The two areas were promised the “lion’s share” of funds under early Resources for Regions funding rounds, but a Newcastle Herald analysis has shown the seat of Barwon has received significantly more government funds under the scheme, and extra funds in the latest round, while the Upper Hunter took cuts. This is despite Barwon generating a fraction of the royalties of the Upper Hunter mine areas.

Singleton and Muswellbrook have poured at least $3.6 billion in royalties into NSW coffers since Resources for Regions was established in 2012 to fund projects in areas most impacted by mining activities, but have received $35.3 million (Singleton) and $53.9 million (Muswellbrook) under the fund.

Muswellbrook’s $53.9 million includes $24 million to Hunter New England Health to upgrade Muswellbrook Hospital, a controversial allocation that contributed to the government banning state agencies from applying for Resources for Regions funds in December 2015.

The seat of Barwon, held by Nationals Party MP Kevin Humphries since 2007, has received $57.45 million from Resources for Regions over the same period, despite its three mining areas of Cobar, Narrabri and Broken Hill generating only a fraction of the royalties contributed by the Upper Hunter.

Adding insult to injury is a 2011 NSW Department of Trade and Investment report - which provided evidence of the need for Resources for Regions - showing Singleton and Muswellbrook significantly under-funded by the NSW Government compared with other mining areas, including Cobar, Narrabri and Broken Hill.

The Economic Assessment of Mining-Affected Communities report showed Singleton and Muswellbrook generated per capita mining royalties of between $10,000 and more than $20,000 in 2010-11, for a total of $700 million to the state in a year when total mining royalties were $1.1 billion.

The third-highest mining area, Mid-Western Council, generated $80 million in 2010-11, with Lake Macquarie fifth on about $50 million, Narrabri seventh on less than $50 million, Cobar listed 13th with royalties of about $20 million, and Broken Hill trailing at 20th with royalties of about $5 million.

But the report showed the two Upper Hunter areas received substantially less per capita in government funds - particularly for road and transport, and despite the impact of a mining boom – than all other mining and non-mining areas.

 “A significant result is the low average amount of ‘Roads and Transport Authority and transport’ capital expenditure and recurrent expenditure per capita received by tier 1 areas (Singleton and Muswellbrook) relative to other categories,” the economic assessment report found.

It prompted the then Upper Hunter MP George Souris to say Singleton and Muswellbrook should receive the “lion’s share” of Resources for Regions early round funds.

Singleton and Muswellbrook were the only two local government mining areas to receive $708 per capita for roads and transport, while all other mining areas received either $1509 (Cobar, Narrabri, Cessnock, Gloucester) or $1898 (Lake Macquarie, Broken Hill, Wollongong) per capita. The report showed even non-mining areas received $1170 per capita in government funding for roads and transport.

The report also showed Singleton and Muswellbrook were the only two local government areas to receive $5396 per capita state funding in total, compared with $7003 per capita for mining areas like Cobar, Narrabri, Cessnock and Gloucester, and $6877 per capita for areas including Lake Macquarie, Broken Hill and Wollongong. Non-mining areas received more than Singleton and Muswellbrook, with $5886 per capita in general government funding.

Government figures show Singleton mines paid $541.9 million in royalties in 2015-16 and have averaged at least $500 million per year since 2008-09. Muswellbrook generated $200 million in 2010-11, $259 million in 2012-13, and has averaged at least $200 million per year.

An analysis of the case for the scheme, the distribution of $250 million in funds since 2012, and allocation of nine out of 10 recent projects to National Party seats – including Orange which the National Party lost in a shock by-election in November - adds weight to Independent Lake Macquarie MP Greg Piper’s request on Wednesday for a NSW Audit Office review.

Lake Macquarie has received no Resources for Regions funds, despite being listed as fifth-highest mining royalties-generating area in the economic assessment report.

It also supports Mr Piper’s call for Resources for Regions to be wound up if politics, and not merit, figures in allocations, after serious concerns about the selection of funded projects since its inception.

More than $10 million in Resources for Regions funds has paid for upgrades at Cobar, Narrabri and Mudgee airports, in part to accommodate mine workers under controversial fly-in/fly-out arrangements and in apparent contradiction to the scheme’s premise of assisting mine-affected communities.

