Sir, - Drapier suggests (The Irish Times, July 31st) that Mr McCreevy's performance as Minister for Finance merits plaudits because "he is behaving with the public finances the way most sensible people behave with the family finances". Whether or not that is a matter for congratulation is highly questionable.
It is alarming that neither the Minister's Dail colleagues nor his officials seem to have brought home to him that family and national finances are very different. What is prudent for the one may be quite harmful for the other. For example, a naive "good housekeeping" approach to the national budget often leads to Micawberism, the misguided notion that balanced budgets ensure a prosperous and well-run economy. Mr McCreevy's proposed establishment of a managed fund to prepay the nation's future pension bills is based on a similar fallacy.
It is misleading to claim that such a fund represents a departure from "pay as you go" and that it will lighten the future burden of an ageing population. In real terms PAYG will still apply. In the year 2020 or 2030 the subsistence paid out to State pensioners will have to be provided out of GNP in the year concerned. Any previous contributions made to the fund by the future pensioners and by other taxpayers will not necessarily add to the output of goods and services available in these future years.
They could ease the burden somewhat if invested abroad or used to reduce the country's foreign indebtedness. However, levying taxpayers with an extra 1 per cent of GNP annually in order to finance the share and property purchases made by the State pensions fund could well damage Ireland's competitiveness.
At the least Mr McCreevy's proposal needs to be subjected to extremely critical scrutiny before legislation to bind future governments is attempted. I would suggest that it is no accident that this purported solution to the so-called pensions time-bomb has not been resorted to by other European nations. -Yours, etc., Jack Lewis,
Coliemore Road, Dalkey, Co Dublin.