Punishing the young for the sins of their elders

INSIDE POLITICS: Massive intergenerational inequity is bad for social cohesion and even democracy itself

AFTER 18 months in office the Coalition is finally coming face to face with the reality that radical and painful reform is the only way the country will emerge from the economic crisis that struck like a whirlwind four years ago.

The Taoiseach and his Ministers tried to shrug off the coded criticism of the International Monetary Fund and the newly established fiscal council over the past week, which suggested they have not been nearly bold enough in their approach.

However, as the budget process got under way at the first Cabinet meeting after the summer break on Wednesday, the penny began to drop and Ministers were sent scurrying back to their departments to find extra cuts.

The big question facing the Coalition is whether it has the nerve and the political ability to make real inroads into the unsustainable gap between public spending and tax revenue rather than merely tinkering with the problem.

This also represents a fundamental challenge for Irish society. Voters face a stark choice of backing the kind of measures required to protect the common good or allowing an array of competing interest groups to tear the country apart in defence of entrenched privilege.

So far there has been a great deal of talk from Ministers about reform but they have not done much more than coast on the spending cuts and tax increases introduced at the height of the crisis by the late Brian Lenihan.

A deal with the EU on the bank debt will not solve the underlying problem in the public finances and it’s about time Ministers stopped deluding themselves and the public that it will. Of course relief on the bank debt will be a help, but unless the public finances are sorted out, it will be meaningless.

Minister for Health James Reilly, who has been the butt of much criticism in recent months, deserves credit as the only Minister to have publicly acknowledged that the current strategy of protecting pay and pensions for all public servants, regardless of income, means that spending cuts are falling on the weakest members of society.

If the best that Brendan Howlin, Minister for Public Expenditure and Reform, can do in the drive to tackle the annual €1.5 billion allowances bill for public servants is to save €75 million by curtailing allowances paid to new entrants, it doesn’t say much for his department’s prospects of achieving worthwhile savings.

It seems that official strategy is to punish the young, at a minimal saving to the exchequer, while protecting all the privileges of their elders. It is astonishing and grossly unfair that under this Government’s plans the salaries of young teachers will be less than the pensions paid to retired teachers and the same will apply in other areas of the public service.

It is some commentary on our society that it pays more to people in retirement, who generally have their families reared and their mortgages paid off, than it does to those who are at an early stage in their careers and facing large financial and family obligations.

The oft-quoted principle of “protecting the most vulnerable in our society” is often a cloak for defending the interests of the privileged at the expense of the genuinely vulnerable. The massive intergenerational inequity, which is being exacerbated by Government policies, could ultimately have devastating consequences for social cohesion and for democracy.

The young have already been burdened with the massive national debt run up by their profligate elders. As if that was not enough they are also facing a lifetime of lower salaries and far inferior pensions than the generation who crashed the economy into the rocks.

The tragedy is that a majority of voters probably do want to see the Government face its responsibilities and take the required tough decisions in the national interest in a spirit of fairness. The problem is that most of the pressure on TDs comes from vocal minorities and not the silent majority.

For instance, many outside observers listening to the shrill voices calling for a No vote in the fiscal treaty referendum concluded that the treaty was going to be defeated, yet nothing of the kind happened. A solid 60 per cent of those who voted backed the plan, austerity measures and all. That should stiffen the resolve of Government TDs, who feel under siege by interest groups and the media over the budget, to do what is right.

In order to bring the public with them, politicians will need to demonstrate once and for all that they are also prepared to take a serious amount of pain. Politicians’ salaries have come down significantly since the start of the crisis but they are still paid a handsome basic salary of €92,000 plus a range of expenses, allowances and pension entitlements that defy belief.

It is preposterous that each of the Independents in the Dáil gets a tax-free leader’s allowance of €40,000, plus tax-free expenses of between €30,000 and €60,000 a year, on top of their basic salary. The €15 million or so dished out annually to fund all the political parties is also far too generous given the pressures facing the exchequer.

What really brings the political system into disrepute are the exorbitant pensions paid to former office holders, from former presidents down. As with society in general, younger politicians are getting the short end of the stick and will not qualify for these pensions until they are 65 while a range of retired politicians, some with huge incomes from other sources, are drawing massive State pensions regardless of age.

This is defended on the nonsensical basis that retired politicians had a legitimate expectation of getting generous pensions when they started on their political careers. Whether their expectations were legitimate or not, the economic crisis has changed everything. If the political world faces up to the need for serious cuts and genuine reform of its own perks and practices, there is a chance it might be able to persuade the rest of society to follow suit.