theMinisterlaunchedtheCLGFwith$400millionoverfouryearstoassistcountrylocalgovernmentstobuildandmaintaintheircommunityinfrastructure.
TheFund’sstatedaimsareto:
• addressinfrastructurebacklogsandsupportcapacitybuilding
• improvethefinancialsustainabilityofcountrylocalgovernmentsinWesternAustraliathroughimprovedassetmanagement
• providefinancialassistancetocountrylocalgovernmentswhichchoosetoamalgamatevoluntarily
• assistgroupsofcountrylocalgovernmentstofundlargerscaleinfrastructureprojects.
TheTrustunderstandstheprovenanceoftheCLGFwasinpartaresponsetoasustainabilityandinfrastructurestudysponsoredbytheWesternAustralianLocalGovernmentAssociation,andthattheCLGForiginallyenvisagedafour-yearbudgetprogramtoaddressdeficienciesandabackloginlocalandregionalinfrastructure.
Section5(1)(a)oftheActwentbeyondthistimeframe,asitgavetheCLGFpermanencebyentrenchingtheCLGFasasubsidiaryaccountoftheFund.
PublicdebateandcommentaryonCLGFpolicyandperformancetodatehasincludedmattersofquantumdesignprocessgovernanceallocationtimelinesandexecution.
TheTrust’sownconsultationtodatehasledittobelievethatoveralltheCLGFexpenditurehasbeenwelcomedandvaluedbyregionallocalgovernmentandregionalcommunities,andthattherehasbeenaneedforanindividuallocalgovernmentcomponenttotheFund,forsmallcommunitygrants,andforsubregionalpooledgrants.
Onthe28June2011theMinisterreferredareviewoftheCLGFtotheTrusttobeconcludedbytheendofJanuary2012.
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Other MattersTheTrusthasmadeitsownobservationsandhashadanumberofmattersraisedwithitinitsconsultation.TheTrustconsidersthattwoofthosemattersbelowareimportantandneedtoberaisedinthisreport.AspectsofthesemattershavebeenincludedinformaladviceprovidedtotheMinister,andreportedabove,buttheTrustconsidersitrelevanttoreportfurther.
PlanningSinceitsformationinJuly2010theTrusthasexpressedconsiderableinterestinthecontributionbetterstrategicregionalplanningcanmaketooptimalRoyaltiesforRegionsoutcomes.TheTrustconsidersthatstrategicholisticregion-basedplanningisessentialtoeffectiveregionaldevelopment.
TheTrustacceptsthenowlong-standinggovernmentdeterminationofninecountryregionsinWesternAustraliaassensibleinnumberanddemarcation,incorporatingastheydoanaggregationofshireswithinregionalboundaries.TheTrustsupportstheallocationandreportingofRoyaltiesforRegionsinvestmentpartlyonthatnine-regionbasis.
Theninecountryregionsarenothoweverastandardorganisationalmatrix,andstateagenciesoftenorganisethemselvesintodifferentregionalconfigurations(theDepartmentofEducationforinstancehassevenregions).
Withinthenineregionsaresub-regions,whichmayconstituteoneormoreshires,industries,andcities,towns,andsettlements,includingminingsettlements.Therearealsogeographiclinkagesanddevelopmentcorridorsacrossregions.
Strategicandoperationalplansareneededateachlevel,informedbyastateplanningframework,aggregatingtoastate-wideregionaldevelopmentplanpolicyandstrategyguidinginvestment.
FromtheRoyaltiesforRegionsperspective,iftheDepartmentofPlanning(DoP)andtheWesternAustralianPlanningCommission(WAPC)weretoplanonadifferentgeographicbasisfornon-metroWesternAustraliathantheninecountryregions,andotherstateagenciesstructuretheirregionalplansandanalysisdifferentlyaswell,itcanmakestrategicdecision-makingandco-ordinatingregionaldevelopmentmoredifficult.
TheTrusthasmadethepointtotheMinisterinadviceconcerninghis2011-12budgetproposals,thatMinisterialbudgetdecision-makingonRoyaltiesforRegionsismademoredifficultindeterminationselectionandprioritisationbyanabsenceofco-ordinatedintegratedholisticandconcludedstrategicplansbyregionandsub-region.
