Oireachtas Joint and Select Committees

Wednesday, 13 September 2017

Committee on Budgetary Oversight

Ex-ante Scrutiny of Budget 2018: Irish Fiscal Advisory Council and Economic and Social Research Institute

2:00 pm

Photo of Joan BurtonJoan Burton (Dublin West, Labour) | Oireachtas source

I welcome Professor Barrett's comment on the ESRI's proposal, which has been widely reported today, to raise the pension age to 70. Doing the latter would be little short of catastrophic. Socially and economically, many people who will rely on the State pension would not be in a position to sustain work until they are 70. Some would, but the vast majority would not. In terms of the legitimate expectations of people, such a move would be extremely unfair. We have a very low rate of at-risk poverty and other indicators among pensioners. This is a very good and stabilising factor in Irish society. Certainly, over the six-year period I was involved with the Department of Social Protection, there was an additional spend on the social welfare pensions provision of approximately €200 million per year. This amounted to €1.2 billion over the six years in terms of expanding the base. This is likely to continue with the demographics, but it will be necessary to make provision for it. Some people resent that the Irish public pension system is not, as it were, funded. However, we have a capacity of people of the current generation who are at work and who pay towards the retirement - in terms of PRSI retirement pensions - of those of previous generations. I would not move away from this system.

I welcome the comments on the supplementary pension. All of the work has been done in the Department of Social Protection on this. We had this conversation. It was not possible to do it when the economy crashed, but the USC, combined with a supplementary pension, could be the initial contribution that many people in work would make to launch it. I acknowledge the work of Professor Shane Whelan and others on this matter. It is a workable scheme. I note that the ESRI would leave it in the public sector. Those in the private pensions industry, certainly in their conversations with me, did not quite agree with this. However, I agree with the recommendation.

The ESRI would do this committee a very great service if it were to elaborate on the site tax proposal and provide us with something we could seriously present to the Minister. It needs to be elaborated upon in order to arrive at something that will work. The previous Government, of which I was a member, developed a derelict sites levy. I would be the first to say it was a very restrictive proposal when compared with a broader site tax levy, which would also take the heat out of rising land valuations. I served on the original old Dublin County Council, and it was all about land speculation, rezoning and mega-profits. Unfortunately, we are heading back in that direction. Would the ESRI be willing to provide us with a worked proposal? It is possible to be fair on this and really try to take the heat out of the speculative end of it. There are many reasons sites cannot be developed and why the process time. We need to take account of these, but we could try to target this at the pure speculation, which, ultimately, is tax free in terms of the profits, by and large, in the Irish system that it engenders. This brings me to another point.

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