The Chinese Nationalist Party’s (KMT) legislative caucus held a meeting on Monday to discuss the annual pension issue. Those who attended, displeased with the government’s reform proposal they thought was too far-reaching, took turns criticizing the Examination Yuan and the Cabinet. KMT caucus whip Lai Shyh-pao (賴士葆) said afterwards that he was not too optimistic about the proposal because it meant cutting the benefits of the party’s grassroots supporters.
Lai said that there was strong opposition to it within the party and that it would take “a lot of hard work” to pass the amendments in this legislative session. This focus on winning votes and maintaining power while ignoring the economic plight of the elderly, is not the approach of a developed political party.
A closer look at the Examination Yuan’s draft civil service pension act shows that it is an example of pseudo-reform, completely devoid of moral principles. It also attempts to perpetuate corrupt practices.
The preferential 18 percent interest rate that retired civil servants enjoy on part of their pensions amounts to almost NT$100 billion (US$3.38 billion) annually. If, as is suggested in the proposal, this benefit is extended until 2017, the Treasury will lose almost NT$400 billion. The draft says that “the 18 percent preferential interest rate for civil servants will decrease to 12 percent in 2017, and after that by 1 percent every year until it reaches 7 percent plus the fixed annual deposit rate at Bank of Taiwan in 2022, with the top rate capped at 9 percent.” In these five years, the Treasury will lose about NT$400 billion more.
Expanding benefits during their own tenure and cutting it for their successors in this way is the antithesis of political accountability, and it is inappropriate behavior for Examination Yuan President John Kuan (關中) and President Ma Ying-jeou (馬英九).
Another kind of pseudo-reform that serves to perpetuate corrupt practices is the collection of a 2 percent business tax from banks and financial institutions instead of the 5 percent collected from regular businesses — and snack bars, as was reported a few days ago — all in an attempt to let banks and financial institutions eliminate their bad loans.
The 13 percent preferential interest rate enjoyed by retired employees of public financial institutions is another drain on the Treasury, costing it tens of billions of dollars. If we add in those privately run financial institutions in which the government holds shares — making them basically government-controlled — that issue annual bonuses amounting to six to 10 months of salary, it becomes impossible to know how much this evil system costs the Treasury every year.
Yet another pseudo-reform that perpetuates corrupt practices is the constant increase in tuition fees at private schools, which charge many times the amount of public schools. If students are unable to pay the fees, the Ministry of Education subsidizes the financial industry by arranging student loans, which means students leave school in debt.
This system, where students basically mortgage away their lives, severely hampers opportunities for members of disadvantaged groups. It also allows private schools to offer “cram school-type” scholarships to students with better grades in order to maintain their commercial operations. This also damages the education system.
Very low land value taxes and interest rates are levied on construction projects, which allows companies to maintain unused land and empty buildings, thereby perpetuating high housing prices, which leads to the government subsidizing young house buyers’ loans and interest rates. Financial institutions and developers make good profits, while teachers in Taipei will forever be “landlord’s slaves.”
Ma’s duty is to clean up these pseudo-reforms and efforts to perpetuate corrupt practices, not to perpetuate them and ruin Taiwan in the process.
Lin Terng-yaw is a retired law professor who taught at Tunghai University.
Translated by Perry Svensson