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Emergency Services super fund plundered to pay for hospital upgrade

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Henrietta Cook, Ben Butler

The Royal Children's Hospital.

The Royal Children's Hospital. Photo: Ken Irwin

Editorial: Where do we draw the line on public monies?

The super fund of police, firefighters and ambulance staff was raided to fund the Royal Children's Hospital project, Fairfax Media has learnt.

Money from the Emergency Services Superannuation Scheme formed part of more than $1 billion the Brumby government pumped into the project, which was billed as privately financed.

In 2007, the government's Victorian Funds Management Corporation lent the money - held on behalf of state sector clients - to the private sector consortium building the hospital.

VFMC manages $41 billion for government and quasi-government clients, including ESSSuper, the Justice Department and the TAC.

Police Association secretary Greg Davies said state governments should not be raiding the superannuation fund of police.

''This had better not have jeopardised the superannuation future of any police officers or emergency service workers because while they are all worthy projects, they have a budget to operate with.''

The Victorian secretary of the Community and Public Sector Union, Karen Batt, called on Spring Street to return control of ESSSuper's $19 billion to its board.

''We believe the fiduciary and governance duties of the elected board members are paramount, and they should be making the decisions,'' she said.

She welcomed inquiries announced this week into the VFMC's investment in the hospital and other government projects.

An ESSSuper spokesman said that in 2006, VFMC gained control of the super fund's defined benefit assets, which are used to fund the retirement of emergency workers.

''As a result, ESSSuper's defined benefit funds are a significant investor with the VFMC and we confirm that some of these funds are invested in bonds associated with the Royal Children's Hospital,'' he said.

Any shortfall in the defined benefit scheme would be made up by the government.

Former Labor treasurer John Lenders said he had no recollection of the VFMC being involved in financing the hospital.

''Any suggestion that the VFMC was directed to prop up a PPP [private-public partnership] is just nonsense,'' he said on Tuesday.

In 2008, then health minister Daniel Andrews was asked in Parliament to explain the government's financial contribution towards the construction of the hospital redevelopment.

He replied: ''As a PPP, the government does not directly pay anything during the construction phase.''

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