12 September, 2015
Industries
Client
Department of Primary Industries and Regional Development
Disciplines
Synergies was engaged by the Department of Primary Industries and Regional Development (DPIRD) to evaluate the economic impacts of Royalty for Regions program investments in the education sector. A whole-of-economy CGE model was used to examine the size and distribution of welfare impacts across nine regions in Western Australia.
Education and skills training has been identified by DPIRD as an important input to building capacity in regional communities, retaining skilled people in country areas, and developing future leaders.
Since 2010 approximately $372 million of Royalties for Regions (RfR) funding has been committed to 73 projects for the purpose of improving education outcomes in regional areas of Western Australia (WA). An additional $108 million of funding from other sources has accompanied this allocation, thus bringing the total value of projects to $480 million.
A mix of both capital and service-orientated projects have been funded. Almost $217 million was allocated to upgrading school buildings and residential colleges. A further $150 million of capital expenditure has been allocated to the Vocational Education and Training (VET) sector for building works. The remainder of funds (approximately $88 million) were spent on non-capital programs such as early literacy intervention and Indigenous-specific education and training programs.
DPIRD commissioned Synergies to undertake a comprehensive evaluation of the economic benefits being delivered by these investments.
Synergies examined the impact of a representative sample of 40 projects. The sample covered approximately two thirds of the total budget value of education projects. First, the potential economic outcomes of these projects were assessed using a Benefit Framework, which classified impacts into four categories:
A combination of desktop research and stakeholder consultation was used to assess the outputs of each project, expected economic outcomes and the timing of the outcomes.
Second, a “whole-of-economy” CGE model was used to quantify the impacts for eight of the projects, which represented a combined budget value of approximately $290 million, or 60% of total funding for education projects.
The modelled projects were estimated to increase economic welfare by $437 million (net present value over 20 years), relative to an investment of $267 million.
The modelling highlights that not all the benefits stay in a region. It was demonstrated that a share of the benefits accrue to Perth, meaning that while Royalties for Regions is primarily targeted at improving regional prosperity, there are spill-over benefits to city dwellers.
The evaluation uncovered a number of valuable insights for future RfR program management.
We recommended that future investments in education projects for rural and regional areas should be made within an overarching strategy that articulates how each thematic areas of investment (ranging from early childhood through to VET and adult education) complement one another in meeting identified strategic objectives. Recognising these linkages are important in designing an effective investment strategy that maximises scope for synergies between projects.
The evaluation also uncovered the need for better monitoring and reporting of measurable outcomes – in particular the collection of information required for economic impact analysis.