This town was ecstatic when it won federal funding for its airport, but the cash is yet to arrive (2024)

The federal government has refused to explain whether it's paying successful recipients of an infrastructure grants scheme as at least one community project faces a major cost blowout due to ongoing delays.

Regional Development Minister Catherine King declined to clarify when the government would hand over cash to 40 recipients of the first $300 million round of the Growing Regions Program, despite announcing the grant allocations in May.

At the time, leaders in Kununurra, 3,000km north of Perth, were elated to find out they were awarded $13.5 million to lengthen the runway of a local airport, potentially paving the way for cheaper flights and direct east coast connections.

The announcement came three months after the government had originally planned, adding stress to staff at the Shire of Wyndham in the East Kimberley, who had arranged for the project to be shovel ready in mid May, in line with the grant program's strict requirements.

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Shire President David Menzel used a trip to Canberra last month to request the funding be moved forward, in a bid to ensure works could begin before heavy wet season rains begin in November-December.

Cr Menzel said the lack of clarity meant the shire was forced to scrap plans to start construction, pushing it back at least a year, with the planned contractor moving onto other engagements.

"You would hope that process would have been worked out by now," he said.

"We'll try and work constructively with the Commonwealth on this and I don't know if I want to apportion any blame, but it's unfortunate it's come to this."

Cost blowout looms

The shire president expected the airport upgrade's costs would increase 10 to 15 per cent, due to inflation and the building contractor's redeployment.

He said it was also a blow for local businesses, with the government's rationale for the delay still unclear.

"Our local subcontractors to this project would have been pencilling in quite a significant amount of work to go with this project," he said.

"I'd like to think it's something innocuous as a lack of resources to get the work done," he said.

Minister deflects questions

The ABC sent detailed questions to Ms King about what's causing the delay, whether the Commonwealth would cover additional costs and to what extent other recipients were affected.

A spokesperson responded with a statement:

"We are working with the Western Australian government to establish a funding agreement as quickly as possible to deliver Stage 2 of the East Kimberley Regional Airport Upgrades, which secured a $13.5 million federal grant in May under Round 1 of the Growing Regions Program," the regional development minister said.

"It is normal practice for Australian government programs to require a funding agreement be in place, with agreed payment milestones, before payments are made."

The Growing Regions Program replaced the former Coalition government's Building Better Regions Fund, which was accused of favouring Nationals seats, especially after a critical report by the Australian National Audit Office.

A separate audit report on the design of Labor's Growing Regions Program in May found bureaucrats were aware that a new two stage assessment process, involving a ministerial panel, risked blowing-out grant delivery timelines.

The grants, from $500,000 to $15 million, were open to non-profits and local governments to get projects off the ground that improved livability and revitalised regional areas.

The government received 650 applications for round one and the total requested funding was $2.7 billion, meaning it was massively oversubscribed for the money available.

Member for Durack Melissa Price criticised the government for the delay in a statement to the ABC.

"Now, after announcing recipients in May, it appears the minister is refusing to sign off on the funding," the Liberal MP said.

"The Albanese government continues to starve regional Western Australia of much needed economic development funding with its abolishment of, or failure to deliver, grants promised to the regions."