Thematterofregionalplanningisofvitalimportancetoregionaldevelopmentdecision-making,butitisoutsideRDL’sdirectcontrol.
TherecentGovernmentRegionalDevelopmentCommissionReviewraisedthisfundamentalquestion:‘HowshouldGovernmentbeorganisedtoimproveservicesandsupportforregionaldevelopment?’Asaguidelinetoaddressingthisquestion,theRDCreviewcommitteesaidthat‘itisimportantthatregionaldevelopmentisapproachedinawaythatbestpromotescoordinationandintegration,aswellasachievingatriplebottomlineofeconomic,socialandenvironmentalsustainability.’15
Itishardtoseehowthiscanbeeffectivelyachievedwithoutthedevelopmentofrequiredregionaloutcomesandregionalfuture-basedplans.Decision-makingofahighorderismademoredifficultandlessefficientwithoutgoodplanningsystems.
15-TheJune2010ReviewCommittee’sIssuesPaperpage3.
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Thereisnoquestionthatregionaldevelopmenthassuccessfullyoccurredwithoutanoverallplan,butthatdoesnotinvalidatetheneedforplanning.Goodplanningsavestimeandmoney,integratescollaborationandcoordination,andcrystallisesdesiredsocialandeconomicoutcomes.
IntheRoyaltiesforRegionsregionaldevelopmentcontexttheTrusthassuggestedthatgoodplanningshouldbecontinuousnotstatic,client-basednotsupplier-based,regionally-basednotcentrallyimposed,future-basednotpast-embedded.
TheTrust’sregionalconsultationhasindicatedthattherearestakeholderswhoconsiderthat:
• Regionalplanningtodatehasgenerallynotbeenintegratedcoordinatedorholistic
• Thereareplansofdifferenttypesbutnoregionalplansyet,apartfromthedraftPilbaraPlanningandInfrastructureFramework
• Planningisby‘silo’-business,community,sector,localgovernment,agency,departmentandauthoritybutisnotwellcoordinated
• Localgovernmentplanningqualityispatchy,andstrategicplanningisessential
• Planningisneedandpastbasedandnotprospectsandfuturebased
• ABScensusandotherdataisnotalwayssoundenough
TheTrusthasnotsightedthevarietyofplansavailablefromthevarietyoforganisationsoperatingintheregions.Nodoubtthereareplansthatarecomprehensiveveryuseableandofahighstandard;butonlysome(likeportauthoritiesandlocalgovernment)wouldbepublicsectorand/orpubliclyavailable.
Strategicandoperationalplanningshouldbecentraltoeverysignificantorganisation’sfunctioning,butrealistically,organisationslikelocalgovernmentoftenrequireexpertassistanceinplanningmatters,sorequiringoutsideinputsandaclient-supplierrelationship.
Startingwithtworegionaldevelopmentprinciples,thatplanningshouldberegionally-drivenandplanningshouldbefuture-based-whatcouldthismean?
Experiencemakesforcaution,andpast-basedplanningexhibitsthatcautionintryingtoberealisticandprudent.Ontheotherhand,underestimatingdevelopmentprospectsdemandorneedcanresultinunderinvestmentinsocialandeconomicinfrastructure,lessthanoptimaloutcomes,andmorecostly‘catch-up’beingrequiredlateron.
Future-basedplanningiseasiestwhenitreflectsGovernmentpolicy.Forexample,thereisadeterminationtocreatelarge,settledsustainablepopulationsinthePilbaraCitiespolicy,andtomakethePilbaraamorediversifiedeconomybyaddingservices,tourism,agricultureandsoontotheminingandexportsectors.
TheTrustacceptsthatsoundpolicydevelopmentmeansthatplanningguidelinesandprinciplesneedtobeagreedanddeterminedbyGovernment,andbudgetaryconsequencesrequireGovernmentapprovalorsupportforanysub-regionalorregionalplan.
TheCabinethasestablishedanagreedapproachtoregionalplanningthroughtheappointmentofregionalstatutoryplanningcommitteesundertheWAPC.
