John Paul Phelan (Carlow-Kilkenny, Fine Gael) | Oireachtas source

I am glad to have the opportunity to make a few points in this discussion. I would not agree with the remedy Deputy Peter Mathews suggested, but he is right about there being unfinished business and how the legacy debt should be dealt with. I am not sure his recommendation is a genuine solution that can be agreed to, but the Government must turn its attention to this issue more strongly than ever. Like all previous speakers, I was here for the Minister for Finance, Deputy Michael Noonan's statement that we were in the last few weeks of the ECB-IMF programme. As the Minister outlined last week when it was announced that the Government had decided not to seek a precautionary credit line, the intention on entering the programme would always have been that we would leave it.

At different points in the past three years many speculated that the country would not be able to leave the programme. There were particularly churlish comments from people in Fianna Fáil about the necessity to have a precautionary credit line and an almost complete failure to acknowledge their role in bringing us into a programme. Deputy Peter Matthews spoke about the role of the Governor of the Central Bank. Perhaps the greatest indictment of the last Government is that it was left to the Governor of the Central Bank to go on the national airwaves to say what was actually happening with the national finances, while Cabinet Ministers were either too incompetent to know what was happening or lied through their teeth about the presence of members of the troika in this city. I do not know which is worse, their being incompetent or telling barefaced lies. That is the situation the country faced.

I was a maths teacher in a previous existence and there is no definitive correct answer to the question on the Government's decision not to seek a precautionary credit line. We do not know and only with the benefit of hindsight will we be able to tell whether it was the correct decision. On balance, based on the facts as we know them, the interest rates available to Ireland on the international markets and our success in exiting the troika programme, it was the correct decision to take. Most of the commentary by independent commentators outside the House has reflected that, on balance, it may well have been the right decision, but we will not know definitively for several years to come.

I agree with many previous speakers and have listened to most of the debate. Deputy Derek Nolan spoke about the origins of the economic crisis of the last five or six years and the housing market bubble. While he was correct, some political decisions made along the way led to that housing market bubble. The Deputy said no attempts had been made to interfere in the property market. Actually, several attempts were made. I was not a Member but a councillor and a student when Mr. Peter Bacon who is now producing reports for private bodies was engaged by the Government to draw up reports on housing market issues. The first Bacon report in 1998 was primarily focused on trying to squeeze investors out of the market and reduce excessive investor demand by changing the tax treatment of certain investment incomes. His 1999 report focused mainly on the position of the many people who were renting and seeking to get on the property ladder. As a result of his reports, in the following few years the Government led by Fianna Fáil with the Progressive Democrats and their Independent friends decided to establish a committee that would examine the role of the Central Bank and regulation of the banking sector. That committee has been largely forgotten and written out of history, but it was chaired by then Deputy Michael McDowell. It made some worthy recommendations, the principal one being that the function of regulation should be removed from the Central Bank and an independent Financial Regulator established. This was accepted by the Government. That decision was subsequently reversed and the Financial Regulator is effectively the No. 2 in the Central Bank. There is much closer co-operation, to say the least, between the two bodies.

There was a dismal failure, in particular following the second Bacon report which examined the level of mortgage people could obtain. It spoke about basing borrowers' mortgages on their net income rather than 2.5 times gross salary. As a result of this, former Deputy Michael McDowell's committee spoke about the need to establish independent regulation and the entire nature of banking in this country changed in a relatively short period. The economy also changed. Up until approximately 2002 the economy was not as focused on the construction sector, but after 2002 the property bubble took hold and future generations will have to come to terms with the disastrous fruits of it. Many more text books will be written about it.

On balance, I agree with the Government's decision. The Minister for Finance, Deputy Michael Noonan, in his time in office has instilled confidence back into the country. I have confidence in him that he has made the correct decision but only time will tell if that is the case.

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