Royalties for Regions viability audited

The ongoing operational costs of some Pilbara Royalties for Regions infrastructure projects far outweigh cost estimates, according to the Town of Port Hedland.

The comments came after the tabling of an auditor-general's report in Parliament last Tuesday, which identified 140 projects worth $729.2 million that did not demonstrate ongoing viability within their original business plans.

Projects such as South Hedland's Wanangkura Stadium, which costs approximately $1 million a year to run, and Marquee Park Splash and Play have added millions of dollars in costs to the local government's budget.

Before July 1, 2013, the now Department for Regional Development did not require applicants such as the Town of Port Hedland to address project sustainability in their business cases, the report said.

Since the 2012-13 financial year, residential ratepayers in the municipality have faced rate rises of 12 per cent in 2012-13, 8 per cent in 2013-14, and 5 per cent in the coming 2014-15 period.

Town chief executive Mal Osborne said since Royalties for Region's implementation in 2008, the Town had been forced to implement additional safeguards to ensure it could continue to maintain resulting assets into the future.

"A rigorous business case process was undertaken for all projects which, among other things, considered the lifetime costs of these assets," he said.

"Unfortunately, these costs were underestimated and far outweighed the reality.

"Ultimately, Royalties for Region's has helped us to deliver important community facilities and set us on the path to becoming a vibrant and attractive regional city."

Despite the implementation of a more rigid business plan template in July 2013, the auditor-general Colin Murphy found two of three projects approved after this date, valued at $68.7 million, were likely to incur future ongoing costs that were not quantified and had no funding sources identified.

"Addressing the long-term sustainability of projects still requires work … even projects using the new template were being funded without providing proper sustainability information," he said.

WA Labor leader Mark McGowan said the report was evidence the Barnett Government was not on top of Royalties for Region's sustainability.

"It's clear the Government is not being disciplined in its management of the State's royalty revenue," he said.

"Its failure to identify ongoing costs of projects puts them at risk of closure, or leaving local councils and ratepayers to pick up the tab."

Architect of the Royalties for Region's program and current Member for the Pilbara Brendon Grylls downplayed the auditor-general's concerns about the immeasurability of project outcomes.

"I actually flatly reject the notion that we can't measure the value of these projects in the community because each project has a different need, value or outcome for different people for different reasons," he said.