Sinn Féinn - use of the Pension Reserve Fund

roosh

Swing voter here.

Personally I don't agree with the noises Sinn Féinn are making with respect to the IMF - saying they can whistle for their money. I do think that there needs to be a renogiation of the conditions of the Bailout, and it could be that Sinn Féinn are looking to establish a fairly strong negotiating position, but one issue that I have heard raised, which I would like to know more about is the use of the Pension Reserve fund.

Now, Sinn Féinn have said that they will use the Pension Reserve fund to fund public spending on certain specific projects, with the purpose of creating employment. Now, this money has been used allocated for use in the Banking system, as part of the EU/IMF deal, which could potentially be renogiated.

Richard Bruton [on frontline] shot down the idea, on the basis that any use of the Pension Reserve fund would have to yield a return, and investing in public expenditure projects would not yield a return. The counter point to this, from the SF representative (can't remember his name), was that the way it will be used under the EU/IMF deal it will just be poured into the black hole of the baking industry.


Assuming that some renogiation of the deal is possible, would the money of the Pension reserve fund be put to better use by investing in government projects and creating employment, as opposed to be pumped into the banking sector?

On the surface it certainly sounds like a better idea, and Richard Bruton's dismissal of the idea wouldn't really hold up if there is no return on the money by pumping it into the banks, or even if the return was demonstrably less.

any reasoned thoughts?

paul71

The arguement is sound, pouring pension money into a banking ststem which will not provide a return defeats the purpose of a pension fund, it may however already be a mute point given that the reserve fund was in the region of 15 billion, I am open to correction on the figure. Given that the IMF deal was cut in December and the election is another month away, how much of the fund is now left?

Pete_Cavan

First of all OP, the EU/IMF bailout money is not just going towards the banks, it is also to cover our budget deficit for last year (over €18bn) and for this year and until 2014 (under the terms of the bailout we must reduce the deficit, although how we achieve this is a thorny issue, ie. what how much expenditure reduced through cuts and how much income raised through taxes).

Basically, while some (a lot) of the bailout money is going to the banks, some of it is also to pay for our existing public expenditure, teacher salaries, running hospitals, road works, etc. Even if we let the banks fail we still need money to cover the deficit. The big problem with SFs plan is that there is only c€16bn in the NPRF, which is only enough to cover the deficit for one year and what do we do next year? SF dont want the bailout money and we would not be able to go back to the bond markets 12 months after we defaulted on our other loans. Brutons point was that if we throw all that money into a stimulus package you have nothing left.

SF want to invest the NPRF into a stimulus package building schools and hospitals. This is not just investing in public expenditure projects, it is investing in a specific type of public expenditure project. The point that Richard Bruton was making is that these public expenditure projects do not yield a financial return. It could be argued that they do yield a return in the long run, but that is not much good given we are in the middle of a crisis right now. Bruton and FG want the money invested in infrastructure such as water, broadband and energy. These do yield a financial return because every business in the country needs these and improving them will make it easier to do business, therefore more employment and tax returns.

The other big problem with SFs plan is that the employment from their stimulus package is only short term (only lasts while the package is in place and it cant last forever) so all those they are employing suddenly become unemployed again at the end of it. FG want to invest in infrastructure that will allow sustainable jobs in other sectors of work to be created. A stimulus package sounds well and good but if it is just state sponsored employment it will not last because the state cannot afford to employ these people for ever.