Mr. Sebastian Barnes:

That was just by way of clarification. The Deputy is right that there are potentially massive amounts of money coming in. There is a question about how to manage that. There are a number of risks. One risk is that we build up spending on the back of that but if that money does not appear, we are then caught. That is something we must not do from a public finance point of view. From a good accounting point of view, one should not recognise these things before they come in. The second risk is that from an economic perspective, this money is essentially coming from outside the economy and if we spend it all at once, we will add further to demand, inflation and pressure on house prices. We have to be cautious about spending that money in terms of economic balance. We are quite dependent on it now, so putting it all into the pensions reserve fund overnight could be disruptive as well. In a previous report we looked at various scenarios where we would gradually put more money into it.

Ultimately, some of these constraints and avoidance of risks come down to social choice. We might have this large amount of money that comes in over a limited number of years. We do not know how much it will be or how long it will last. The question is whether we want to spend that now or save it and spend it later when we know there are going to be big costs around ageing. That is a social choice. It depends whether we want to favour the young people or the old people or how we want to make that balance. That is a really big social choice to be made. We in the Irish Fiscal Advisory Council can not tell others how to make that choice but it is the way people should be looking at it. That is why we think there should be serious consideration given to putting it into a pension reserve fund and saving that money. Then in 20 years' time, the baby boomers will be retired and taxes will probably have to go up anyway. However, they will not have to go up by anywhere near as much if we have saved this money and did not spend it on things we happened to have wanted now.