The New South Wales Government is under fire for breaking its promise to funnel mining royalties back to mining regions.
Before the most recent election the current government promised to spend $160 million on infrastructure under its Resources for Regions initiative, the ABC reports.
However to date only $10 million has been allocated to two Hunter Valley councils, in Singleton and Muswellbrook.
Treasurer Mike Baird and premier Barry O’Farrell argue the rise was necessary to offset the cost of the carbon tax, which they estimate will cost the state $950 million over the next four years.
Baird said because the Federal Government had not offered any alternative reimbursement from the carbon tax NSW had no choice but to increase mining royalties.
“In the absence of an alternative proposal from the federal government, NSW is left with no other choice,” he said.
Royalties in NSW currently range from 6.2 per cent for deep underground coal to 8.2 per cent for open-cut coal.
Following these statements federal treasurer Wayne Swan stated that the government will almost certainly cut the state’s infrastructure funding.
"If Mr O’Farrell wants to take this action then that will simply mean less money for infrastructure in places like NSW,” Swan said.
Now Gunnedah mayor Adam Marshall has slammed the state government for breaking its promise.
"In this basin last financial year the government collected about $50.3 million in mining royalties," Marshall told the ABC.
"None of that comes back directly."
Despite receiving $4 million in funding for infrastructure, the Muswellbrook Council spent it on a hospital instead, even though 13 other hospitals in the state were funded from the government's health budget.
"This is the only one funded from Resources for Regions and there will be a suspicion in the community that this really is not in addition, as the government promised, to its own obligations that it already had in this community, and that it's just using this money in diminution of those obligations."
In response the Government says it will carry out an audit this year to re-examine its current definition of "mining affected" so that more regions may receive funding.
Mick Veitch, the state opposition's regional infrastructure spokesperson, slammed the government.
"They have breached their commitment," he told the ABC.