Debt In The Afternoon

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Hibernians: Keith Redmond, Cormac Lucey and Eamon Delaney at the forum’s launch

The Hibernia Forum [advocacy group ‘dedicated to the principles of a free market’] will hold a press conference this afternoon to present a document entitled Ten Questions Our Politicians Must Answer.

Forum founder Eamon Delaney writes:

Not only are rash and reckless promises being made by all parties, despite the precarious global situation, but nothing is being done to address major structural long term problems in Irish society, such as the inefficient and high spending on health, the international threat to our low corporate tax and a massive future pension liability, which we cannot afford.

Public Pensions
Public pensions are accounted for on a pay-as-you-go basis. This means that pension contributions paid today do not fund investments to fund tomorrow’s liabilities: instead they fund today’s liabilities. This is the funding model of a pyramid or Ponzi scheme. If applied in the private sector it could result in the imprisonment of those responsible on grounds of fraud.

The Gap in PRSI System
A December 2010 actuarial review of the Social Insurance Fund carried out by KPMG for the Department of Social Protection concluded that the present value of the unfunded liabilities of the PRSI system was then €324 billion. Given that real interest rates have fallen significantly since 2010, it is likely that an updated actuarial estimate of this liability might be significantly higher than €324 billion.

The Gap in Public Sector Pensions
The total accrued liability in respect of Public Service occupational pensions was estimated at €98bn as at December 2012. Given that real interest rates have fallen significantly since 2012, it is likely that an updated actuarial estimate of this liability might be significantly higher than €98 billion notwithstanding the efforts of the Department of Public Spending and Reform to reduce it.

The National Debt
While reported national debt was about €183 billion at the end of 2015, the actual financial liabilities of the state were (if we add the unaccrued Social Insurance and Public Sector Pension liabilities) actually much higher at €636 billion.

Health spending
Relative to national income, Irish health spending is the second-highest in the world and yet we get a very poor outcome, as we know. We also spend a third more than the developed world average (9.3% of national income). The problem with Irish health spending is not lack of resources, but lack of management.

Political Reform
In order to promote the likelihood that general elections produce a stable government and in order to reduce the risk that governments may be forced to favour certain constituencies over others (in order to procure the votes of their Independent TDs) consideration should be given to reducing every Dáil constituency to just three seats.

Hibernia Forum

25 thoughts on “Debt In The Afternoon

  1. phil

    This is a depressing time, I would class most of my political thoughts as far Left , but to be fair, I have a handful of center right thoughts is business areas, but what depresses me is I see little wrong with what those right wing zealots said above …

  2. Kolmo

    oh, not these gimps…they attack the sense of entitlement they perceive is the problem – citizens of this nation should feel entitled to civilised state services after paying many taxes, not privatised, half-assed race to the bottom replacements and a ideologically retarded health system. The logical progression of this group’s world view is a proper dystopia. The National debt is so horrifically huge due, in-part to the very so-called free market financial criminality they are pushing. Dangerous insulated insiders.

    1. Neilo

      Our national debt is huge because we are addicted to high levels of spending on feather-bedded public sector sinecures and gold-plated pensions and comparatively generous social transfers. There’s no end in sight to these outflows, pending full employment and the invention of both cold fusion and the car that will run on water. The ‘bailout’ lavished three times as much on the government deficit – where public expenditure greatly outstripped the tax base – as it did on bank recapitalisations.

  3. ahjayzis

    Reducing seat numbers makes us less proportional – nullifying the voices of people who vote for smaller parties.

    Larger-constituencies, in parallel with a national list system addresses the balance in a far fairer way.

    But then these guys are set up to campaign against fairness, democracy and other ‘threats’.

    1. Kieran NYC

      I thought there was a push for the reduction in Dáil numbers after the 2011 election to stop the kind of parish pump politics that ruins the political process?

  4. Robert

    It’s beginning to dawn on me that phrases like “principles of a free market” have a coded meaning that is something other than the face value meaning. No wonder we’re all confused! I’d previously thought the recent vogue for the word ‘populist’ was purely disingenuous but maybe them that use it really mean it, without any witting irony at all!

  5. PhilJo

    The problem with Irish health spending is not lack of resources, but lack of management.
    Seriously … I would have thought that the problem was an excess of manglement

  6. SB

    To eliminate parish pump politics I think we need something like virtual constituencies. Say if we had 100 single-seat constituencies and thus 100 seats in the Dáil. Voters AND candidates allocated to a constituency based on the last 2 digits of their RSI number, so every constituency covers the entire country. First-past-the-post electoral system. TDs can then concentrate on developing the nation rather than having to spend time trying to get Mrs. Murphy her medical card back to ensure the votes of her house. County councils can take on any local issues.

    1. ahjayzis

      FPTP is a massive, massive regression which will lead to hundreds of thousands not being represented.

      Look at the UK, a massively ideological government with an overall majority based on less than 37% of the vote.

  7. Media Guru

    If these people want attention why don’t they put up or shut up and just stand for election. Stop giving them air time

    1. Neilo

      The Hibernia Forum, like Broadsheet’s beloved TASC, is a think tank. I don’t recall too many posters asking Rory Hearne to run for office so that we can be spared his thoughts on the the Right To Water campaign. What’s sauce for the goose etc.

  8. Chris

    Hibernian, a word used by rich guys to say ‘Irish’ but without all the uncouth associations. The Latin for Ireland but the Romans wouldn’t even come here. Here’s another Latin word ‘hubris’.

    1. Neilo

      Your point would have a little more punch, save for the fact that hubris is Greek. Ah, the joys of a classical edumacashun. :)

  9. theCitizen

    It is astounding that this is the first serious mention during the election of the fact that we don’t even know what our pension liabilities are.
    Defined benefit schemes being funded from the current account to benefit the public sector – what happened to the covenant of transparency Enda?

    Hire a feckin actuary or 7 and add it up to hell, hiding your heads in the sand won’t achieve anything.

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