A breakdown of Barwon mining areas shows Cobar has received $22.4 million under Resources for Regions, despite generating less than $5000 per capita in royalties in 2010-11 compared with more than $20,000 in royalties from Singleton. It includes $5 million to Cobar Water Board to replace twin pipelines, and $2.1 million for a new sewerage treatment plant.

Barwon’s Narrabri has received $26.09 million of Resources for Regions funds, despite generating even less in per capita royalties in 2010-11 than Cobar.

Barwon’s Broken Hill has received $8.96 million in Resources for Regions funds, including more than $5 million to upgrade its civic centre in 2015 and $3.9 million for a YMCA project under the latest round, which includes an additional $800,000 after the project was shortlisted at $3.1 million.

In the economic assessment report Broken Hill ranked behind Lake Macquarie in per capita royalties generation.

In the latest Resources for Regions round, announced last week, Muswellbrook lost $1 million and Singleton lost more than $2.64 million from the cost of shortlisted projects.

Singleton mayor Sue Moore declined to comment about Mr Piper’s call for an Audit Office review of Resources for Regions, and said the administration of the scheme was “a matter for the State Government”, but Muswellbrook mayor Martin Rush supported the call and said it was clear the Upper Hunter’s share of the fund had been “heavily diluted” over the years.

“The Resources for Regions fund needs to get back to basics,” Cr Rush said.

“This fund was designed to assist councils affected by very intensive mining activity in circumstances where public funding couldn’t keep pace with industry growth or contraction.

“It was a recognition that a small community wasn’t equipped to deal with the peaks and troughs of an international industry, as was particularly the case for the Upper Hunter when the Resources for Regions fund was established. Compare Orange with a population of about 50,000 and one gold mine and Singleton and Muswellbrook with 70 per cent of the largest export industry in NSW, and with a population of 30,000. You can’t do it without public funding.”

Cr Rush said it was to former Upper Hunter MP George Souris’s “enormous credit” that he ensured Muswellbrook and Singleton shires received the ‘lion’s share’ in the earliest Resources for Regions round.

“Clearly Muswellbrook and Singleton’s shares have been heavily diluted in recent years and it appears that Upper Hunter projects were stripped of allocations to fund projects elsewhere,” Cr Rush said.

In 2016 the NSW Government changed the base rate of royalties for coal. Mining royalties are based on self assessment by companies which are required to remit 8.2 per cent of the value of open cut mined-coal, and 7.2 per cent of coal recovered by underground mining, to the government. 

The Association of Mining-Related Councils, which includes Hunter councils, has pushed for a number of years for a royalties for regions scheme requiring a set percentage of mining royalties to be returned to local government areas.

The AMRC has repeatedly criticised Resources for Regions in talks with the NSW Government, including the “ever-changing criteria that has been a major area of concern” by member councils and the “underwhelming” financial returns under the scheme.

In 2012 the NSW Minerals Council backed a royalties for regions scheme, and in a submission to the NSW Government in June, 2016 the Minerals Council criticised the “fraction” of mining funds being returned to the regions where they were generated.

“Resources for Regions ​is an important initiative that provides critical public infrastructure funding to regional mining communities that contribute so much to our economy,” NSW Minerals Council chief executive Stephen Galilee said.

“However, in the four years since its inception in 2012, the R​esources of Regions​ program has returned just $208 million in funding to mining communities, despite the $5 billion in mining royalties raised over the same period.”​

The Minerals Council in 2016 called on the NSW Government to commit at least $60 million per year to Resources for Regions, and said regions would be “sorely disappointed” the government failed to announce a new funding commitment, despite “touting a $3.7 billion budget surplus”.

In a media statement in response to Mr Piper’s call for an Audit Office review of Resources for Regions, a spokesperson for Deputy Premier and National Party leader John Barilaro said all Resources for Regions applications were reviewed by an Infrastructure NSW independent assessment panel.

Recommendations were made to the NSW Department of Industry, the spokesperson said.

A Department of Industry briefing document on Resources for Regions notes that “funding decisions are made by the Government”.