Friday 28 November 2014

Marc Coleman: Left-wing are skewing the vital debate on pensions

Published 18/11/2012 | 05:00

The generous funding of public pensions is an affront and an insult to taxpayers.

If you see a flock of seagulls flying low in circles, it's a sign a bad storm is coming. And if you read a pile of papers about pensions policy from the ESRI and TASC, it's a sign that a bad storm is coming. A different kind of storm: A smash and grab raid on private sector pensions.

Last Sunday's Week in Politics on RTE television showed how the debate on public policy is moving rapidly in this direction. Using the questionable terminology of "tax expenditures", contributors steered viewers towards the view that the real problem was not the €129bn public pension liability but the fact that those who impose no burden on the taxpayer at all are the real problem.

By merely wishing to keep some of the income they earn to fund their retirement the self-reliant are, we were told, imposing a "tax expenditure" on the State. According to this upside-down logic – which dominates thinking in the ESRI, TASC and it would seem RTE – our income does not belong to us at all.

This view has best been articulated by Vincent Browne, who believes that when those of us in the private sector earn money it belongs automatically to "society". But at least Vincent is a disinterested party in this debate, whereas one could argue that those who work for the ESRI, being in receipt of public service pensions, do have an interest, even subconsciously, in the funding of those pensions.

For some, when they use the word "society" they really mean the state and its institutions. By allowing us to keep some of what we earn, the State is somehow lavishing money on us. That this thinking now dominates "public" debate is unsurprising: Look at RTE's dominance of current affairs debate.

Then look at the construction of RTE panels on pensions policy: The odd token representative of the private sector aside, the vast majority of participants are academics, politicians or members of what is now called "civic society". In other words, direct or indirect beneficiaries of the State. Like the former German "Democratic" Republic, "debate" on public policy consists not of real debate but of a negotiation between various shades of left-wing opinion on how the rest of us should fund the State they love so much.

The fact that there was no one on the Week in Politics to raise the issue of the public pension liability is no reflection on Sean O'Rourke, by the way. Rather it reflects the left-wing culture that now clearly dominates our media. Universities, despite their high level of education, ran up a combined pension deficit of €800m. That they, and the ESRI, were able to lobby the last government to bail out that deficit stretches credibility. That they are now chosen by RTE to tell the rest of us – who fund our own pensions – that the State is doing us a favour by letting us keep what we spend on our own retirement stretches credibility beyond belief.

Neither the scale of the public pension liability, the rapid escalation in its annual cost, or the recent findings of the Comptroller and Auditor General in relation to mismanagement of public pensions were mentioned on the programme. Nor was the biggest item in pensions news this week: The €748m pension deficit at Aer Lingus. Unlike those in the private sector, public or semi-state employees have a weapon they can use to force the Government to bail out a deficit in their pensions: Strike action. Whether by the less likely route of a direct bailout by government or depletion of Aer Lingus reserves, or by the more likely indirect bailout via hikes in Aer Lingus fares and in fees and charges at Dublin airport, taxpayers and consumers with no secure pensions of their own will pay yet again for the bailout of those within the state tent.

Let's be very clear: For frontline teachers, nurses, gardai, pensions are a fair reward for a lifetime's dedication and service and no one begrudges them. Nor should they be cut. But above a certain threshold, €40,000 a year perhaps, the generosity of public pensions funded by taxpayers who fund their own is becoming an affront and an insult.

In 2010 the C&AG put our accrued public pension liability at €129bn; exceeding our national debt and four times the promissory note burden. And the promissory note has received much more media attention. According to KPMG, our Social Insurance Fund will have a deficit of €324bn by 2066.

Those are future contingent liabilities. But the "here and now" annual running cost of public pensions is also staggering: From €1.4bn in 2006 to €2.4bn, it has risen 66 per cent in just five years.

That the modest sums, of their own money, that the State allows private sector workers to keep should be the focus of debate while silence reigns on these vast sums is an indictment of how biased to the left national debate is. And bias in debate leads to bias in policy: €900m was taken from private sector pension funds last year. Cuts in the tax rate and income ceilings for pensions relief in the next Budget may have a similar impact. By contrast, a "reform" of public pensions cut Ray Burke's annual six-figure pension by a mere euro per day.

Last week the ESRI published three papers on pensions policy, under the heading 'Analysing Pensions, Modelling and Policy issues', that were worthy in their own right. But none of them addressed in any substantial way the monstrous challenge facing us on public pensions. Like universities and RTE, ESRI staff benefit, directly or indirectly, from taxpayer support for the funding of their pensions. Last Sunday's referendum result showed how public trust in state insitutions is collapsing. That process now looks like accelerating.

Marc Coleman presents 'Coleman at Large' each Tuesday and Wednesday from 10pm on Newstalk 106-108fm @marcpcoleman

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