'Well-off' pensioners must share cuts burden, says Minister

THE IRISH political system needs to overcome its inability to countenance budgetary cutbacks affecting older people because many of them are “very well off”, Minister of State for Finance Brian Hayes has said.

Mr Hayes also said yesterday that it was not sustainable to have nearly 50 per cent of college students on grants.

In an interview with The Irish Times, Mr Hayes said lots of elderly people told him they were “well off” because they did not have mortgages and he was sure that Minister for Social Protection Joan Burton of Labour would look at the issue ahead of the budget.

“I think we need to realise that the one group of people in this country who have come through this crash and still have their incomes intact are pensioners,” he said.

He stressed that he was not talking about people who depended solely on the State pension. “I’m talking about people here with multiple pensions who have their houses paid for, who of course have lost money on share dealings and the like,” he said.

“But it seems to me that the Irish political system will never countenance cutbacks on the elderly. My view is that all this needs to be on the table,” he said.

“I meet a lot of older people who tell me they’re well off because they don’t have mortgages, and they see their kids in an appalling situation because of negative equity.”

Mr Hayes’s comments could put the Government on a collision course with the so-called grey power movement. The previous administration faced such vocal opposition to budgetary changes restricting access to medical cards for the over-70s in 2008 that the plans were revised.

Mr Hayes said that developing a system that catered for “inter-generational equity and justice” would prove a challenge for Government.

“But there are many, many elderly people who are very well off and insofar as we can look at that issue in the budget I’m sure the Minister for Social Protection will look at it.”

Mr Hayes said pensioners were people with “common sense and judgment” who would understand the need to look at the State’s contribution to them. This would not be done in “some kind of hairshirt way” but rather in a “sensible” manner.

He also said that almost half of college students were in receipt of grants and that could not continue.

“Students need to pay their way,” he said. “It’s not sustainable in my view that nearly 50 per cent of all kids going to college at the moment are getting a grant.”

Minister for Education Ruairí Quinn was looking at a “proper, independent system of funding for higher-level education”, he said.

Mr Hayes said the Government’s taxation and social welfare policies must be based on making it beneficial for people to work. “It’s crucial that we do not increase tax on income further,” he said.

People could not give any more on the taxation side but “much more” needed to be done on the expenditure side, where the scale and universality of social welfare benefits had to be considered. “Everything needs to be on the table if we’re really serious about not only hitting our targets but creating the culture where work actually pays,” he said.

“We’ve got to make it clear to people that if they move from benefit back to work that it pays for them and their families. Not just on the issue of income tax but also on secondary benefits like medical cards.”

He said there had been substantial rises in tax over the last number of years. “I don’t believe that we can give any more on the tax side. Otherwise it will be a recipe for disaster.

“The priority for the Government is not to have further tax increases on work because you create this dreadful disincentive that encourages people to stay on benefit.”