Debt costs outweigh WA future fund returns A FUTURE fund designed to quarantine some of Western Australia's mining royalties for future generations isn't making enough cash to offset the state's increased cost of borrowing, the premier says. The fund was the centrepiece of the 2012/13 budget and is being established with more than $1 billion in seed capital over four years, mainly using money from the Royalties for Regions fund. While it's forecast to grow to $4.7 billion within 20 years, opposition treasury spokesman Ben Wyatt has cast doubt on whether it will even make a return. Mr Wyatt says it is actually being funded by borrowings, which are used for investments, and then placed in a marginally interest-bearing account. But the cost of debt had gone up with the state losing its AAA credit rating, so the fund was losing money, he said. Liberal leader Colin Barnett conceded the fund wasn't making enough to counter higher borrowing costs, but said the loans were for capital works projects. "We pay a little bit more on what we borrow compared to what we receive from the future fund," Mr Barnett told Fairfax radio. That is true, but we're not borrowing, as such, to put into the future fund. Mr Barnett said only one per cent of the fund would come from royalties after the seed capital was injected. The premier said Mr Wyatt "could argue" the remainder would be debt "but that doesn't defeat the need for a future fund." "It's all in one big pot," Mr Barnett said.