TheTrustnotesthattheWAPCisreportinggoodprogressunderitsStatePlanningStrategyandregionalplanningprocessestoaddressdeficiencieshighlightedhere.
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Targeted investmentWork
TheemphasisoftheActisonregionaldevelopment.TheActrecognisesthateconomicandbusinessdevelopmentisinsufficientunlessaccompaniedbysocialdevelopment.WhilethereareRoyaltiesforRegionsprogramsthataredirectedatindividuals,andarethereforewelfareinnature,suchasthePensionerFuelCard,PatientAssistanceTravelSchemeandtheRegionalWorkersIncentive,extensiveRoyaltiesforRegionssocialinvestmentinhealth,education,housingandurbanamenitieshasbeenmade.16
WhilemostRoyaltiesforRegionsexpenditureisnotdirectedtoaparticulardemographic,17thereisacasefortargetedinvestmentaimedatspecificareasofdisadvantageoropportunityinWesternAustralia’sregionalindigenouscommunity.Inparticular,furtherinvestmenttargetedatAboriginalworkforceparticipationiswarranted.
TheremitoftheActiswide.Section4oftheActstatesthattheRoyaltiesforRegionsFundistobeusedtopromoteandfacilitateeconomic,businessandsocialdevelopmentinregionalWesternAustralia.However,section9(1)(c)specificallytargetsjobs,andrequiresRoyaltiesforRegionstomaximisejobcreationandimprovecareeropportunitiesinregionalWesternAustralia.18
16-ThedistinctionbetweensocialandwelfareneedsisbroadlythatthereareRoyaltiesforRegionsprogramsandprojectsthatcontributetosocialdevelopmentintheregions,andthereareRoyaltiesforRegionsprogramsandprojectsthatprovideaidtoindividualsorgroupsinawelfarecontext.
17-Therearenotableexceptions,suchasforolderWesternAustralianswiththeCountryAgePensionFuelCardScheme.
18-Section9(1)oftheActisspecificastothedirectionofexpenditurerequired:
(a) to provide infrastructure and services in regional Western Australia;
(b) to develop and broaden the economic base of regional Western Australia;
(c) to maximise job creation and improve career opportunities in regional Western Australia.
Todate,RoyaltiesforRegionseffortsintheOrd19andintheculturalartsspaceseemtobeaneconomicandemploymentsuccess.
TherearemanyindigenousWesternAustralianslivingintheregionsthataredoingwell,holddowngoodjobs,andhavestablefamilies,buttherearemanywhoarenotdoingwell,whoareonwelfare,andwhosefamilyandsociallifeissub-optimal.
TherehasbeennoshortageofjobsinmuchofregionalWesternAustraliain2010-11,yetthereisunemploymentandunder-employment,particularlyinAboriginalcommunities.Inpartthatisbecausemanyliveinremoteareaswheretherearefewjobs,butinmanycountrytownstherearepeopleonwelfarewhileforeignbackpackersaregainfullyemployedinretail,tourist,agriculturalandotherpursuits.Theminingsectorisflyinginworkers,evenforunskilledandsemi-skilledjobs.
Jobavailabilityisnotenough.Experiencehasshownthatitisnoteasytoendanentrenchedwelfarecultureinsomesectors,ortoovercomeissuesofgeography,culture,communityandrelativedisadvantage.
Thereisconcernateconomicandemploymentissuesinregionalindigenoussociety,butincontrasttothosetargetingsocialoutcomes,therearenotthatmanyagenciesorganisationsandindividualsaddressingeconomicandemploymentissues.
TheexperienceofArgyleMinesandtheOrdExpansionprojectisthattomakesolidgainsinAboriginalemployment,anactiveprogramofrecruitmentandsupport,involvingaconsiderableoverhead,isrequiredtoaddresssocialandeconomicissues.
19-TheOrdFinalAgreementprovidesfortheAboriginalDevelopmentPackagewhichenablestheMiriuwung-Gajerrongpeopletoparticipateintheprojectasemployeesandinbusinesses.
