Mr. Bertie Ahern:

So, to ... to my section with ... on the statement ... the "Context of Budgetary Policy": In terms of wider budgetary policy and also, maybe, to give proper context to the issues under discussion, I think it's worthwhile to emphasise that during my period as Taoiseach, Ireland finally caught up with and then surpassed average EU living standards. It was a sizeable national achievement to raise our living standards from a historically low base of two thirds of the EU average. The downturn did have a very hard impact on individuals and families, especially those who lost their jobs and, of course, that saddened me and I wish the recession did not happen. However, it is disingenuous to suggest that all the gains this country made have been wiped away. Between 1997 and 2008 this country thrived, and, not only did Ireland enjoy record economic growth but living standards were raised across the board and this drove social progress. This rising tide was essential in lifting hundreds of thousands of our people out of poverty, to reversing forced emigration, to significantly increasing pensions and child benefit, to modernising schools, health facilities, roads and communications infrastructure around our country and creating well-paid jobs for young people at home. This represented a positive change to the lives of many people and, despite the recession, a lot of this progress is still there, benefiting thousands of our citizens.

I am glad that Government allocated - that I led - huge amounts of money in this period into regenerating traditional areas of poverty, such as Ballymun and Fatima Mansions in inner-city areas, and parts of Limerick, Cork, Waterford and other cities. I am glad we put money into the islands, improving electricity, sewage and building infrastructure and piers and ... in rural areas. Throughout the country, people now drive on better and safer roads. The motorway network that Government supported during my tenure has cut journey times and is a vital economic and social artery of our people. People also travel on better trains, our school and hospitals have more staff working in better buildings. All the time as Taoiseach, what I wanted to do, Chairman, was ... with budgets, was to improve the quality of life for ordinary people and to provide services that our country did not have before. Those who say we squandered the boom forget that in my time as Taoiseach we actually recorded budget surpluses in ten of our 11 budgets. We balanced sustained increases in spending with the need to reduce our national debt. As a result, Ireland paid a billion euro less every year in ... in interest payments.

I want to remind members of this committee that when I first came to the House, in '77, and for ... right through the 80s, our national debt was an unsustainable milestone around the neck of taxpayers. It was a barrier to national progress, as huge sums of revenue had to service interest payments. In 1997, the year I became Taoiseach, 20% of all taxes raised in the State were used to service the national debt. In 2007, my last full year as Taoiseach, that figure stood at 4.3%. During my time as Taoiseach, we continued to pay into the National Pensions Reserve Fund, so that, when the downturn came, we had €20 billion saved which provided some protection when the recession came.

There is zero credibility in suggesting that an open economy like ours could withstand the global recession and the collapse of the global investment banking system. This was not just an Irish experience, it was a worldwide recession that affected America, Japan, Britain and China, and most of the developed economies in the world. In 2007 the International Monetary Fund maintained that Ireland's economic growth would be strong over the medium term. The IMF directors said our economic performance was robust and was supported by sound economic policies. When I left office a year later, the IMF and other financial organisations, such as the OECD, along with national ones, such as the ESRI, were all predicting growth in the Irish economy in the region of 3% for 2009. In June 2009, a little more than a year on from my resignation, they were predicting contraction of between 8% and 10%. That illustrates how unprecedented and unforeseen this global crisis had been and how quickly it took shape.

It is true that we had some warnings about over-reliance on ... on property. But it is important to be clear about the record. In October 2004 the IMF alluded to a possible overheating in the housing market, even though, subsequently, they themselves, and other economic commentators, implied there was no bubble. In the budget two months later, Brian Cowen, the Minister for Finance, announced a review of tax incentive schemes. In the next budget we announced a termination date for all existing property-related tax incentive schemes, with the exception of private hospitals, registered nursing homes and child care facilities. Our stamp duty was already the largest transaction tax on property in the European Union and despite a concerted campaign by some to get rid of the tax, or to reduce it substantially, we refused to go down this route and we listened ... we'd ... if we had listened to those calls, this would have added fuel to the housing market and we would have experienced a far greater difficulties than we ultimately experienced. We were, Chairman, able gradually to remove incentives from the property market but membership of the euro meant that we were unable to raise interest rates. Accordingly ... according to the IMF report in the summer of 2009, the housing boom was caused mainly by cheap credit due to low interest rates, along with rising incomes and a strong demand for housing. There is no doubt that this created a structural weakness in the economy and the international downturn ensured this has turned from a soft landing into a very hard one. I wish this didn't happen and, with hindsight, of course, I would have done things differently.

I did make mistakes, Chairman, I admit that. But, so does everyone who governs. I know that during my time as Taoiseach, while I did not get everything right, I can honestly put my hand on my heart and say I did try my best - my very best - to do the right thing by the Irish people. Of course, I apologise for my mistakes but I am also pleased that I did get a lot of things right.

The winds of the greatest international recession since 1929 did batter our country after my departure but now, as that storm abates, it will become increasingly clear that a lot of the progress the Irish people made in the first decade of the 21st century, such as modernising infrastructure, investing in our roads, schools and hospitals has not been washed away. I make these points not to take away from the fact that Government has had to do Trojan work in recent times and that the Irish people have endured many sacrifices in a national battle for economic and social stability. I want to conclude by saying I respect the work done by my successor, Brian Cowen, and the late Brian Lenihan. I also admire the efforts of the current Government and I think the Taoiseach, Minister Noonan and Minister Howlin have shown a lot of commitment and courage in tackling the financial crisis. I think one of the lessons we should all take from the crisis is that, maybe, our politics needs to be less partisan and that, as a small island, we should pull together. The last few years have been extremely tough on many ordinary families and that breaks my heart, but the work of our democratic political system must prevail and the problems we faced on a massive scale of unemployment, emigration and the banking crisis are on track to being resolved. Thank you, Chairman.