Establishing a National Debt Clock: A Day Late, and a Dollar Short

Establishing a National Debt Clock:
A Day Late, and a Dollar Short
China Times editorial (Taipei, Taiwan, ROC)
A Translation
November 2, 2010

Next year the Republic of China will celebrate its centennial. Government debt will reach record highs. In view of the rapid deterioration in the government's finances, the Ministry of Finance intends to set up a "national debt clock" to keep the public informed. The biggest problem however is that our government's definition of government bonds is not consistent with international standards. Information disclosure is incomplete. Government debt is nearly off the charts. But only now is the government establishing a national debt clock. It is, to borrow an old expression, a day late and a dollar short.

Over the past decade, central government debt has doubled. The Ministry of Finance wants to establish a national debt clock. A prerequisite however is complete data. Only that will enable any national debt clock to serve as an early warning system. If any would-be national debt clock presents incomplete information, the Ministry of Finance can assure the public that the "Republic of China's finances are the soundest in the world." Such a national debt clock would create only confusion. It would only be suspected of misleading the public.

The international definition of government bonds includes bonds less than one year old plus non-operating fund subordinated debt. Our government regulates debt in accordance with the "Public Debt Act." Take 2009 for example. Debts less than one year old amounted to 240 billion NT. Non-operating fund debt amounted to 570 billion NT. Therefore 2009 central government debt amounted to 4.95 trillion NT. This exceeds the officially declared amount by 810 billion NT. Therefore according to the International Monetary Fund (IMF) definition, the 2012 central government debt burden is on the verge of bankruptcy.

The Control Yuan has already reprimanded the government for failing to define existing government bonds in accordance with international standards. But if the Ministry of Finance's future national debt clock still uses such relaxed standards and incomplete information, what sort of warning can such a national debt clock really provide?

The government debt burden also includes future "hidden liabilities." The total budget for 2012 has revealed for the first time "hidden debt" amounting to 13.3 trillion NT. This includes pensions for military personnel, civil servants, public sector teachers, and social security (public health insurance, labor health insurance, farm worker health insurance). These are legally-mandated government debt burdens. But they are not defined as such by the Public Debt Act. Thirteen trillion NT in "hidden debt" will have to be honored. If one day the government is unable to pay people their pensions, social unrest will surely ensue.

Recent strikes in France are a harsh example. Despite continuing street protests, the French National Assembly voted on October 27 to approve a retirement system reform bill. It changed the statutory retirement age from 60 to 62, and the full pension qualification age from 65 to 67. French President Nicolas Sarkozy insisted on retirement system reform. The government could no longer make its pension payments. France faces a huge wave of postwar baby boom generation retirees. Unless the nation's retirement system is reformed, it will eventually become unsustainable.

Following the financial crisis, Europe and the United States faced financial difficulties. This, coupled with a rapidly aging population, made their financial problems worse. According to Standard & Poor's, if their policies are not changed, French government spending on the elderly would amount to 29% in 20 years, the highest in Europe and America. In the nearby UK, government spending on the elderly would amount to 20% in 20 years. An aging population has caused a huge budget deficit. Forty years later, the government debt-GDP ratio for the Group of Seven will exceed 400%. The amazing estimates show that the United States and Europe have reached the point where fiscal reform is unavoidable. Last month the UK announced its most drastic fiscal tightening policy since WWII. It includes changing the statutory retirement age to 62.

In recent years, the population on Taiwan has aged rapidly relative to its European and American counterparts. According to CEPD estimates, by 2015, the elderly will outnumber the young. By 2025, the elderly will amount to 20% of the population. Society on Taiwan will become ultra-elderly. By then, pensions, health care, long-term care, and other major health care spending will amount to a heavy financial burden. Coincidentally, the the Bureau of Labor Insurance assessment pointed out that in 2026, the Labor Insurance Fund will face bankruptcy. By then, it will require government subsidies. Without sound finances, people really should begin worrying that they may not receive pensions upon retirement.

Government debt is rapidly rising. The population is rapidly aging. Our national debt has already sounded an alarm. Will establishing a national debt clock inhibit growing debt? Consider the United States. During the financial tsunami the U.S. national debt exceeded the 10 trillion US mark. Its national debt clock broke too. Decision makers must keep an eye on the public treasury. They must not continue indulging in feel good policies. Otherwise, no matter how many national debt clocks they establish, they will find it difficult to turn back the tide. Debt clock or no debt clock, Europe and America's painful experience should provide our government's financial agencies a hard-earned lesson.

