The 'Now' generation should enjoy the races - because we've left them our debts
Published 31/07/2014 | 02:30
The Galway Races will see punters wager more than €7m on the track at Ballybritt. By Sunday evening there'll be those that have won big or lost heavily. The intoxicating atmosphere of gambling is unequalled in the Irish racing calendar. It got me thinking about life's winners and losers over the past six years.
The ESRI now tell us the preservation of welfare rates meant that middle-income earners shared an unequal burden of rectitude. This is based on like-for-like general comparisons of different income groups between 2008 and 2012. Altered taxation and income cuts don't take account of those who were completely upended by the crisis, debt distress resulting in loss of job, business or home.
Transformational personal family circumstances can't be statistically documented. My overall take is that anyone who rolled the dice between 2000 and 2006 in acquiring any assets were pole-axed by being in the wrong place at the wrong time of their investment - be it in a business acquisition, speculative investment or purchasing a home. Bad timing that imploded on those 40+ midlife risk takers.
As we emerge maybe this cohort weren't actually life's biggest losers. Public policy decisions are based on chronic short-termism, focusing exclusively on expedient political requirements of the next election. This means THE burden shifts to the twenty-something next-generation.
Welcome to the "gazumped generation". A series of government decisions has forward sold their prospects of enhanced living standards. The first liability they will take on arises from the promissory note deal upon the liquidation of IBRC. €25bn of bonds will have to be repaid from 2038 onwards to avoid us paying €3.1bn annually this decade. Next up is the decision to sell the National Lottery proceeds for €405m. This 27-year deal with An Post, Camelot and Ontario Teachers means that annual income is foregone. Similarly, the sale of Bord Gas Éireann for €1.1bn to the Centrica consortium means a vital utility will be subject to international control and profiteering in decades ahead. Great in the short term these decision are shifting the onus on to tomorrow's taxpayers.
Last week, we learned from German politicians that there's no hope of sovereign debt relief on our bank bailouts of €64bn. Therefore newbie taxpayers will pick up €8bn a year of servicing our national debt of €200bn, which stood at a mere €40bn in 2006. The same suckers won't benefit from affordable housing. House prices are now heading full steam back towards bubble prices in Dublin, where seven out of every 10 new jobs are being created. The 25pc home price hike will exclude many potential first-time buyers from owning a home and have direct knock-on effects on future rents. These twin developments of continual high taxation rates and dearer accommodation will stymie their living standards for two decades.
The new working poor will also be deprived in the context of pension provision. By 2046 there'll be 1.4m pensioners (dependant persons over 65 years) who have to be maintained by those of working age. Yet only 40pc of private sector workers have pension provision beyond the State Old Age Pension entitlement. We don't have an opt-in pension structure with compulsory employee involvement. Today's new adults will have to work till they drop to provide for their parents' old-age and their own livelihood.
We have attempted to resolve the immediate crises by mortgaging their future. They seem blissfully unaware of their future inheritance, laden down with liabilities. Even worse, we have wasted opportunities of the current crisis to reform our worst past traditions. Our political culture of clientelism has never been more endemic. Ministers and TDs are more addicted to vote winning gombeen clientelism than ever, before. The John B Keane parody of parish pump politicos has never been more apt.
We have failed to overhaul our public service structures. We persist with contracts for life employment instead of five or seven-year term agreements which would allow for the prospect of severance. Robert Watt still strives to attain a system that could rationalise outdated services through redundancy or to terminate jobs for those who chronically and consistently underperform.
We continue to pay unearned annual increments, irrespective of performance. This facilitates a culture of internal promotion and exclusion. Old ways are returning, with internal appointment of Derek Moran as secretary general of the Department of Finance.
Have you noticed how the insider elites are regaining their equilibrium? Hospital consultants will have salaries restored; no doubt barristers will succeed in watering down reforms of the legal professions to safeguard enormous incomes.
Senior civil servants are head of the queue to recoup previous pay and perks. This amounts to a poisoned legacy which no generation has ever passed on to the next.
The biggest losers were not those mid-lifers who took the hit upfront over the past few years. Reserve your greatest concern for their adult children who will pick up our bills, through diminished take-home pay and deferred costs of living. They're the 'NOW' generation living in the moment.
Let's hope at least they enjoy the races.