Government Ministers – estimated to be costing the Republic nearly €9 million a year – Francis Donohoe reports
Taxpayers’ money is being paid out in pensions to approximately 100 former Ministers, many of whom have lucrative new jobs and positions despite their failings as public administrators.
Former Taoiseach Bertie Ahern receives the largest state pension of €152,331 for his service as minister and TD. Other former Taoisigh receiving pensions include Brian Cowen on €151,061; Albert Reynolds, who is getting €149,740 and John Bruton on €141,849.
Former Health Minister and Tánaiste Mary Harney, who is six years short of the normal retiring age, is paid an annual pension of €129,805.
Former Tánaiste Dick Spring has a ministerial pension of €121,108, on top of his basic salary of €27,375 and €3,000 for every committee meeting he attends as public interest director at the partly state- owned AIB.
The Workers’ Party National Organiser, Seamus McDonagh, said: “The continued payment of these pensions to former ‘public servants’ while the most vulnerable are having their services cut is obscene. The amount that will be saved if a special levy is introduced to bring these pensions down to the standard state pension will not sort out the economy but will set a moral example.”
He added: “It is our understanding that special legalisation which would tax these pensions at a special high rate can be enacted, however the Government has claimed such a change would necessitate a constitutional referendum. If so, they should let the people vote on this issue.”
LookLeft will be contacting TDs in the coming weeks to ask them to state their position on the introduction of emergency legalisation to curtail these pension payments and will publish their responses.
Need a foolproof guide to figuring out the Government’s actions? Read on
How the promissory note works (sort of)
Step 1 The Government pays €3.1 billion interest payments on an IOU for loads of money it gave to Anglo/IBRC (a branch of Government), who then pay the interest back to the Central Bank (a branch of Government), who stare at it for a while.
Step 2 Some sums.
Step 3 Terrifying omens abound. A two-headed lamb is born. An eagle drops a wolf cub. It lands on Phil Hogan’s head (he wears it as a hat). An apparition of Seán Lemass is seen pacing Leinster House. The Spice Girls make a musical. The ghost of Bertie Ahern is seen in a petrol station forecourt eating a Big Time (to the surprise of the still living Bertie Ahern). The pope tweets his first tweet (“I’m infallible LOL!”). A long-faced man from Europe appears and gazes mournfully at us.
Step 4 Coffee break.
Step 5 Some more sums. Maybe some physics. Possibly a bit of string theory.
Step 6 The money vanishes.
Step 7 Cut respite grants for carers and reduce child allowance.
How the Labour Party works
This is when members of the Labour Party usually intervene and say they are a bit sad. They feel really desperate about the whole thing. In fact, they feel just awful. Words cannot express how terrible they feel and neither can devising redistributive policies. “Jaysus, it’s terrible,” they add, before crooning a few bars of a song about Jim Larkin and submitting an expenses claim.
“If only we were in opposition,” they say. “Then we might have some real power.”
At this point they sing a sad Irish air about missing being in opposition.
Because Labour are goodies. If they weren’t in Government things would certainly, definitely, probably, possibly be worse. We’d be working as footmen in Fine Gael’s stately homes and the Cabinet would be paying off loads of extra interest on promissory notes and raiding the pension fund all the time, just for the laugh. Enda Kenny would be wearing leather gloves, jodhpurs and possibly an eye patch. There would be far more nefarious guffawing.
Labour are, they imagine, classic heroes like the rebels in Star Wars. It just so happens they’re on the Death Star wearing stormtrooper suits at the moment (alternatively, you can imagine them as the carefree Smurfs hanging around Gargamel’s cave dressed as cats).
How Fine Gael works
Fine Gael, on the other hand, is more comfortable with governmental villainy (see Derek Keating’s attack on the “welfare economy lifestyle”). Its Ministers are modelled on classic baddies from fiction.
Kenny’s whole shtick is based on Gort, the glossy robot in The Day the Earth Stood Still (not the Galway town).
James Reilly, with his tax-relieved stately home and history of lobbying for the medical profession, is of course the Lovecraftian old god Cthulhu locating health centres in his home dimension.
Michael Noonan has based his persona on a character from the obscure 1950s Hammer exploitation film – Dracula meets Michael Noonan – in which the hero, an ageless whispering plutocrat, battles the otherworldly Michael Noonan.
Not everyone in Fine Gael seems bad at first. The Li’l Blueshirts, Leo Varadkar, Lucinda Creighton and Simon Harris, once seemed like roguish scamps engaged in neoliberal hijinks with a social-conservative twist.
But eventually their unearthly powers manifested themselves, like the children in Village of the Damned, and they terrified us all with their Toryism, sighing monotone deliveries, and by causing unexplained fires with their minds. They don’t mind being baddies.
But Labour are goodies. They don’t mean to target the poor. They LIKE the poor . . . and not just as a source of cheap labour. So they’ll sigh and cry and feel everyone’s pain and some brave souls will defect and some of them will do sad-face. Because they’re not baddies. They’re NOT. STOP IT. DON’T LOOK AT ME. DON’T LOOK AT ME!