中時電子報 新聞
中國時報 　2010.11.02
社論－現在設國債鐘 反應已經慢半拍
本報訊

明年中華民國將歡慶建國百年，政府債務餘額也將達到歷史新高。有鑑於國家財政急速惡化，財政部將設立「國債鐘」隨時向國人報告國債的最新狀況。然而，目前最大的問題是，我國公債的定義未與國際接軌，資訊揭露不完整，財政單位在國債瀕臨「破表」之際才準備設立「國債鐘」，反應似乎慢了半拍。

最近十年來，中央政府債務餘額翻了一番。財政部設立「國債鐘」，前提是必須提供完整的數據，以發揮警惕作用；如果未來這個「國債鐘」所呈現的是不完整的訊息，財政部擬據此告訴國人「中華民國的財政是全世界最好的」，這樣的「國債鐘」反而有混淆視聽、誤導大眾之嫌。

國際上對於公債的定義，除了我國《公共債務法》所規範的債務，還必須把未滿一年債務、非營業基金的自償性債務加總計算。以民國九十八年為例，若加計一年以下債務二千四百億元，以及非營業基金債務五千七百多億元，那麼九十八年度中央政府債務餘額為四．九五兆元，比官方公告版本多出八千一百億元。以此類推，民國一百年的中央政府債務負擔，若依國際貨幣基金(ＩＭＦ)定義，幾乎就要「破表」了。

令人質疑的是，監察院已對現行公債定義未與國際接軌提出糾正，未來財政部的「國債鐘」若仍以較寬鬆標準呈現不完整的資訊，這樣的「國債鐘」能發揮多少警惕作用？

政府債務負擔除了上述已發生的部分，還有未來將發生的「隱藏負債」。民國一百年總預算案中，首度揭露政府「隱藏負債」高達十三．三兆元，包括軍公教人員退休金、社會保險（公保、勞保、農保）提存不足的部分等，這些是屬於政府未來應負擔的法定給付義務，但不屬於《公共債務法》規範的債務。十三兆餘元「隱藏負債」到期一定要兌現，如果有一天政府付不出退休金，那肯定會引發社會動亂。

最近法國發生大罷工，就是一個血淋淋的教訓。儘管街頭抗爭活動不斷，法國眾議院十月廿七日表決通過退休制度改革法案，將法定退休年齡由六十歲延後至六十二歲，領取政府全額退休金的年齡由六十五歲延後至六十七歲。法國總統薩科奇堅持推動退休制度的改革，原因是政府退休金已入不敷出，法國面臨戰後嬰兒潮世代的龐大退休潮，國家的退休制度再不改革，將無以為繼。

在金融海嘯之後，歐美各國面臨財政困難，再加上人口快速老化，使得財政問題雪上加霜。根據標準普爾的報告，在政策不變情況下，法國政府有關高齡人口相關支出在二十年後將占ＧＤＰ的廿九％，高居歐美各國之冠；鄰近的英國，二十年後高齡人口相關支出也將達到ＧＤＰ的廿％。由於人口老化引發龐大的財政赤字，四十年後，七大工業國政府負債占ＧＤＰ比率將超過四○○％。這些驚人的推估顯示，歐美國家的財政已到了非改不可的地步。英國上月即公布了二次戰後最血腥的財政緊縮政策，其中包括將法定退休年齡延後至六十六歲。

近年來台灣人口老化速度，比起歐美有過之而無不及。依經建會預估，二○一五年，老年人口將超過幼年人口；二○二五年，老年人口將達二十％，台灣將成為超高齡社會，屆時退休金、健保與長期照護等龐大支出將是沉重的財政負擔。巧的是，勞保局委託的評估指出，二○二六年勞保基金將面臨破產危機，屆時必須依靠政府編列預算支應。如果沒有穩健的財政，那麼民眾真得要擔心以後可能領不到退休金了。

從政府債務急速攀升趨勢與未來人口老化所加重的財政負擔來看，我們的國債警鐘早已響起。然而，設立「國債鐘」就能抑制債務的增加嗎？看看美國，金融海嘯期間，美國國債突破十兆美元大關，「國債鐘」也破表了。事實上，如果決策者不能為人民看緊荷包，為財政嚴加把關，繼續「自我感覺良好」，設立再多的「國債鐘」，也難以發揮力挽狂瀾的作用。不論有無設立「國債鐘」，歐美的慘痛經驗，財政單位都應引以為鑑。