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ManyindigenousWesternAustraliansintheregionsfaceparticularsocialandeconomicchallenges.Thesearewelldocumentedandarethefocusofmultiplestate,federalandprivatesectorprograms.RDLsitsontheWesternAustralianAboriginalAffairsCoordinatingCommittee,whichisleadingthedevelopmentofarationalisedandfocussedAboriginalpolicyframework.
TheTrusttakestheviewthatwhileRDLcanbeavaluablepartnerinthatcommittee’swork,itshouldusetheopportunitiesprovidedbytheActanditsdepartmentalresponsibilitiestotargetspecificaction.
MostfederalandstateexpenditureonAboriginalpeoplehasbeeninhealth,education,housing,publicorderandsafety,welfareandsoon.Expenditureoneconomicparticipationhasbeencomparativelylow.JobcreationisacorerequirementoftheAct.Thatshouldmeanthecreationofpermanentandsustainablework.TheTrustiswellawareofhowdifficultataskthathasprovedtobe,buthasbeenencouragedbythecommitmentandresultsofAboriginalworkparticipationintheOrdproject.
TheregionalAboriginalpopulationhashighnumbersofunder35’s,with40%oftheAboriginalpopulationundertheageof15.TheTrustisoftheviewthatatargetedandsustainedlong-termefforttoassistthislargecohortofyoungerAboriginalpeopletomovefromschooltoworkandfromwelfareintoeconomicparticipation,offersthegreatestdevelopmentpotential.
Land
LandsisadivisionofRDL,andthatdivisionhasaparttoplayinregionaldevelopment.State-widethereareissuesofsub-optimallandmanagement,misseddevelopmentopportunities,skillsdeficiencies,andsocialdisadvantage.Theseissuesarecross-cultural,buttheyarepronouncedintheAboriginalcommunitiesofthenorthandeast.ThereareopportunitiesnotonlytodevelopprogramsaimedatallWesternAustraliansinpastoral/rangeland/crownlandcountryareas,butalsoonesthatarespecificallyindigenousbecauseitisanareaofhighneed.
Further,homeandbusinessownershipareimportantcomponentsofregionaldevelopment.Workneedstobedonetoensurethatlargercountrytownshavethesamerangeoftenureavailabletothemwhetherthosetownshaveapredominantlyindigenouspopulationornot.
Somelandissuesneedspecialattention.InHedlandandKununurra(totaketwoexamples),inthemidstofverysignificantRoyaltiesforRegionsandotherexpenditurethatistransformingthosetowns,areAboriginalLandsTrust(ALT)20ownedsettlements.IntheorythesetwoALTcommunitiesarejustsuburbsofthesecountrytownsunderdifferenttenure,butinpracticethesearedegradedareaswithoutaccesstomunicipalservices,andinabadstatewithrespecttohousing,roads,footpaths,lighting,rubbish-collection,postalservicesandamenitiesmaintenance.Thereisexcessivelitter,andpoorcommunitystandardsreflectthepoorurbanenvironment.
Suchconditionsareapparentlylong-standing,andtheircontinuationisunacceptable.Politicalwillisneededtoaddressthepolicy,fundingandregulatoryissuesinvolved.Adeadlineshouldbesetforchangetobeeffected.Thosesuburbsshouldbenormalisedandbeprovidedwiththesamemunicipalservicesandfundingasanyothersuburb.
20-TheAboriginalLandsTrustwasestablishedbytheAboriginalAffairsPlanningAuthorityAct1972,whichistheresponsibilityofthe(WesternAustralian)DepartmentofIndigenousAffairs.
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Trust Internal Governance
Trust Operating BudgetPursuanttosection9(2)(c)andsection27oftheAct,RDLprovidestheTrustwithanoperatingbudgettocovertheexpenditureincurredintheadministrationoftheTrust.ThesefundsaremanagedbyRDLandarereportedonintheFinancialStatementssectionofRDL’s2010-11AnnualReport.
TheoperatingbudgetfortheTrustforthe2010-11periodwas$380,000.00.Asummaryofsomeoftheexpenditureisprovidedbelow.
