Regions win in election '08

The Nationals WA's surprise result in last weekend's election is likely to provide a boost for business in regional Western Australia, with the next state government forced to deliver improved infrastructure and services outside the Perth metropolitan area.

It is not just the Nationals who will be applying pressure to a future government of any hue.

Former Labor minister John Bowler, who has claimed the revised electorate of Kalgoorlie, is also staking a claim to a $30 million infrastructure fund for the Goldfields, having sought a mini-version of the Nationals' Royalties for Regions investment fund.

Having won as an independent, Mr Bowler is still viewed as a key part of any plan for Labor to retain power because it will most likely need the Kalgoorlie member and Carol Adams, the newly elected independent in Kwinana, to form a government.

Mr Bowler is understood to be in discussions with the Nationals to achieve such funding whichever way the election turns, as several seats hang in the balance.

There is also the likelihood of uranium mining being allowed if the Liberals take government with the Nationals help, an expectation that has lifted stocks in the sector this week.

Even though the next government is undecided, business in general in regional WA has been buoyed by the result.

Regional Chambers of Commerce and Industries WA president Kitty Prodonovich welcomed the power shift likely to result from the close election.

Ms Prodonovich said the chambers had been highlighting the lack of funding in the regions for years and the Nationals had picked up on that need and campaigned hard on the issue.

She said the expectation was that, no matter which party ultimately claimed victory, the regional areas would receive much greater funding resulting in direct and indirect benefits for business.

"That is all business across the board," Ms Prodonovich said.

"With the election result that is looking likely, regional WA is going to get more benefits, something for every

business owner, from tiny one-person businesses to huge businesses in WA.

"We know that regional WA is where the wealth is generated."

The Nationals' plan is for 25 per cent of all mining and petroleum royalties collected by the state to be reinvested in regional community projects.

The rural-based party led by Brendon Grylls said that its policy would ensure that $675 million of an estimated $2.7 billion expected to be raised in royalties by the state in 2008-09 would be returned to the regions, over and above current budgeted expenditure.

One of the key focuses of the Nationals has been housing, which has been severely short in many booming regional centres. They want the next government to ensure essential workers are offered housing incentives to work in the regions.

Bunbury Wellington Economic Alliance CEO Trevor Whittington said the regions had a big opportunity to win a sustained funding increase but it needed to be managed well to benefit business and community in the longer term.

Mr Whittington said the Nationals would need to find a different formula to that of the previous coalition government, led by Liberal Richard Court and his deputy, Nationals leader Hendy Cowan.

"They could fundamentally change the way the regions are funded," he said. "But there is a caveat.

"It is the minister who is in charge of the department and dictating how effective they are in delivering services."

Mr Whittington said the Nationals had to be in cabinet positions to guide the delivery of services, otherwise infrastructure spending would simply result in new facilities with no-one to work in them.

The Bunbury Wellington Economic Alliance was also wary of the benefits of returning Labor with a slim grip on power, believing that many businesses in the area had lost confidence in ministers from the previous state government, especially over the handling of the recent state gas crisis.

The impression Mr Whittington gave was that if Labor managed to retain office there would be little new blood to drive change and it would be a kind of lame duck administration that was simply hanging in for another term.

"There is no confidence that if these guys are allowed to stay in charge that there will be any structural change," he said. "They will know it's their last term.

"Labor can't get away from the process. Anyone who can cut through that quickly will get the support of industry."

However, not all business will welcome the Nationals potentially having a bigger say in the state economy.

For instance, the Nationals oppose deregulated retail trading hours in metropolitan WA because the party believes it removes competition and diversity from our metropolitan shopping environment, which has a knock-on effect on small business in regional and rural communities.

Such a policy will put them at odds with the Chamber of Commerce and Industry WA, which has been an outspoken critic of regulation in the retail sector.

There is also the likelihood that daylight saving, popular among the Perth professional community, could be a victim of the resurgent Nationals.

Aside from the Nationals, there are some interesting prospects for the business community from the Liberals under Colin Barnett, who was a big opponent of the break-up of Western Power and has flagged concerns about the proposed takeover of Rio Tinto Ltd by BHP Billiton Ltd.

Mr Barnett has suggested a royalty review might be in order if that happens, though he will not have many bargaining chips to renegotiate state agreements.

However, BHP may seek to consolidate all its state agreements to generate more efficiencies if it combines Rio's Pilbara operations with its own, especially where port and rail distribution of ore from various mines is controlled by state agreements.

Mr Barnett has noted that the majors have negotiated concessions on royalties and he wants to change that, a matter worth as much as $2 billion.

It is understood the companies pay the 7.5 per cent royalty on lump iron ore but when it comes to iron ore fines, once hard to market, they pay 3.75 per cent, compared with the legislated 5.625 per cent.