Arrest guy stupidly wasting first of government funds (8)
I believe the answer is:
treasury
'funds' is the definition.
(treasury is a kind of funds)
I don't understand how the remainder of the clue works.
(Other definitions for treasury that I've seen before include "The funds available to government" , "The funds of a state" , "Repository of government funds" , "Government financiers" , "Bank" .)