Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

Okay. So we'll go on a small bit more then. And its ... the next document is a pre letter in 2006 and there's a box here. If you look at the section ... the mid-section in the box it says, "Another indicator that house prices are becoming overvalued is that, based upon a debt service threshold of 40% of disposable income, an increase in proportion and potential buyers are being priced out of the market." So this is 2006, house prices are still going up. 2004, there's discussions with regard to tax relief being a difficulty. In 2004, there is commentary with regard to the Governor's advice not being adhered to and so on.

Then I'll just ... to finally to go on to the Honohan report, and that'll come up on your screen there, where he makes a general commentary on the annual pre-budget letters ... these are the sort of documents that I just discussing a moment ago. And if you look at 7.8 and take it from the second sentence in, it says. "These letters regularly highlighted the issue of house price inflation and the size of the construction sector, particularly in the letters of 30 September 2004." This is well before 2006. It's a year into your tenure as the ... as the general secretary of the Department of Finance. "The level of house prices, along with continuing high rates of increase in prices, posed macroeconomic as well as financial stability risks" - stability being a responsibility of the Central Bank, regulatory being an issue of the regulator, but you're on the board of the Central Bank and stability is an issue concerning your responsibility. "There remains a risk, however, that in the current state of housing output is on some estimates very much higher, not far off twice." And this goes back to your earlier statement this morning about housing supply and demand, there's a very, very strong indication here that demand is less than 50% of actually supply ... that there's an oversupply of a very, very high capacity. So, not far off twice the underlying demand for property.

Then the very, very final statement I'll take it ... its the last line on that page and continues into the next page, "In this regard, it would seem appropriate, for example, to allow no further extensions to the termination date of mid-2006 for the range of tax driven incentive schemes for housing." So what we have in the earlier testimony there is back as far as 2003, there is discussion with regard to doing something about the tax incentivisation in the property sector. And here we are out in 2006 and it's still being discussed. Could you explain to us this morning, Mr. Considine, why was the Central Bank's recommendations to the Minister not more forcibly alert to the issue, given that you would have been, maybe, conceived as being the middle man between the Department of Finance and the Central Bank?