Professor Michael McMahon:

Those questions are linked. I will start with the second of them. There are two big advantages to focusing on pension costs. One of the advantages is that they are quite forecastable. Demographics are well known and fairly slow-moving. We can tell now what kind of commitments under current policy we will be looking at in 2030, 2040 and 2050. A couple of years ago, we put out our long-term sustainability report, which pointed to the kinds of costs Ireland will be looking at by 2050. An additional age-related health spending consideration, in addition to pensions, predicted an increase worth approximately nine percentage points of GNI*. That is quite a big number when we think about the extent of these things. That is one of the advantages.

The other advantage is that its slow-moving nature means we can save the excess corporation tax in a fund that could be invested and generate a return. We have quite a long time to build up the pot before we need to draw from its flows in a big way. We could get to a point in 2040 where the pot is quite big and providing a substantial flow. That could eat into the nine percentage point cost Ireland will face.

Of course, there are many other things that can be done to help to address those kinds of costs. It is our estimate from that report that the cost of deciding not to increase the pension age from 66 to 67 by 2050 - and Dr. Casey will correct me if I am wrong about this - will be approximately €5 billion at that point. There is a menu of possible options that any government can take in terms of how to deal with these costs. We could change the generosity of the system or the age at which people can access it. We could take actions now to build up a fund to address the issue.

Going back to the general point we have been trying to make about this long-term saving vehicle, dealing with forecastable and predictable future challenges frees up space in the budget to deal with a number of other challenges. These are not the only challenges that Ireland faces but the climate transition challenges are going to come sooner than the bulk of the age-related challenges. We can create a system that allow us to feel the age-related challenges are dealt with. This is a question for Deputies today and their future selves and the questions and challenges with which they will have to deal. If we know those age-related challenges are taken care of because of this enviable position of excess corporate tax, if we invest it well and plan appropriately, the discussion can then shift to dealing with climate, housing, infrastructure and all of the things that might be thought of as the ordinary business of today's Government. There is a menu of different options, some of which the Deputy mentioned. The key thing is to plan now. The wonderful thing about costs that are coming in the future is that even relatively small amounts of action we take now will add up to a lot over 20 or 25 years. It would be a real tragedy to do nothing and for those of us who will be affected in 2035 or 2040 to be suddenly facing decisions of the scale of five, eight or nine percentage points of GNI* as actions need to be taken suddenly and quickly. That is a big fiscal adjustment and we would not want to make it at that point.