George Lee (Dublin South, Fine Gael)

In his speech, the Minister of State, Deputy Mansergh spoke about the need to examine and learn from recent event in the banking sector. He was absolutely right and nobody would disagree with him. However, the difficulty is that while we need to learn, we must recognise that learning about what happened is a necessary condition for fixing the banking system, but it will never be a sufficient condition. The core of the collapse in prosperity has been a collapse in trust. In addressing the banking problem, we do not just need to learn what went wrong; we also need to work very hard to re-establish trust.

The collapse in trust has led to the collapse in prosperity. The collapse in trust caused banks not to lend to each other, wiped out the share values of those banks and caused all sorts of difficulties in obtaining working capital for businesses, resulting in a loss of jobs. That is the real difficulty with recreating prosperity. We should learn what went wrong, but we should not pretend for a second that this will be enough. It is incredible that the Government is suggesting we can re-establish public trust behind closed doors. It just cannot be done.

We are being asked to accept that the Central Bank will report on itself and expect that this will restore confidence. This simply cannot be true. The Central Bank itself has failed, although I do not mean to impugn Professor Honohan's reputation in saying that. He was not involved in the Central Bank at the time. The bank failed and will now write a report on its own failure. From a public perspective, this is obscene. Members of the public who are picking up the tab for the failure of the banking system and the poor decisions that were made need to know the reason they are being asked to do so.

It is crucial to have a well informed contribution to the new form of banking regulation which is being discussed. Members of the public need to have confidence in the regulation that will be put in place. Unless they see questions being asked in public, there will be a lack of belief in the new system of banking regulation. The problem is they cannot trust insiders on this matter. The inquiry, as proposed by the Government, will be about insiders and will be conducted by insiders for the benefit of insiders. That will not do. It is not acceptable to conduct the inquiry in secret when the consequences of the collapse have been so public. While a private commission may help us to establish some facts, it will not restore trust.

I understand from international observations made by the OECD and others that the loss to taxpayers from the banking collapse could be as much as €24 billion. Ireland has only 1.8 million to 1.9 million people with jobs. Last year, the net loss of young people to emigration was of the order of 60,000. On the employment front, the cost to the public of having 420,000 people on the live register is enormous. The proposal to conduct this inquiry in private is breathtaking in its arrogance.

The Central Bank, Financial Regulator and Government told us everything would be all right when things were not all right. We are not trying to find out what went wrong. We know the effect of what went wrong. Unemployment, damage, hurt and lost prosperity are in everybody's face. This is the reason we need this inquiry. The difficulty we have is that the commission will produce a report which will present a fait accompli to the public. We do not know for sure that it will ask witnesses the questions we would like it to ask. For this reason, it will be difficult to accept it.

In terms of believing the Government has the correct approach one only has to consider the issue of fallibility. In 2004, the current Taoiseach and then Minister for Finance, Deputy Cowen, outlined his view of the world in the context of his budget. He stated he hoped ordinary taxpayers would recognise the firm resolve of the Government to secure their welfare now and for the future, adding that the "country and its future are in safe hands with this Government." This statement turned out to be waffle. The following year, the then Minister for Finance stated the Government would not put at risk the prosperity achieved by the Irish people, adding that prosperity could be a great gift that this generation would give to the next generation. This, too, turned out to be guff.

In 2006, the current Taoiseach and then Minister for Finance, Deputy Cowen, stated that the country's success had been brought about by the hard work of our people - that part was true - in response to the policies of the Government. If he believes that, then the Government's policies are the cause of what occurred and the public needs to see the matter thrashed out in public. The hard work, which is key to prosperity, was done by people. They want answers and need to see them given in public.

In December 2007, while the credit crisis was well in flow, the current Taoiseach and then Minister for Finance, Deputy Cowen, stated that the fundamentals of the economy were still good, adding that rather than adopting "a conservative, cautious stance, I believe we must respond to the challenge by taking determined action and pushing ahead with renewed vigour". The Government is extraordinarily fallible and members of the public do not have confidence in or trust it. If one examines its record in terms of everything it has done and said, there is good reason for this lack of public confidence and trust.

This also applies to the Central Bank. The bank produces a financial stability report each year. In November 2006, only months before the outbreak of the credit crisis, it stated that house price increases "may be easing somewhat" and that if these signs were to continue into 2007, the vulnerability posed by house prices would be reduced somewhat. This statement was rubbish.

The following year the Central Bank stated that the central expectation was that the shock absorption capacity of the banks left them well placed to withstand the pressures from any adverse economic and sectoral developments. This was drivel. The bank stated further that the health of the banking system remained robust. Its analysis described as benign the changes in the workings of the banking system and the fact that it was importing money. We cannot have the Central Bank investigate itself. No one has any trust in the proposal.

While the Government and Central Bank did not set out to make mistakes and wanted to do the job correctly, that they got it so wrong is the reason it is so important to have an independent report. It is impossible to support a proposal to have the people who got it wrong report on how they got it wrong. No one has confidence in the proposal.

Members of the public are in shock and sick of being spoken down to by people behind closed doors. The Government proposal in its amendment to the Labour Party's Private Members' motion is to do just this. It is not sufficient and the public deserves much better. Trust is lacking and the Government, by failing to live up to its responsibility, has shown it cannot be trusted. If the report is not debated in full in public, it will be an enormous error and a huge let down for the public.

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