“One of the more spectacular bits of fiscal humbuggery we have ever seen in this country” is Laura Tingle’s AFR description of the Howard/Costello money jar approach to having a large surplus and eating it too.

In the same tabloid, former NSW Auditor-General Tony Harris bells the most cunning part of the plan:

The government can safely promise to establish numerous money jars for popular causes and dedicate their future income because ministers know they can cut the normal budgetary allocations to the same causes if circumstances warrant it.

Those in the university sector who rapturously welcomed the higher education fund must have believed its income would always be additional to normal budgetary allocations. But ministers made no such promise.

But the man with the Magic Pudding surplus can pull more strategic political tricks than that out of his growing variety of “future funds”.

Firstly, it makes possible an election platform that promises many billions of dollars of necessary investment initiatives without incurring immediate Reserve Bank wrath.

Secondly, anyone remember what happens to NGOs that criticise the Federal Gvernment? Right. So hands up all the university vice-chancellors who’d happily see their institution’s name attached to criticism of government policy just when they’re begging for one of Costello’s research infrastructure grants. Ditto health professionals seeking a slice of the “Health and Medical Investment Fund”, ditto lobby groups and governments wanting some of the mooted “economic and social infrastructure” fund.

Thirdly, it’s a nice way of camouflaging the central problem in funding Australia’s inadequate education, health and infrastructure. As Macquarie Bank’s Rory Robertson has definitively explained, Canberra’s share of the national pudding is running at three-decade highs while what it passes on to the states is running at three-decade lows – GST pea-and-thimble tricks notwithstanding. That’s partly why Canberra has so much money and state services range from average to absolutely appalling.

Fourthly, the money jars mean the Magic Pudding spawns Magic Pork Barrels – a never-ending source of Commonwealth largesse to be trumpeted by smiling federal ministers being photographed with grateful recipients.

Fifthly, it’s one more step towards the One True Way for the Great Centraliser. The Coalition has been happy to use funding power to enforce its IR ideology on universities and state construction contracts, so one presumes the multiplying funds will be capable of achieving the same ends among those applying for grants.

And finally, it partially satisfies Costello’s stated initial reason for setting up the Future Fund, as reported in the up-coming Howard biography – it’s a way of keeping the hands of Kevin Rudd and John Howard off the money.

It could be worse, but it could also be better.