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The $334 million Labor ‘slush fund’ for regional roads
By Max Maddison
The state government’s $334 million Regional Roads Fund has come under scrutiny by the NSW Auditor-General – the second Labor election funding scheme examined by the Audit Office in a matter of months.
None of the 30 projects allocated funding, including $50 million for an upgrade around the corner from Roads Minister Jenny Aitchison’s residence in the Hunter, were subject to a business case assessment ahead of the state election in March 2023.
Minister for Roads and Regional Transport Jenny Aitchison. Credit: Dion Georgopoulos
Established as a mechanism to allocate commitments made by Labor while in opposition, the fund has been widely criticised by the Nationals because funded projects are overwhelmingly in Labor-held or targeted seats, with none in the state’s west. The state government has argued that distribution of funding was necessary after years of Coalition underinvestment in these areas.
Of projects funded under the Regional Roads Fund, $40 million will be spent on the planning and design of the Gosford bypass, a further $20 million on the Bulli Bypass investigation and $12 million for improvements to the Golden Highway.
A draft of the Audit Office’s 2025-26 performance audits list was obtained by the Herald and later confirmed by the agency, which said the final report was expected to be tabled later in 2025. The audit was made public after this masthead’s inquiry.
“This audit will examine whether Transport for NSW administered grants to councils through the RRF program in compliance with the Grants Administration Guide and relevant administrative and legislative requirements,” the Audit Office’s website states.
A spokeswoman for the Audit Office said: “As the audit has commenced, Transport for NSW has been engaged as the auditee and is familiar with the scope and timelines for the audit.”
It is the second government fund examined by the Audit Office in just months. In late June, the NSW auditor-general, Bola Oyetunji, handed down a report considering the Local Small Commitments Allocation (LSCA), a grants fund set up to distribute $400,000 commitments in every electorate.
Oyetunji said “key steps” in the administration of the fund could not be examined because they were carried out while Labor was in opposition. Moreover, there was “insufficient evidence” that some community projects represented value for money. More than 50 conflicts had not been identified and managed, the Audit Office found.
The Nationals have criticised the Regional Roads Fund for being almost exclusively located in Labor-held seats, with former MP Sam Farraway revealing last September that 24 of the 28 projects, or 88 per cent, were in government electorates. Labor holds just under half of the seats in the Legislative Assembly.
During budget estimates last year, Aitchison characterised projects for funding through the fund as “no-brainers”. The fund was designed to “complete a lot of projects that, under the former government, were half-finished, unfinished or had been called out for years by communities”, she said.
“When we were looking at election commitments, we were looking at community need,” Aitchison explained.
“Unfortunately, I didn’t have many Nationals members knocking on my door asking me for assistance in their electorates, so it was difficult to get that understanding of what their communities needed.”
Aitchison acknowledged that none of the projects was subjected to a business case or benefit-case ratios — a method of determining the spending value of taxpayer dollars — ahead of their allocation because Labor was in opposition at the time and did not “have the capacity”.
Transport for NSW Head of Regional Integration Anthony Hayes told budget estimates in April business cases for certain projects were being undertaken. The outcome would not impact the government’s commitment to proceeding with the infrastructure upgrades, Hayes said.
“Our role is not to be deciding whether we do it or not, but to be deciding on the most appropriate way to do it,” he said.
A project that has come under scrutiny is the Thornton Bridge road and rail bridge upgrade in Aitchison’s Maitland electorate and a short drive from her primary residence. The project was initially allocated $15 million before receiving a $35 million funding boost in the June budget. The project is being delivered by Transport for NSW so will not be examined by the Auditor-General.
Opposition regional transport and roads spokesman David Layzell said: “I’ve been concerned about this Labor slush fund since it was created.”
“It never sat right with me that successful projects, including the Thornton road and rail bridge upgrade in the minister’s own backyard, required no business case and had no transparency.”
Aitchison said she welcomed the Audit Office’s examination of the Regional Roads Fund, saying the projects selected were “chosen for their impact on safety, productivity and local communities – not party politics”.
The Thornton Bridge was a “vital safety and access link for the Hunter region” and a “long-standing priority” dating to the former Labor government in 2010.
“Unlike the former government, who pork-barrelled and chose projects based on the electoral map, we are determined to deliver projects that ensure people spend less time in their cars and more time with their families,” she said.
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