Budgeting for Public Investment

(This is a current page, from the Patterns of Power Edition 3 book contents.  An archived copy of this page is held at http://www.patternsofpower.org/edition03/6714.htm)

Investments, in research or infrastructure for example, may be economically justifiable in terms of enabling future growth (3.2.8) or as a stimulus to reduce unemployment during an economic downturn (  For each project, though, politicians also need to gain political support, which partly depends upon their ability to explain the economic case and partly upon it being seen to have wider benefits.  People can sometimes be persuaded to support a project on the basis of improved quality of life even if the financial return on investment is meagre or difficult to prove.  One example was described in the History of the De La Warr Pavilion: a building whose purpose was “to provide accessible culture and leisure for the people of Bexhill and beyond and so regenerate the economy of the town and the surrounding area”.

It would be prudent to budget to pay off any debt incurred for an infrastructure project by the time when the investment ceases to be of benefit, or has to be replaced: ‘accounting for depreciation’.