Parties scrambled to promise changes to pension rules last night as fears grow of an auction election.
But even as the parties clashed over pensions and other issues, Leo Varadkar last night offered to work with Fianna Fáil including a possible grand coalition between the two parties – in the event of an inconclusive election result.
Fianna Fáil has pledged to postpone the rise in the pension age to 67 planned for next year and to pay sums equivalent to the old-age pension to those over 65 in the meantime, pending a review of pension provision.
This follows the promise made by Minister for Social Protection Regina Doherty late on Tuesday night when she said that Fine Gael would pay a "transition payment" equivalent to the pension to those retiring at 66 until they reach the new pension age of 67.
Neither Fianna Fáil nor Fine Gael responded to queries seeking the costs of their pension promises, while the Department of Social Protection said the pledge made by Ms Doherty was a matter for Fine Gael.
Other parties, including People Before Profit and Sinn Féin have promised to restore the pension age back to 65, at an annual cost estimated at €450 million. Labour says it would cancel the proposed rise in the pension age to 67 next year.
Anger
All parties report anger among elderly voters at pension changes which have seen private-sector workers left without pension coverage for a year after retirement at age 65 as they wait for the State pension to begin at 66, due to rise to 67 next year.
As all parties continue to make largely uncosted pledges to voters, a number of senior economists have warned of the dangers of an “auction” election, in which the parties seek to outdo one another with expensive and extravagant promises.
University of Limerick economist Stephen Kinsella said the State’s finances were in good health now because of extra revenue from corporation tax and the fiscal discipline last year which produced a surplus.
“The dramatic escalation in electoral promises – as yet uncosted – risks running a deficit, adding to the national debt, overheating the economy further, and running up against our fiscal rules. Worse, it probably fuels increased cynicism amongst the electorate, because there is little to no chance of all the promises being met,” he said.
Prof Brian Lucey of Trinity College said that as the “painful lessons of the crash recede among politicians, the danger is very strong that the bad old habits come back”.
Dermot O’Leary, chief economist with Goodbody Stockbrokers, said there was a “clear and present danger” of an auction election developing.
“You see it happening on a daily basis in this campaign,” he said.
Colm McCarthy, an economist who has advised successive governments in the 1980s and 2000s on reducing public expenditure during recessions, said that the current rash of election promises was “utterly insane”.
‘Jam today’
Economist and author David McWilliams said: “The problem with electoral giveaways is that they have to make an immediate impact on voters’ pockets, so they tend to be about consumption rather than investment. This means they enhance demand at a time when national demand is already extremely strong, so the effects are washed away by inflation.
“If the parties were promising huge increases in public investment in return for votes, we should bring this on, but I suspect the ‘bribes’ will be all about jam today, which will be paid for in higher taxes when the economy slows down,” he said.
Senior Government officials, who spoke on condition of anonymity, also expressed concerns about the proposed pension reforms and about the general direction of the election campaign.
One senior official expressed extreme concern that reforms to the pension age, legislated for in 2011 by Fine Gael and Labour and supported by Fianna Fail, were now in doubt.
Without the reforms the pension system is “unsustainable”, the official said, “and everyone knows it’s unsustainable”.
