Thursday, May 15, 2008

Funds For The Future… Or Future Election Promises?

The establishment of the three new special funds for infrastructure, education and health is essentially a good idea. One of the greatest failures of the past generation or so has been the failure to adequately invest in those three crucial areas of our economy. National infrastructure has been either neglected or left to private enterprise. Universities have suffered a crippling erosion of capital investment, and as for hospitals, all you have to do is pick up any newspaper and read the headlines. This new initiative holds the promise of placing future infrastructure investment on a sustainable basis.

While they will be run by the trustees of the Future Fund, these new funds will not be set up in the same way. Where the Future Fund has its capital locked away, the new infrastructure funds will have their capital available for drawdown and expenditure. What’s more, the funds can be expended at any time and for any purpose approved by Cabinet. This is a significant difference from the Future Fund, which can only be used for the purpose for which it was intended.

The opposition has seized upon this reality and promptly accused the government of setting up a slush fund which can be used at election time for good old fashioned pork-barreling. And it’s true. There is nothing to prevent that other than the government’s good intentions, and what the prime minister promises to be layers of accountability and public scrutiny, which have yet to be set up, or even defined. Each fund will have its own independent board to make recommendations for the use of the funds, but the decisions will be taken by Cabinet.

In effect, the government is asking us to trust them on this. Of course, the opposition might also want to remember that as long as the funds remain unlocked, it means that the Coalition can also do its own pork-barreling when it comes to making election promises.

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