Trust Members’ RemunerationAspersection20oftheActandthePublicSectorCommissioner’sdeterminationTrustmembersareentitledtoremunerationandtravelallowances,exceptingthememberoftheTrustwhoistheChiefExecutiveOfficerofRDL.TheremunerationforTrustmembersisasfollows:
Chair $111,377perannum
DeputyChair $40,160perannum
Members $660perdayformeetingsof4hoursormore
$430perdayformeetingslessthan4hours
ThetotalremunerationpaidtoTrustMembersforthe2010/11periodwas$158,674(exclusiveofsuperannuation).
Travel ExpenditureTheTrustheldonemeetinginGeraldton,countrymembersoftheTrustincurredtravelcoststoattendtoTrustbusiness,andtheChairoftheTrusttravelledextensivelytotheregionsofWesternAustralia.
Thetotaltravelexpenditurefor2010-11periodwas$14,108.
Trust Governance FrameworkTheTrust’sinternalGovernanceFrameworkwasdevelopedusingpublicsectorbestpracticeandcomprisesaCharter,CodeofConductandConflictofInterestPolicy.TheCodeofConductandConflictofInterestPolicywerereviewedbythethenOfficeofthePublicSectorStandardsCommissionerandtheirfeedbackwasincorporatedintothepolicies.
Thegovernancepolicieswereendorsedatthe16July2010meetingsubjecttoareviewforsuitabilityinoneyear’stime,whichiscurrentlyunderway.
CharterTheCharterwasdevelopedusingrecommendationsonbestpracticeforboardsandcommitteesfromthePublicSectorCommission’sGood Governance for Western Australian Public Sector Boards and Committeesguide.TheCharteroutlinestherolesandrelationships,keyactivities,Trustoperationandadministration.
Code of ConductTheCodeofConductwasdevelopedusingthethenOfficeofthePublicSectorStandardsCommissioner(OPSSC)Conduct Guide for Boards and Committees.InitsreviewoftheCodeofConductOPSSCfeedbackwasthattheCodewasconsistentwiththePublic Sector Code of Ethics,relevantlegislationandthesixkeyelementsintheConduct Guide for Boards and Committees.
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Conflict of Interest PolicyTheConflictofInterestPolicywasdevelopedtoassistTrustMemberstoidentify,declareandmanageconflictsofinterest.Thepolicygoesfurtherthantherequirementsundersection24oftheActtodisclose“directorindirectpecuniaryinterests”.TrustMembersagreedthatamoreexpansivedeclarationisappropriateandthattheActistheminimumrequired.
TheOPSSCnotedinitsreviewoftheConflictofInterestPolicythatthecodereflectedtheuniquebusinessoftheTrustandthestandardsexpectedofitsMembers.
TheConflictofInterestPolicycontainsthefollowingforms:
• RegistrationofPrivateInterests
• AdviceofPrivateAssociations
• DisclosingConflictsofInterest
• NotificationofAlterationtoStatementofInterests
• ResolutionandManagementofInterests
TrustMemberscompletedalloftheappropriateformsatthebeginningoftheirtermsandfurtherdisclosuresaremadeastheyoccur.TheagendaforformalTrustmeetingsincludesasectionatthebeginningfordisclosuresofinterestrelevanttoagendaitems.
Trust Administrative FunctionsPursuanttosection27oftheActRDLprovidestheTrustwiththeservicesandfacilitiesnecessaryfortheTrusttoperformitsfunction.Thisincludestheprovisionofafull-timeExecutiveOfficerwhoprovidessupporttotheTrust.TheExecutiveOfficerisresponsibleforadministrativeandproceduralarrangementsfortheTrust.
PartoftheservicesandfacilitiesprovidedtotheTrustbyRDLincludesthefollowingandisreportedoninRDL’s2010-11AnnualReport:
• RecordKeepingPlan
• DisabilityAccessandInclusionPlanOutcomes
• SubstantiveEquality
• Occupationalsafety,healthandinjurymanagement
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Western Australian Regional Development TrustPOBox1143WestPerthWA6872
Tel: (08)65524498Fax:(08)65524417Web:www.rdl.wa.gov.au
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