Announcing in his budget speech that $40 billion was to be shovelled into three new government investment funds, Wayne Swan admitted: “This money is not ours — it belongs to the Australian people.” To which a lone voice responded: “Give it back, then!”

I blame Peter Costello, for it was he who set up the government Future Fund as a repository for budget surpluses. That Fund is now full, so we are to have three “sons of Future Fund” — one for “infrastructure”, one for health and one for education.

Wayne won’t say how or when this money is to be used. But as Malcolm Turnbull told Kerry O’Brien, any private financier who asked investors to put their money into a fund whose purpose remained unspecified like this would get laughed out of Martin Place. The difference, of course, is that the federal government doesn’t have to ask us for our money — it just takes it. Wayne says this $40 billion belongs to the Australian people, but he and we know that possession is nine-tenths of the law, and the cash is all in his hands.

Let’s accept that, as good “fiscal conservatives”, the government cannot just “give this money back” in the way that lone voice suggested (although when Wayne comes to spend it, won’t it increase demand in the economy just as much as if we spent it ourselves?). But if the money has to be set aside rather than spent, why is it better for the government to save our money for us, rather than leaving us to save it for ourselves in our own superannuation or medical savings accounts?

There were some good things in this budget — the beginnings of an attack on middle class welfare; the promise to reform the tax and benefit systems; the new welfare card for irresponsible parents. But there were some real gaffes too.

The raising of the Medicare surcharge threshold will drive thousands of people out of private medical insurance and into the public system at a time when rising medical costs and an ageing population should be leading government to induce us to move in precisely the opposite direction. Trendy talk about encouraging ‘preventive health’ is just a way of avoiding the real issue, which is that sooner or later, we are going to have to start saving and insuring for our own health needs rather than putting impossible demands on a collapsing public system.

And the softening of Work for the Dole (a cave-in to a welfare lobby which has never accepted the principle of Work First and which still pines for the days of unconditional welfare) is a disaster. We still have 1.7 million Australians — 1 in 6 of the working population — living on benefits. The government says it is going to train these people rather than push them into working, and it promises to blow $880 million on 238,000 new training places. But this is more trendy talk. The much admired James Heckman says it is a “dangerous myth” to think training is the answer to low-skilled joblessness, and OECD data demonstrate that schemes like these have little impact. This money will be wasted and welfare dependency will get worse.

These are our core social policy challenges — to avert a future medical crisis by getting more people to take responsibility for their own health care, and to reverse the inexorable growth of welfare dependency. By its actions yesterday, it seems the government hasn’t begun to grasp the nature or scale of these two problems.