Brendan Ryan (Labour)

One of the remarkable developments in civilised western societies has been the extraordinary consensus that one cannot leave people who move beyond working age to fend for themselves according to some law of the jungle. According to my often faulty memory, it has been 150 years since Bismarck introduced the idea of an old-age pension and 100 years since it was first conceived of here. Notwithstanding Senator Morrissey's comments, there is greater political consensus than conflict about what approach to take to this matter. We want to ensure that a population, which is ageing but not old in the sense of being inactive, can enjoy extra years of reasonable health in reasonable comfort.

There is no single solution. People on my side of the traditional political divide used to be of the opinion that pension provision should be income-related, inflation-proofed and paid for from general taxation. That was simply a way of transferring the burden from one generation to the next. It was to say we would allow the next generation to worry about us when we became old. It is not that I have anything against the next generation, but I am not madly keen to leave my security entirely to it. On the other side of the political divide there was a view that people should be left entirely to fund their old age themselves. In the more extreme version of this perspective, one would not even be given tax incentives to make pension provisions as the level of personal taxation would be so low.

While I can say plenty about my political opponents as Members will know, we do not differ significantly on this matter. However, when my party suggested there were better uses to which the national pensions reserve fund could be put, it was making a perfectly valid point. For the Labour Party to question why the money was being used to fund infrastructure developments in Japan while this country was suffering a major infrastructure deficit was to make a balanced and reasonable contribution to the debate on how to use the reserve fund. While I understand the need to diversify risk and all the other arguments, it does not make sense to suggest that it is always better to invest a fund of this type abroad.

To make a political point, it is a bit rich to make political remarks on comments on the national pensions reserve fund within two years of a raid by the previous Minister for Finance on the social insurance fund to cover a hole in his budget figures. The social insurance fund is another form of pensions reserve fund. It is paid for by the social insurance contributions of working people to fund social insurance payments. At a time of enormous surplus in the fund, the Minister for Finance raided it and made no attempt to hide the fact.

We must inculcate a culture which has always existed in the public sector. In my other public service career, I have been paying 6.5% of my income in pension contributions since I started work after leaving college at approximately age 25. It is not a funded pension but, by the standards of the abolition of defined benefits, probably quite generous. It would be interesting to discover what level of contribution would have been needed, if tax allowable in its entirety, to fund an equivalent pension for public servants like me. I agree with Senator Morrissey that there will always be a degree of uncertainty. While there is no easy answer, my approach would be to integrate all of these things. The role of the State should be to encourage, fund and facilitate the maximum possible contribution from the private sector in the management and organisation of pension funds. Having observed the frightening variations of the marketplace over the past decade, I consider a fundamental role of the State should be to act as a guarantor of a certain level of pension for everybody. It would be required to do so to a greater extent in hard times and to a lesser extent otherwise.

A number of questions must be addressed. While I have no problem with contributions and share fully Senator O'Toole's views, there is significant reluctance in this area. Some weeks ago, the issue of compulsory pension fund deductions was raised in Britain to great resistance by financial services interests and others. I have asked people about it, but still have no idea why. Across the political divide we must accept that if the Government was to decide that from 2005 everybody would be required to pay up to 8% of gross income, tax allowable in its entirety, to fund their pensions, many would be led by the O'Reilly newspapers to scream about a 10% tax increase. If we must deal with that level of hysterical nonsense, we will never provide for pensions. The great attraction of the national pensions reserve fund is that it is not imposed on individuals, but is simply a sum.