"Financial Millstones"

As I scanned Hansard earlier this week (as one does) I noticed a mention of $9 million that the federal government is requesting back from the City of Greater Geraldton for funding of a particular project. (Hansard is the formal record of what was spoken in parliament.)

Another $9 million bill when funds are already tight, staff have been cut, and services reduced, would not be great news for the people of Geraldton.

You'll notice the reference to Royalties for Regions projects now being "financial millstones". Millstones are quite handy when you're running a mill, but we think Blayney is using the term in the biblical "millstone around your neck" context.

We haven't had confirmation of which project is being referred to, but...

A quick search reveals that $9 million is the exact amount granted to the City of Greater Geraldton for the Karloo-Wandina project, which was meant to produce 800 affordable blocks of land, as well as the construction of Verita Road and the accompanying bridge. The grant came from the "Building Better Regional Cities" program created under the Gillard government back in 2010.

The project has been beset by cost blow outs, with the original figure to be contributed by ratepayers expected to be around 4 or 5 million, but that seems to have grown somewhat higher. (In last year's budget, $18 million was allocated to finalise the project.) Money also came from Royalties for Regions and other government departments for the project.

The project also turned out to be a major ongoing financial burden to the people of Geraldton. This is a statement from Mark Atkinson, who was the Manager of Infrastructure Planning & Design with the City of Greater Geraldton:

"Whilst higher levels of government have provided the majority of the upfront capital, this represents only about 20% of the whole of life costs of the asset. The CGG will ultimately inherit the ongoing maintenance of the road infrastructure and will now need to budget for in the order of an additional $1M/year for depreciation if it intends to maintain the same level of service."

The purpose of the Building Better Regional Cities grants was to increase the number of homes for sale and rent that were affordable for working families on ordinary incomes, in communities that are experiencing positive jobs and population growth that need more homes to be built. The program was largely unsuccessful and poorly run according to an audit in 2014, resulting in projections that the program would be lucky to result in helping 2000 homes be built across Australia, instead of the original goal of 15,000.

According to the 2014 audit done on the project, Geraldton suffered the most delays of any of the BBRC projects, with the expected completion being 30 June 2017. The BBRC projects were originally given until the deadline of 30 June 2016 to complete their residential works.

The BBRC program stated in the funding agreement that is it a "performance-based, legally enforceable agreement between the Australian Government and the Successful Applicant."

Interestingly, according to an article from Darcy Hay of the Geraldton Guardian in 2013, Ian Blayney and Shane Van Styn were at odds with each other over the project, with Van Styn, who was at the time a National Party candidate and is now Geraldton's Mayor, strongly supporting the project, but MLA Ian Blayney, (our state government representative in the Legislative Assembly) opposed to the project. (link). Comments on the Facebook post embedded below are worth a read too (or click here).

We have emailed the City of Greater Geraldton for comment, and to confirm for which project the federal government is asking the funds be returned.

Update: 5:00pm - CGG CEO Ken Diehm has sent a response. Click here to read.