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Australian governments are under constant pressure to intervene to support the economies of particular regions, particularly those that grow more slowly.

The most prominent recent example is the Commonwealth Government’s “Commitment to Regional Australia” in September 2010 1 that promised $10b over eight years, partly implemented through the Investing in Australia’s Regions package in the May 2011 budget. 2 Other examples include the Victorian Government’s Regional Growth Fund allocating $1b over eight years, 3 and the Royalties for Regions program of the West Australian Government, allocating over $1b per year.
Although some of this money is for improved regional services, a significant proportion purports to develop regional economies. Such substantial spending on regional assistance has a rich heritage in Australia, as shown in Judith Brett’s Quarterly Essay, Fair Share. 4 State-owned enterprises from the Post-Master General to electricity and irrigation utilities to government airlines had mandates to subsidise regional services. Soldier settlement programs explicitly aimed to boost regional populations.
The Commonwealth Government redistributes tax revenues between the states using a process that aims to enable states and territories to provide Australians with services at the same standard irrespective of location. This effectively provides additional revenues to states with more people in remote areas, that are costly to service.

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