Requiring just one quarter of all new pension contributions go into new infrastructure investment – in exchange for a guaranteed and proper return, maybe with an upside if something went especially well, is a wholly reasonable condition of giving pension tax relief.
That\’s the finance part he doesn\’t understand. If infrastructure investment could provide a guaranteed and proper return, with that option on the upside, then you wouldn\’t need to direct investment into it. There\’s hundreds of billions out there crying out for such guaranteed and proper returns. You could pave the country three times over with what people would be willing to invest in a proper and guaranteed return.
The problem isn\’t finding the money: it\’s creating the guaranteed return. Which is the part that he and Colin Hines haven\’t in fact addressed except for some wibble about….well, what have they actually said about where the guarantee comes from?
So long as these funds were invested witha view to returns then they’re not part of the revenue cycle and should not be considered part of the deficit or government borrowing. It is ludicrous that such stupid accounting definition are destroying real lives and constraining rela growth – precisely because the government is slashing investment now to try to balance books to meet these accounting rules, and is destroying lives in the process. No business is constrained by such stupidity. When they invest the profit and loss account is not punished – the asset is put on the balance sheet and the behaviour is applauded. That should be true for government too.
And that\’s accounting that he doesn\’t understand. Sure, let\’s have a proper balance sheet for government. Let\’s put the assets onto it. And given that it is indeed a balance sheet then we\’ve also got to put the liabilities onto it. You know, all those unfunded pension rights for example? Look a bit sick at that point, wouldn\’t it?
As to his not understanding economics, well, blogs passim and all that.