Transitioning Regional Economies

C Australian Government expenditure on regional programs

Details to support the estimate of Australian Government regional expenditure for box 2.10 in chapter 2 are presented in table C.1. Figures for selected state governments are given in box 2.10.

These figures are indicative only. Regional programs can involve multiple levels of government, departments and policy areas, and change over time. This makes it difficult to establish a robust estimate of expenditure on regional programs.

Most notably, government financial reporting often makes it difficult to separately identify the purpose and nature of regional programs. This can occur because:

many areas of government expenditure benefit nonmetropolitan regions, but do not have regional development as their primary purpose (such as disaster recovery, pest and disease management and agricultural support)

programs that may be intended to support regional growth and development may not be separately allocated to individual regional communities (such as tourism marketing programs for an entire state or territory)

many large expenditure programs are not disaggregated into metropolitan and regional components. For some large projects, such as major road and rail projects that link regional centres with capital cities, there are likely to be benefits accruing to both metropolitan and regional areas, yet it is difficult to determine the relative magnitude of these expected benefits

jurisdictions may use different methods of budget reporting (for example, some jurisdictions report only current and forward estimates, while others supply actual amounts spent; some jurisdictions report expenditure by functional area, without detailing specific grants).

Table C.1 Australian Government funding commitments for regional programs As at May 2017

Program^a Funding ($m) Agricultural Competitiveness White Paper — a fairer go for farm businesses 25.2 Agricultural Competitiveness White Paper — building 21st century water, transport and communication infrastructure 499.5 Agricultural Competitiveness White Paper — strengthening our approach to drought and risk management 64.1 Leadership in Agricultural Industries Fund 5.0 National Institute for Forest Products Innovation 4.0 Northern Australia Rice Industry 4.0 Rural Financial Counselling Service 7.1 Relocation of the Australian Pesticides and Veterinary Medicines Authority 25.6 Community Infrastructure Projects — New Announcements: Sunshine Coast Regional Council Submarine Cable Study 0.3 Community Infrastructure Projects — New Announcements: Mt Roland FireLight Trial Festival in Tasmania + Tasmanian Winter Events Program on the North West Coast of Tasmania 0.1 Mobile Black Spot Program 220.0 Regional Arts Fund 3.4 Regional Study Hubs 15.2 Rural and Regional Enterprise Scholarships 24.0 Jobs and Growth in Tasmania — University of Tasmania campuses in Launceston and Burnie 150.0 Deakin University — Support for the Warrnambool Campus 14.0 Rural Health Commissioner and Pathway for Rural Professionals — Establishment 4.4 Rural General Practice Grants Programme 13.1 Better Targeted Rural Financial Incentives for Doctors 457.8 Developing Northern Australia — Positioning the North as a Leader in Tropical Health 6.4 Rural Health Multidisciplinary Training Programme 775.0 John Flynn Placement Programme 15.2 Strengthening Medicare — Rural Procedural Grants Programme 73.3 Alcoa Portland Aluminium Smelter — Financial Assistance 30.0 Northern Australian Tourism Initiative 13.6 Northern Australia Water Resource Assessment 15.0 Cooperative Research Centre for Developing Northern Australia 75.0 National Resources Development Strategy — Exploring for the Future 100.5 Regional Jobs and Investment Packages 220.0 Regional Growth Fund 472.2 Regional Rail in Victoria 500.0 Faster Rail Connecting Capital Cities and Orbital Regional Centres 20.0 Building Better Regions Fund 297.7 Tasmanian Jobs and Growth Package 80.3 Developing Northern Australia — Improving Northern Cattle Supply Chains (Northern Australia Beef Roads Programme) 100.0

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Table C.1 (continued)

Program^a Funding ($m) Northern Australia Roads Programme 600.0 National Highway Upgrade Programme 225.8 Developing Northern Australia — Freight Rail Analyses 4.9 Tasmanian Freight Rail Revitalisation 59.8 Regional Aviation Access 87.8 Victorian Infrastructure Package 565.0 Great Ocean Road (Victoria) 50.0 Great Western Highway (New South Wales) 200.0 Pacific Highway (New South Wales) 5 600.0 Bruce Highway (Queensland) 6 700.0 Cape York Region Package (Queensland) 208.4 Outback Way (Queensland, Northern Territory and Western Australia) 142.0 Adelaide to Tarcoola ReRailing Upgrade Acceleration (South Australia) 252.0 Anangu Pitjantjatjara Yankunytjatjara Lands (South Australia) 85.0 South Australian Regional Roads Package 11.0 Great Northern Highway — Muchea to Wubin Upgrade (Western Australia) 275.8 NorthLink WA — Swan Valley Bypass (Western Australia) 648.4 Midland Highway (Tasmania) 400.0 Regional Roads Productivity Package (Northern Territory) 90.0 Regional Development Australia Committees 74.3 Townsville City Deal 150.0 Seasonal Work Incentives for Job Seekers — Trial 27.5 Strong and Resilient Communities 12.6 Regional and Remote Student Access to Education — Additional Support 93.3 TOTAL 20 894.5

^a Loans schemes and programs with a significant unspecified metropolitan component have not been included in the above estimates.

Source: Joyce and Nash (2017).

Consequently, publicly available government financial reports do not yield a robust estimate of the relative levels of expenditure on regions compared with capital cities. Using unpublished departmental data, a recent Grattan Institute analysis of transport infrastructure investment showed the relative shares of Commonwealth and State governments’ road and rail investment that was allocated to capital cities and to non-capital city areas during the period 200506 to 201415 (Terrill 2016b, p. 28) (figure C.1). This analysis revealed that Commonwealth and State governments have spent proportionally more (relative to population and size of regional economy) in regional areas of New South Wales and Queensland than in large, faster growing capital cities such as Sydney, Melbourne and Perth.

Figure C.1 Governments have spent more on road and rail in regional areas than in capital cities, relative to population growth and share of national GDP^a 200506 to 201415

^a Excludes private sector contributions to publicprivate partnerships.

Source: Terrill (2016b, p. 28).

However, this analysis also needs to be interpreted cautiously, as it does not account for key factors including:

differences in the quality and adequacy of existing transport infrastructure

differences in the cost of providing a comparable service in capital cities compared with regional areas

benefits accruing to capital cities because of improved transport connectivity with regional areas (and viceversa).

A key issue affecting the interpretation of the data in the above figure and table is whether the expenditure has been used for maintaining an existing level of service or whether it was an investment in additional capacity or service quality. It is not possible to distinguish governments’ investment in new infrastructure in response to growth and transition in a region from investment in repairing and/or replacing deteriorating infrastructure (or, for that matter, catching up on past underinvestment in maintenance). Furthermore, it is not possible to identify the proportion of investment spending that relates to promoting growth and development as distinct from providing a basic level of service (such as public transport) with adjustments for changing population and demographic characteristics.

Improved government budget reporting processes would be needed to enable such identification. This would be a first step toward clarifying, respectively, the extent of government expenditure allocated to:

providing and maintaining basic services (noting that the cost of service provision will differ across regions)

developing (that is, extending) regional capacity and connectivity beyond current levels.