John Crown (Independent) | Oireachtas source

We were always taught that pensions were sacrosanct, that they were different. A pension was a special kind of saving one made and certain rules applied in respect of it. One could not touch one's pension. If one experienced a very rainy day, one could not gain access to it. One could only access one's pension on a particular date that had been determined many years previously. In return, one received certain tax breaks and concessions. One lost one's control over and discretion in respect of how one's money was spent in order to, as it were, make that deal.

I was troubled when I witnessed the scale of the catastrophe which struck our country in recent years, particularly in the context of the number of people who lost their businesses or whose homes were plunged into negative equity. I had the idea - I could not act on it because we are not allowed to introduce money Bills in this House - that we should allow, on a discretionary basis, people who are in debt to access the lump sums in their pensions, pay a little more tax in respect of the money involved and use it to get themselves out of debt. This would have had the effect of providing a degree of recapitalisation for the banks, of making loans perform better, of bringing more revenue into the Exchequer and of allowing people to, perhaps, save their businesses. Ultimately, the latter might have resulted in the generation of much employment in the years to come. Due to the fact that we are somewhat constitutionally limited in the context of what we can do in this House, I could not bring forward legislation. When I discussed my proposal with some of the Minister of State's senior colleagues, they indicated that they thought it somewhat hare-brained. However, I notice one or two of them have now adopted it and have put it forward in the Lower House.

The conundrum we face is that while those in government tell me that I cannot use my pension fund to get myself out of debt, of which I would love to be free, they can use my pension fund to get themselves out of the debt that they have put me in. That is reason I am a bit troubled by certain aspects of the specifics of this Bill. I may not be great on the arithmetic - the points were a bit lower for medicine in my day although they were still pretty high. The Minister of State referred to a portion of the fund being used to recapitalise the banks during the financial crisis - a portion sounds like something small and modest, but if I am doing the arithmetic correctly, the portion is two thirds of the fund. The Minister of State is saying that bit is worth €13 billion and what is left is somewhere shy of €7 billion. Possibly the €13 billion has appreciated from a lower figure over the years when it was first invested but it seems that this was a relatively large proportion.

I also would have a little difficulty with the philosophical underpinning of the remark that bank capitalisation could indeed be resorted to again but only in exceptional circumstances and it is not envisaged that it would ever happen. Who envisaged the original bank guarantee? The nature of exceptional circumstances is that they tend to be the type of thing that one does not envisage but they happen. The question is whether it was wise for us to use that money in this way at that time and whether it would be wise to allow a future Government to misbehave, overspend, under-tax and misinvest with the security blanket that it can still tap into the assiduously, carefully and prudently collected pension funds of its citizens through the National Pensions Reserve Fund, to say nothing of rating as has been done? They are private pension funds, so people tend to be hit with a double whammy. Perhaps things will be very different after the revolution but the coalition of people who gave us the bank guarantee - who as I recall were Sinn Féin, Fine Gael, Fianna Fáil, the Green Party and the rump of the PDs, with my honourable colleagues from the Labour Party across the House being the only dissenting voices at the time - are likely to still occupy some portion of a future coalition Government where the same decision could be made and the question is: do we want to give them that authority?

On the question of who will work in it, how will their voices be heard, who will they represent and what conflicts of interest will they have, I am a little troubled by the idea that it appears that the board of the National Pensions Reserve Fund is being stood down and sucked into this whole thing. Over the years we were always told that there should prudent pension managers and bank managers, people who follow the rules, who had fiduciary responsibilities in their dealings, who did not make crazy casino-like investments, who were careful and who looked after people's interests. As we know, during the early years of this century, those rules became arbitrarily and unwisely rewritten and people started using those funds for all kinds of other speculative activities. Bank managers stopped caring about a customer's ability to repay the loan and started caring more about their ability to get a bonus. I am a little troubled that in all of this we appear to be losing the steadying hand of a cadre of people whose only job is to make sure there is money in the pension fund for a rapidly ageing society. I was doing the arithmetic on those appointed to the new Cabinet. I am 57 years old and if I was in the Cabinet I would be one of the younger third of the people in it. The questions of the effective age are reaching all across the country but it seems we will have no one in the new dispensation at a high level whose only job is to look after the pensions at a time when we are going to need them more than ever.

I do not want to paraphrase Einstein too much but I would refer to his famous quotation about the definition of lack of wisdom being to repeat the same mistakes. We are institutionalising the position of the Secretary General of the Department of Finance. With no personal disrespect to any of the recent incumbents, it is not immediately obvious that they have been extraordinary repositories of expertise in terms of the stewardship of the public finances over the past decade and I am not speaking of any in particular. These seem to have been by and large with one exception appointed in accordance with traditional Civil Service career advancement policies even though a whole other group of people were being assiduously recruited through non-traditional, non-Civil Service pay grades, as the Minister of State told us in his opening contribution, presumably to attract the very best people with that particular skillset. Were those people overruled by the people who were on the more traditional pay scales? It seems that they probably were. Do we have absolute clarity that there will be protection for whistleblowers in the new organisation because, as we have seen in recent years and we are to the point of this now being near folklore, we were told there was no one in the Department of Finance who had any financial expertise but in the case of Ms Mackle it now transpires there was but a decision was made not only to ignore her but to tell her to be quiet.

Do we have guarantees that we will concentrate all of this diverse range of financial responsibilities into a unified bureaucracy and a unified board structure, with the protection that exists for dissenting voices because it was the failure of dissenting voices to be allowed exist, be articulated and be listened to that was a huge cause of the problem we faced? As I said previously, and I am probably boring my Seanad colleagues when I say this, there were many folks who were responsible for the financial meltdown but the people who were most responsible were those in government. The builders and the developers acted rationally in their own self-interest, not necessarily very wisely but they were in a system where there was a great deal money floating around and people had loans to buy houses they could not afford so the guys would build the houses. The banks behaved rationally because there was credit flowing and they were getting bonuses for the more loans they gave. The people who we paid and entrusted with the responsibility of acting not in their own rational self-interest but in the collective self-interest were Government Inc., both elected members and officialdom, and they were the ones who failed. Will these new structures maximise the chance that this kind of systems failure will not occur again?

I welcome the Minister of State, it is very nice to have him here in Seanad Éireann. I am sure he is as glad as we are now that we were not abolished, having had the opportunity to come into the House, and we look forward to many interactions with him in the future.