Talking the talk on sharing the pain will not suffice for a Coalition that continues to defend its indefensible privileges
NEXT MONTH’S budget will be a moment of truth for the Coalition and it really needs to come up with a bold gesture to show the public that it is going to lead by example when it comes to the imposition of further hardship.
An analysis of the generous ministerial pension regime published earlier this week by The Irish Times was a reminder that the elite among the political class are still pampering themselves, despite the severe cutbacks affecting other members of society.
The analysis put the market value of the pension entitlements of the current Cabinet at €36 million, but it did not take account of the far greater cost of paying very generous pensions to a range of senior politicians who have already retired.
The actuarial cost of that would easily exceed €100 million. For instance Mary Robinson has an annual pension of €187,297 for her 6½ years in Áras an Uachtaráin and 20 years in Seanad Éireann.
Funding a pension of that magnitude for somebody in the private sector would cost a minimum of €6 million and possibly much more. The pensions paid to former taoisigh and former government ministers are not far behind, ranging from about €120,000 a year for most of the ministers in the last government to over €150,000 for Bertie Ahern and Brian Cowen.
Robinson and Ahern have gifted part of the pensions back to the State, but their entitlements are extraordinary and appear to be wildly in excess of the pension arrangements for public figures in other EU countries.
Given the scale of the financial crisis facing the country, and the fact that it has taken the bailout to keep the State functioning for the past two years, it is amazing that no effort has been made to scale back the pension entitlements of former as well as current politicians.
As with other parts of the public service, new entrants into politics in 2010 suffered a significant reduction in entitlements and will be able to claim pensions only at the age of 65, but for the older generation of politicians, almost all of the entitlements they amassed during the boom are intact.
To be fair the current crop of politicians have taken a series of pay cuts since the start of the crisis but their salaries are still among the highest in the democratic world and those already on pensions have hardly been touched.
The excuse given by Minister for Public Expenditure and Reform Brendan Howlin for not touching some of the most privileged pensioners in the country is that they had “a legitimate expectation” that the current arrangements would continue to apply, regardless of the pressure on the State’s finances.
Strangely enough “legitimate expectation” does not seem to apply to those outside the public service. People in private sector pension schemes have received letters in the past two months informing them that their future entitlements will be cut as a result of the levy on pension funds introduced by the Government last year to fund its jobs initiative.
Politicians are not the only ones to benefit from enhanced public sector pensions. Judges, semi-State senior executives, Army officers and gardaí all benefit in varying degrees from a system that nobody in the political world appears willing to challenge.
How public service pensions of all kinds will be funded in the future is an issue that will have to be faced at some stage. The most recent estimate in 2009 of the accrued liability to the State for public service pensions was €116 billion.
Given the flood of early retirements since then, that figure is now undoubtedly much higher. An official report published during the week pointed out that public service pensions now account for 14.8 per cent of the annual pay bill, up from 8.5 per cent in 2007.
The figure has risen by 67 per cent – up from €1.5 billion in 2007 to €2.5 billion this year. Yet the political system is paying scant regard to how this escalating liability can be put on a sustainable basis into the future.
The immediate danger facing the country as it heads into its final phase of reckoning for the excesses of the boom is that the contrast between the way different groups have been treated will lead to a breakdown of the social cohesion that has been such a feature of the crisis.
About 75 per cent of the adjustment required to get the State’s finances back on track has already been achieved. The final 25 per cent is probably going to be the most painful of all and it will take a lot of political skill and courage to see it through to the end.
That is why it is imperative that the Coalition comes up with a budget package that demonstrates a genuine commitment to fairness rather than paying lip service to the notion while continuing to protect its own privileges.
The unremitting focus by the Coalition and its opponents on the bank debt has, if anything, only obscured the real choices facing the country.
The Government has overhyped the scale and timing of a debt deal while the Opposition has been far too dismissive of its prospects.
The likely outcome is that a deal on the debt will ultimately be done but it will not happen quickly and the precise nature of the arrangements will probably not become clear until the end of next year.
Just as Albert Reynolds got the £8 billion from the EU in the 1990s, despite the dismissive claims of his political opponents and media critics, Enda Kenny will most likely deliver a substantial deal on the bank debt, but it is going to take time.
The more critical challenge facing the Taoiseach and his Government is the fact that the public finances remain in a parlous state due to the collapse in tax revenues after 2008, combined with the failure to rein in expenditure. So far the Coalition has managed to keep on course towards a more sustainable budgetary position, but imagination as well as gritty determination will be needed to see the job through.
Earlier this month, Providence Resources announced that an oil field at Barryroe, off the coast of Cork, is expected to yield 280 million barrels. The company’s CEO, Tony O’Reilly Jr, the son of the media mogul, told the Today programme that this was ‘very good news for Providence shareholders and the Irish economy’. The first part of his statement is undoubtedly true: Providence’s share price rose sharply on the back of the Barryroe news. That Ireland’s economy will benefit is much less likely.
