Royalties for Regions: Accountability and Sustainability

To determine whether the Western Australian (WA) Government's 'royalties for regions' policy will enhance economic welfare it is necessary to (i) know the net fiscal transfer that the community wants the State Government to provide between Perth and regional WA and (ii) determine whether the royalties for regions policy brings the Government closer to, or further away from, that goal. In view of this, it is recommended that the State's public accounts be complemented by a new budget paper that (i) reports on public finances for 'Perth' and the 'Regions' separately, which will improve government accountability, and (ii) classifies mineral royalties as 'capital' revenues, which will enhance sustainability provided these capital revenues are hypothecated for expenditure on capital projects.