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Our View: Cutting public sector pensions the only way to raise state funds for the poor

Demetris Christofias

POLITICAL parties have always operated on the assumption that the best way to win votes is by promising to spend more money. And in time of elections, they never have trouble finding groups of people that are supposedly deserving of greater financial assistance from the state. In fact assorted citizens’ groups approach the political parties a few months before elections, knowing that this is the best time to extract promises from them. Public sector unions have got this down to a science which goes some way to explaining the enviable pay and pensions of their members.

Voting through cash handouts does not always work because it can lead to state bankruptcy, as Demetris Christofias found during his ultra generous presidency which increased state welfare spending by a billion euros. The elderly, pensioners, single mothers, university students, large families were all given more state cash until it all ran out and Christofias had to raid the CyTA pension fund to pay civil servants their 13th salaries at the end of 2013. Despite his lavish generosity his party did not allow him to stand for re-election, aware that his chances were non-existent, after his emphatic mismanagement of the economy.

This has not stopped AKEL from championing more state spending in the current campaign. It has found a new excuse – the supposedly growing inequality in the distribution of income and the claim that Cypriot society has become one of the most unequal in Europe. The communists have been repeating this claim, also reporting that the rich have become richer and the poor poorer, at every opportunity, but we have not seen any data in support of its theories.

In order to bridge the allegedly growing gap between the rich and poor, party chief Andros Kyprianou presented a list of proposals on Sunday which would change the income criteria for child allowance and student grants. He also wanted a financial assistance scheme for young, low income couples that wanted to start a family. Apart from the fact that this is not the responsibility of the state the key question is whether the state could afford to give out such assistance? The answer is ‘no’. Wealthier countries than Cyprus do not offer such assistance – in the UK all students have to take out a loan to pay for their university studies – so how could a heavily indebted country like ours be so generous?

The problem is elsewhere and we have mentioned it on countless occasions. If the political parties want to reduce income inequalities with the state helping the poor, they should cut the state payroll and state pensions (retired civil servants and teachers are paid pensions more than three times the average private sector wage). It is time they realised that the state does not have unlimited amounts of money and there is always a trade off when making state spending decisions.

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