According to the World Bank, Ireland offers ‘very favourable’ fiscal terms for oil and gas companies. At 25 per cent, Ireland’s government take is among the lowest in the world. Norway’s, by comparison, is 78 per cent; Yemen’s is 95 per cent. Ireland also boasts some of the most generous tax-write offs in the industry: companies can offset all costs before they declare profits, including any ‘incurred in the 25-year-period prior to commencement of field production’, from such activities as drilling unsuccessful wells in Irish waters.
When a company finds oil or gas in Irish territory, ownership and control of the resource is transferred in full to the company; no royalties are paid to the state; the company can choose to export the oil or gas; they do not have to land the resources in Ireland or use Irish services or personnel.
In the late 1950s, the minister of industry and commerce (and future taoiseach) Seán Lemass sold the first exclusive exploration drilling rights in Ireland for £500 to Madonna Oil, a shell company owned by three American representatives of the Messman-Rinehart Oil Company of Wichita and the Ambassador Oil Corporation of Forth Worth. In 1961, a two-thirds share in the rights was sold to Continental Oil and Ohio Oil International for $450,000.
In 1971, Marathon Oil (as Ohio Oil International had become) discovered gas off Kinsale, Co. Cork. The terms of the government deal under which the gas was extracted were so favourable to the company that it became an issue in the 1973 general election. Influenced by Norway’s creation of a state oil company, the new minister for industry and commerce, Labour’s Justin Keating, set about recalibrating Ireland’s relationship with oil and gas companies: the state would have a stake in any commercial find; corporation tax on oil and gas revenue was set at 50 per cent; production royalties would be levied.
eating’s amendments did not last long. In 1987, the energy minister Ray Burke – who in 2005 was jailed in relation to corrupt payments received in office – abolished royalty payments and state participation in oil and gas development. In 1992, the finance minister (and another taoiseach in waiting) Bertie Ahern cut corporation tax for the industry from 50 per cent to 25 per cent, where it broadly remains, despite some alterations to the new licensing terms made by the Green party minister Eamon Ryan in 2007.
Ireland’s oil and gas regime reflects the dominant logic of Irish economic policy: low taxes will make Ireland attractive to foreign companies, even if they are simply harvesting the country’s natural resources and creating little in the way of jobs or tax revenue. That speculative Irish licence holders get rich in the process is no cause for concern.
A year ago, the minister for communications, energy and natural resources, Pat Rabbitte, announced that 13 new offshore exploration licences had been awarded. ‘Ireland must continue to communicate the message to international exploration companies that Ireland is open for business,’ he said.
In 1973, the Union of Students of Ireland published a pamphlet entitled What’s Mined is Ours! The Case for the Retention and Development of Irish Minerals under Public Ownership. According to the foreword, ‘those with a vested interest in the development of Irish mineral resources appear to have access to unlimited finance for public relations purposes.’ One of the text’s three signatories was the USI president, Pat Rabbitte.
All told, Mr. Cowen received €310,469 in 2011 before tax. He did not make any voluntary contribution to the State. The documents indicate.
THE BILL for pensions to former office holders jumped by more than 25 per cent last year, with former presidents, ministers, members of the judiciary and other senior office holders receiving a total of €15.22 million.
That compares with €12.1 million in 2010. The figure includes severance payments of €1.1 million to members of the Fianna Fáil/ Green coalition voted out of office last year.
Figures published last night on the Department of Finance website indicate that only 31 out of almost 200 office holders opted to forgo any portion of their pension. The €347,686 forgone amounts to just 2.3 per cent of the total sum paid in pensions and severance.
The highest pension paid last year was to former Progressive Democrats leader Michael McDowell. However, of the €173,700 he received, more than €142,000 related to backpayment for years in which he had been underpaid. That aside, two former comptroller and auditor generals – John Purcell and Laurie McDonnell – were the largest single beneficiaries, with pensions of €114,700.
Two former taoisigh, Bertie Ahern and Liam Cosgrave, surrendered a portion of their pensions while Brian Cowen, John Bruton and Albert Reynolds did not. Former president Mary Robinson opted to forgo €15,500 of her €139,500 entitlement.
The presidency remains the highest-paid office, with Mary McAleese receiving €280,300 and her successor Michael D Higgins €45,200 during the year, a total of €325,500. Both surrendered a portion of that salary last year.
The figures show the State’s judiciary was paid €27.35 million last year. The position of chief justice was paid €304,974. They also show the total paid in parliamentary leaders’ allowances fell last year to €7.2 million, from €8 million in 2010. Sinn Féin saw its leader’s allowance more than double to €933,876 from €335,425 the previous year. The allowance for Labour also rose while the figures for Fianna Fáil and Fine Gael fell.