Tuesday, December 27, 2011

Funding versus investing decisions

One of the more annoying examples of mismanagement is decision makers insistence of mixing funding decisions with investing decisions. This seriously erroneous practice is endemic throughout many organisations but festers most prominently in government. Take this article published in the Sydney Morning Herald . Aside from it being an hilarious example of an investment decision being woefully inadequate to meet the policy objective, the retort made by the leader of the opposition is even more humerous. How is retraining laid off employees and supporting business innovation a mutually exclusive decision to the original investment decision of providing a subsidy for relocation to regional areas? I guess one could hope that the statement to "use the money" from the axed programme could be a misquote but I doubt it.

The point here is not whether any of these investment decisions actually helps the policy objective of spreading the population across the state of NSW but that the investments described are not mutually exclusive and hence should be invested in based off their own merit and funded accordingly. By making the statement that you would scrap one investment so you can invest in another you are making the erroneous assumption that using the money saved from one justifies the investment in another. What about just not spending the money at all? The fact that you have money to spend is not an argument to spend it. Each investment should have its business case argued for, not subsidised by the fact that you're not going to spend the money on something equally moronic.

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