Overview

Royalties for Regions (RfR) is an ongoing State Government initiative that involves significant allocations of public money. Launched in December 2008 the program has been funding projects for over five years and at the time of audit had allocated $4.2 billion to over 3 500 projects across the State. The high level objectives of the Royalties for Regions Act 2009 (the Act) are:

• to provide infrastructure and services in the regions
• to develop and broaden the economic base of the regions
• to maximise job creation and improve career opportunities in the regions.

This is our third audit of RfR. Our first audit in 2009 was a preliminary review of the RfR high level controls and governance arrangements. Our second audit in 2010 examined Local Government spending through the Country Local Government Fund component of the program.

Our 2009 audit found that implementation of appropriate governance frameworks had lagged behind project funding disbursements. At that time we identified that the then Department of Regional Development and Lands, now the Department of Regional Development (the Department), was developing an evaluation framework. The framework was implemented by the Department in 2011 and has been embedded into its business case, financial agreement and reporting templates.

The framework should provide the Department with a structured outcomes based approach to funding and evaluating RfR projects. It should support decision making by clearly demonstrating how projects align with the three legislative objectives, as well as six lower level objectives the Department established to help funding decisions and to focus projects on achieving clearly identified benefits.

Success of the RfR program will be determined by whether it provides long lasting impacts to regional communities, and not only on whether it delivered specific outputs.

The objective of our audit was to determine if RfR projects are delivering their intended benefits to regional Western Australia. Consistent with the Department’s framework, our audit focused on whether projects identify outcomes and benefits, and if the Department evaluates whether projects are meeting the six objectives and delivering their intended benefits.

Conclusion

The RfR program is providing substantial infrastructure and service projects to regional communities. The Department’s focus in administering the program is on funding projects for the delivery of tangible outputs, and ensuring money is spent where it was approved to be spent. What long term benefits these projects were expected to deliver and how projects are actually contributing towards achieving the RfR objectives is essentially still unknown. This is primarily because the outcomes based funding and evaluation framework that was implemented by the Department in mid-2011 has not been consistently applied.

Since 2009, the government has indicated that outcomes from RfR projects would be measured, or be capable of being measured. However, the Department’s selective approach to evaluating achievement of the RfR objectives, while consistent with the framework, has resulted in few evaluations relative to the overall size of the program. While these evaluations may have shown what outputs and outcomes were delivered by projects they did not show if projects had delivered their intended outcomes.