Silo art in Merredin as a part of the FORM Silo Trail. Credit:Hannah Barry According to the WA Country Health Service, "the investment was set to support the significant refurbishment of the hospital's emergency department, and bring together allied health and outpatient services in one convenient location." But as we spot the "construction to be completed in 2018" sign, Morris says into the microphone: "The hospital was set to be upgraded with a $20 million Royalties for Regions investment, but now we don't know where that's heading 100 per cent." Up until this year, the scheme has pumped billions of dollars into infrastructure projects and upgrades – however, as we continue our tour, Merredin gives a distinct impression things have stalled.

The Merredin District Hospital was due an upgrade under the scheme. Credit:WA Country Health Service At one end of town, the property market is thriving. Sprawling homes cover around five acres, with gorgeous limestone, trimmed lawns and a farmer's ute parked on a paved driveway. The latest home in the area just went for a cool $800,000. At the other end of town, buildings sit half-finished, abandoned buildings continue to collect wheat dust and flashy Barnett Government signage sits out the front of empty blocks of land. Regional Development Minister Alannah MacTiernan's ongoing criticism of the scheme, State Treasurer Ben Wyatt's warnings of a tightened wallet and a cloud of uncertainty over a number of projects has contributed to a tense atmosphere in regional WA over recent months. As whispers of a Royalties carve up began to circulate, towns like Merredin have been left in the lurch - and on Thursday, locals finally had their fears confirmed.

Thursday's state budget revealed the fate of the scheme responsible for sinking $7 billion in investment into regional WA to date, and confirmed the State Government Government would instead be looking to spend $4 billion over the next four years. It was reported $861 million of the fund is now set to be redirected elsewhere, and the existing fund will be aimed at funding ongoing costs - not new infrastructure or programs. The treasurer denied the program was "dead" and simply needed a "financial re-think". "There is plenty of good news for regional WA in our Government's first Budget - we're investing in initiatives that will grow and diversify the economy from Broome to Esperance," he said. "This is a Budget that strikes the balance between retaining critical existing regional projects and fulfilling our Government's job-generating election commitments in the regions."

Premier Mark McGowan echoed Mr Wyatt's sentiments and said it was important to focus on existing assets rather than looking at new projects. "The Royalties for Regions fund, framework and legislation will continue, as we have made clear, however we are ensuring funding is spent wisely on projects that people really need," he said. "We want to unleash the economic potential of regional WA through tourism, agriculture, aquaculture and other growth industries to create long-term jobs for all Western Australians." The fund redirection of the Royalties for Regions program could partially be due to its more controversial spending habits and Minister MacTiernan's belief the scheme failed to focus on local employment and instead attempted to promote town "beautification". But Mr Morris doesn't see it that way.

"If you look what's happened in Merredin, Royalties for Regions has provided concrete beneficial things for our community, which the ongoing of provisional services won't do," he said. "It's the same old, same old. That's a concern, if we're not going to try and make it a better place to live, we can't just try and maintain it the way it is. We need to get better. "The government wants to stand up and say they want to attract industry to these places, but they're not acknowledging we've got to make these places a better place to live for these workers. "If we're going to have to cut back on a lot of stuff, people will ask if regional Australia is the place to live." Mr Martin highlighted concerns with existing projects due for approaching opening dates, and said the State Government still had not offered clarity on their future.

"One of the concerns I've got is this: projects – such as retirement villages and ambulance facilities – we still don't know if that is going to be halted. Stuff that's in the pipeline now – are those in jeopardy? Or do those successful applications just get thrown out now? We still don't know," he said. Shire of Merredin chief executive officer Greg Powell said the town's retirement village plan was of serious concern. "The key program for us at the moment is the one revolving around our aged care program – involving 11 shires and around 75 houses," he said. "That project has been tendered for and tenders are currently under assessment. It's a $22 million project and it would be a significant blow to the region should that funding be pulled. "Of course, it's what to be expected and it's what has been telegraphed since the election.

"We were told there will be a shift from innovative programs into mainstream services such as health, education and transport... but there's definitely a concern for Merredin. "You've got to provide an appealing well serviced environment. It's not just a matter of employing the employee, you're employing the family... it becomes extremely difficult to attract people to the region." Mr Powell said he was also concerned about budget's turn towards the Peel region, away from the Wheatbelt and the Pilbara. "We're going to have to ask the question about the direction of the funds in the future. It seems like a fair bit of funding will be allocated into Labor seats in the Peel region," he said. "Here in Merriden, we're a Nationals seat with a large majority. We are not in any sense of the word a marginal seat, so it's going to be difficult for us to attract funding."

Nationals WA leader and member for the Central Wheatbelt Mia Davies also did not hold back on her assessment of the budget's carve-up of the scheme, calling it "treacherous" and "cruel". "Royalties for Regions was created by the Nationals to fund regional development projects and diversify regional economies on top of usual government funding," she said. "Instead, Mr Wyatt is raiding the program to plug holes in his Budget and pay for ongoing government services and infrastructure projects in transport, health, water and education. "Royalties for Regions is dead in all but name. What's worse, the money saved by using Royalties for Regions to pay for core government services is being ploughed back into Labor's election promises - which have blown out by $1 billion in less than six months." Ms Davies said the budget was nothing short of an "unprecedented attack on the bush".

"Today's cruel cuts throughout regional Western Australia will do nothing to assist the state's finances, with debt predicted to blow out by $11 billion over the next four years... Labor's regional MPs have been exposed as imposters. "For them to stand and applaud a budget which discriminates against the constituents they profess to represent is treacherous." Loading "Labor came to power promising to create jobs and reduce State debt. "They have failed on both accounts."