The grass at the Northam Race Club is lush and green, and not just because it has been a mild summer this year.

The club, in the Avon Valley east of Perth, benefited from a Royalties for Regions-funded grey water project, which dramatically reduced its annual water bill.

"Basically, before the project we were spending $300,000 to $400,000 on water, up to $500,000," club manager Nicole Bell said.

"We were 100 per cent reliant on scheme water to irrigate.

"Following the establishment of the dam, we've been able to reduce that to well under $100,000 per annum."

Northam Race Club slashed its annual water bill after Royalties for Regions paid for a dam. ( Facebook: Northam Race Club )

But almost 500 kilometres north-east in Kalgoorlie, another Royalties for Regions (RfR) project was highlighted in the recently-released Langoulant report into the Barnett Government's fiscal management of the state.

The Ray Finlayson Sporting Complex was cited as an example of waste in public spending, where good governance practices had broken down.

"A $16-million project. Did we need it? Probably not," City of Kalgoorlie-Boulder chief executive John Walker told the inquiry.

"We had quality sporting fields already. But because there is a lot of money there, it had to be spent."

A damning assessment

Almost 10 years since the $1 billion-per-annum fund dedicated to regional spending cemented a government alliance between the Liberals and Nationals, views on the benefits of the policy remain polarised.

The Langoulant report delivered a damning assessment of the fund, which saw "programs being implemented without sound planning — and in some cases, none at all — which has led to developments which don't deliver their intended objectives and left liabilities for government at the state and local government levels".

Report author John Langoulant found the scheme "drained" the budget and the need to spend annual allocations rather than fund well-targeted and managed projects was a "major mistake".

The report also found the fund now needed "major surgery".

Sorry, this video has expired Premier says report highlights 'incompetence of a grand scale'

Premier Mark McGowan has rejected Mr Langoulant's recommendation to review the ongoing rationale for a hypothecated program directed toward the regions, although his Government will adopt other proposals to tighten scrutiny.

But it is Mr McGowan's ongoing dedication to spending up to a billion dollars in mining royalties specifically on the regions that continues to divide opinion.

Wasteful or necessary?

The Liberals have flat-out called for the program to be scrapped.

But former WA Nationals MP Wendy Duncan, one of the architects of RfR, said it was just as necessary now as in 2008, when she and former party leader Brendon Grylls devised the policy.

Ms Duncan said the demographic imbalance between city and country meant most politicians came from Perth.

Wendy Duncan says a mechanism is needed to help regional areas get the attention they deserve. ( ABC Goldfields: Nathan Morris )

"They quite rightly are going to be focused on their own electorates as far as trying to get funding for projects, which means logically the regions will miss out because of lack of representation in government," she said.

"This is one way to ensure politicians look up from their local navel and take part in decision making about funding being directed out into regional areas."

Ms Duncan said that was even more relevant following an electorate boundary change at the last election, with an extra MP from the metropolitan area now in the Legislative Assembly, and one less from the regions.

"While ever our population remains so dramatically out of balance, we really have to have some sort of mechanism to make sure regional areas get the attention they deserve," she said.

Former Shire of Derby-West Kimberley president Elsia Archer said RfR made a huge difference to community groups, sporting clubs and small country shires.

"A lot of the Kimberley shires don't have a big rate base, so we don't have a lot of money," Ms Archer said.

"So it was always handy."

Call for more 'sensible' spending

The main argument against the scheme was that if a project had a strong business case, it should not need a hypothecated fund to get it over the line.

Mr Langoulant underlined the massive opportunity cost, saying huge resources were wasted on "knee-jerk" projects, instead of building significant regional infrastructure with lasting capital value.

John Daley, chief executive of the independent thinktank the Grattan Institute, found in a 2011 report that excessive RfR funding was being spent on regions like the Pilbara instead of fast-growing areas of greater need like Mandurah, Perth and Bunbury.

John Daley says Royalties for Regions penalises Perth residents. ( Four Corners )

These days, Mr Daley said at the very least the scheme needed a substantial re-think.

"When you have a hypothecated fund like this, you essentially make it quite likely you will spend more than is sensible relative to the competing demands for that money from other places," he said.

"The whole point of regular prioritisation and spending decisions in everything from health, to schooling, to policing, to whatever else, is precisely to come up with a sensible and fair allocation of the money relative to need in each of the areas.