The Irish Times view on the public finances: an ageing country

If a decision is made to leave the State retirement age at 66, then it will leave more cash to be found by spending less or taxing more elsewhere

Commuters awaiting their bus on O’Connell Street in Dublin this week. Photograph: Nick Bradshaw

Commuters awaiting their bus on O’Connell Street in Dublin this week. Photograph: Nick Bradshaw

 

Politics tends to focus on the short term and follow the advice of the famous phrase by J.M Keynes that in the long run we are all dead. Yet recent history has shown us that, in terms of managing the national finances, a longer term view is important. In this light, the latest report from the Irish Fiscal Advisory Council on the longer-term outlook for the public finances is worth careful reading. Put simply, it could help the State to avoid storing up more problems for the future.

The central point of the report is that the ageing population is going to slowly but inevitably put pressure on the exchequer finances in the years ahead. Between 2020 and 2050 the number of people over 85 in the population will grow fourfold, while the number in younger age groups will rise by 17 per cent. From having one of the youngest populations in Europe, we will quickly start to catch up with the European average – with all the implications that has for healthcare spending, pensions and so on.

The value of the IFAC report is that it puts some financial estimates around this. It shows that after the middle of this decade the impact on the public finances will start to show, in terms of pressure on spending and, if no other action is taken, in higher deficits and – in time – a rising debt burden. Unlike, we hope, the impact of the Covid-19 crisis, the impact of ageing on the level of spending will be long-lasting . But it can be planned for.

In the heat of the Covid-19 crisis, the Government may have limited time to consider longer-term issues for the public finances. But decisions made in the months ahead – for example on the economic plan to be published in October, need to be start taking this into account.

And as the council points out, one current question – the retirement age for the State pension – which was an issue in the general election and is now to be re-examined is important. If a decision is made to leave the State retirement age at 66, then it will leave more cash to be found by spending less or taxing more elsewhere. It is as simple as that.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.