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
Regional and Remote Student Access to Education — Additional Support
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 Using unpublished departmental data, a recent Grattan Institute analysis of transport infrastructure investment showed the relative shares of Commonwealth and State governments’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 GDPa
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 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.