Richard Bruton (Dublin North Central, Fine Gael)

I welcome the opportunity provided to Members by the Labour Party to debate this issue. The Government must realise that there is great political and public scepticism about its attitude to investigating the banking inquiry. This is not a surprise because such scepticism has arisen from the Government's reaction whereby, from the very first day that such an investigation was mooted by the Governor of the Central Bank, the response was evasive. It was to the effect that the Government was too busy with other matters to have an investigation or that, while an investigation should by all means be held, it should be in the long-distant future. Members who were told it would be too costly or would be a political football now are expected to believe the Government is fully open about the investigation, which strains credibility. People's scepticism is greatly enhanced by noting that the form of inquiry being proposed by the Government is so constrained in respect both of its terms of reference and of the period over which it is to investigate.

It betrays the fact that there still remains a culture within the Government that does not believe public officers, whether elected or non-elected, should be accountable. Accountability is at the heart of this matter and a culture exists within the Government that simply does not accept that anyone is responsible or that anyone should take responsibility when things go wrong. The reason the public wishes to see an inquiry in the public domain is that in part, contrary to what the Government would suggest, this is not simply about finding out the reasons and causes but is about the very notion that people are accountable. Those who hold high offices in the country, whether it be a non-elected office such as the power to investigate and regulate the banking system and ensure that excesses do not occur or whether it be a political role, must be accountable in public for their stewardship. This is at the heart of any proper system and is at the heart of any democratic parliament that is worth its salt. Members should be capable of holding people to account and this simply has not been possible. It has not been possible for many reasons, some of which were created by the courts' circumventing of the Dáil's ability to perform such work properly. However, Members must return to a position whereby Parliament holds people to account. This is a fundamental point in this debate.

I have heard the terms of reference which have been set by the Minister described as being focused. The only thing on which I can discern them being focused is on ensuring that nothing involving political accountability will be properly investigated. The sort of focus involved is to keep it away from the Government at all costs. The Government has stated that an investigation of systemic failure in the banking sector is needed. This is to suggest that the commission of inquiry should have a narrow focus and simply is about the banking sector. The Minister of State is aware that in respect of what has gone wrong in Ireland, the banking crisis is a symptom of a much deeper systemic failure that has occurred. I refer to a failure of our system of governance and regulation, as well as the willingness and ability to hold power in all its shapes to account. That is what is at the heart of this matter. There has been regulation in Ireland in which no probing scepticism was exercised by the regulators. There have been unhealthy linkages between policymakers, regulators and those who stood to gain from their decisions. Such unhealthy relationships have been developed by a political culture that has occurred during the past ten years in particular. It has discerned no difference between personal and political donations, has appointed those who made donations to boards and has favoured some of those people in political decisions that were taken subsequently. Members have the evidence of that trail and the moral, ethical and accountability boundaries that should have prevailed and kept those matters separate simply were allowed to erode. This has formed part of Ireland's systemic failure.

Moreover, those who issued warnings about the impending banking crisis and the fragility of the economic model were treated with contempt by those at the head of the political system. Such warnings not only went unheeded but were dismissed contemptuously. The message was clear to those within the regulatory systems that the political system had a view as to whether the ongoing bank lending and property boom was sustainable. Clearly, the political system was stating repeatedly that this was based on sound economic fundamentals and was the route to take when this manifestly was not the case. There was no understanding and a political atmosphere was created in which regulation was encouraged to break down. While I do not exonerate from responsibility those who were directly holding those offices, a political climate was created that stated the property boom was based on sound economic fundamentals and that these banking models, which Members now know were so holed below the waterline, were to be encouraged and supported. This constituted a massive political failure that must be included.

Instead however, I read closely the Minister for Finance's discussion of what will be involved and the only reference he made to the Government and its Departments was to consider the Departments' response. Moreover, such consideration was mysteriously to end at September 2008. As for the notion that the Government was only responsible for the response to the impending crisis, it was at the heart of its creation. This must be acknowledged by anyone who is setting up the terms of reference for an inquiry. It is wholly inappropriate to ask the new Governor of the Central Bank to decide on or to shape the terms of reference of an inquiry into himself and his agencies, albeit before his time. This is inappropriate and trying to shape these terms of reference places the Governor in an invidious position.

There is a need to examine the manner in which the economy and the Government allowed policy development to occur that supported the banking sector. The collapse of banking did not take place in a political and policy vacuum but took place within a policy arena that was created by the Government. The shutting down of a veil of secrecy at September 2008 is completely unacceptable and inexplicable. How can one pretend that a forensic examination of facts, the purpose of which is to shed light on the development of future policy, should suddenly end when the policy decisions start to occur? Surely one should examine what sort of advice was being tendered by regulatory authorities and others and which shaped the public policy that has been adopted. Surely one needs to know the reason regulators were stating in September 2008 that Irish banks were among the most sound and well-capitalised in the world. Although this manifestly was not the case, it was being offered as an assurance and support to Government policy. However, the investigation is to be shut down as though, while one must know what happened in the past, one does not need to apply it to what is being done at present or that one does not need to know whether the policy decisions that have been adopted are best designed to be least costly to the taxpayer and most effective in getting credit to flow. The only reason such questions are not to be asked is that it is on the present Government's watch. This is not because the power of a forensic inquiry might not be able to investigate such matters or shed light on how one should modify public policy from henceforth. It is totally arbitrary and unacceptable that such a cut-off point has been proposed.

The issue of whether the inquiry the Government proposes to set up should be held in public or private is important. As I stated, I believe the conduct of public policy and the behaviour of those charged with its execution are properly matters for public accountability and the inquiry should be held in public. I accept that when one is making decisions or findings that could affect the reputation of an individual who is not a statutory officeholder, elected or otherwise, different rules apply. However, in shaping the terms of reference, one should make clear to the commission that the reason Members seek this investigation and a commission of inquiry is that certain matters must be held to public account. Consequently, one should create an environment in which a commission of inquiry will use the maximum discretion available to it to hold hearings in public and will confine the private element only to instances in which the reputation of individuals may be affected. If that were a term of reference, the Government would dramatically step forward, as Deputy Kenny said earlier, from the inquiry it proposes. The Taoiseach said he would welcome such an approach but, within moments, he replied to the Labour Party leader that if an inquiry were held in public, everyone would have to have legal representation. That is untrue. Legal representation will be necessary even if the inquiry is held in private if it impinges on an individual's reputation. However, there is no need for such representation if the inquiry investigates the conduct of public policy. The Dáil needs to find role for politicians in the investigation of banking and to show that, once and for all, politics can hold public offices accountable for catastrophic failures that have brought the ordinary people of this country to their knees.

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