Lucinda Creighton (Dublin South East, Fine Gael)

I am pleased to have an opportunity to speak on this important legislation, namely, the Central Bank Reform Bill 2010. Clearly, this legislation is badly needed and were one to comb the nation's highways and byways, it would be difficult to find anyone who does not share the view that our banking and financial systems, and probably our political system, are in dire need of reform. Consequently, this Bill constitutes an important first step. I believe the public is disillusioned and distrustful and is utterly dubious about all financial and regulatory institutions within this State and consequently, reform is badly needed. A robust, credible and rigorous system must be developed that will prevent any recurrence of the type of Russian roulette-style banking and financial practices that literally have brought this country to its knees. While a new system of regulation undoubtedly is required, the question is whether the legislation proposed by the Government is the solution and this requires some consideration.

Objectively, it is highly difficult to place one's faith and confidence in any system proposed by a Government that itself is utterly discredited. It is even more difficult to place one's faith in proposals to reform a system that has not undergone meaningful scrutiny or any form of public investigation. This is quite extraordinary and unique, given the scale of dramatic financial collapse witnessed in this country. We are starting from a point at which there are no definitive answers to the questions as to what went wrong, the reason it went wrong or who was responsible. Without answers to these questions, it is difficult to prescribe a solution or panacea to the serious ailments within the banking sector and the wider economy. One cannot credibly apply a sticking plaster to a failed system and simply move on without any self-analysis, serious investigation or self-examination. The ordinary citizens and taxpayers seek root and branch reform and real change to the entire culture and to all the failed practices and procedures within the banking system. They simply will not accept superficial solutions but desire real change. They do not wish to ever see a repeat of the reckless practices that have destroyed our banks and economy with effects and ramifications that no one in this Chamber can quantify. Moreover, I do not believe that any of the so-called experts who comment via the media or in academic circles can quantify it either. While the gravity of the situation is profound, I am not convinced that any meaningful solutions are available.

In order to achieve the type of reform that people expect and deserve, the Government must undertake a series of measures, some of which have been proposed by my party's finance spokesman, Deputy Bruton in recent months and specifically in the Chamber yesterday. First, I acknowledge this point has been played out in the media and that the Opposition parties have repeatedly called for it but it is time for the Government to listen to the Opposition. There is a need to conduct a special inquiry into the financial collapse of this country, as was instigated by the Icelandic Government. The Minister for Finance, Deputy Brian Lenihan, and other Ministers may be heard pronouncing on an almost daily basis that our international reputation is by far the most important asset the country can have. Moreover, one is repeatedly reminded of the need for a positive response on the part of international markets. While I do not disagree with this, if we are to instil confidence in international markets or to restore credibility among our international peers, we must be transparent. We must prove our readiness to take the necessary steps to identify clearly what went wrong and to prescribe a solution in order to ensure recovery and to prevent a repeat of the type of practices that got us into the mess in the first place.

When one considers the model that was pursued by the Icelandic Government, it is almost a no-brainer as it is so straightforward and obvious. However, Ireland has failed to follow suit. The committee of inquiry that was established in Iceland had wide-ranging powers, including the power to search premises and to seize property evidence to complete a thorough investigation. After almost two years of investigations and a detailed inquiry involving hundreds of witnesses and lengthy hearings, the commission has reached a point at which there are likely to be prosecutions and clear findings have been made that implicate the government, the finance minister and the regulator. I wonder whether this is the nub of the issue. Is the issue that prevents the Government in Ireland from pursuing a similar course of action the simple naked fact that the Minister of State and his colleagues are aware that the Government also would be fingered? It would be identified as having been party to, complicit in or turning a blind eye towards this issue. It would be identified as having played an extremely detrimental role in the Irish economy and banking sector in recent years and would be found to have facilitated the economic collapse that, as I stated earlier, has the country on its knees.

I do not believe this is a good enough reason. While this may require a change of Government, the present Government must begin to introduce some degree of accountability. This is badly needed from the perspective of vindication and of ordinary taxpayers being entitled to know what went on and what went wrong. However, this also is badly needed as a means to gather the intelligence and information that will be required to effect meaningful reform of the financial and banking sectors in Ireland. An inquiry in Ireland that was similar to the Icelandic inquiry could answer many of the questions that remain unanswered such as what went wrong, the reason it went wrong and who was responsible. This is necessary information and is not a luxury. It is not a question of finger-pointing but constitutes necessary information that is required to ensure a comprehensive redesign of the financial regulatory system in Ireland. This is essential and the Minister of State should convey the need for such an approach to be adopted by the Government to the Minister for Finance. This need should be taken into account in any new regulatory environment. Introducing legislation that simply focuses on reform of the regulatory institutions, the Central Bank and so on is all very well, but accompanying reform in the political system is required. It must be built into the larger system of reform that is necessary.

There is a risk that the old regulatory system will be blamed exclusively without any focus on the political decision making mechanisms that were in place. They need to be scrutinised and changed. If we focus on the regulatory system in the financial sphere, we could risk ignoring 50% of the cause. This would set a dangerous precedent in beginning the reform process.

While it cannot be proven, since there have been no inquiries, it is fair to assume on the basis of anecdotal evidence and what is known to Opposition Members and the public that there was a degree of joint culpability between the regulator and the Minister, the Department or the Government collectively. As far back as 2006, both the regulator and one can only assume the Minister for Finance were well aware of the problems in the property market, yet they did nothing. This is a clear example of joint culpability. The advice made available to the Government during the so-called boom years in the run up to the financial crisis should be published and subject to an inquiry. If the Government is not prepared to initiate the public inquiry demanded by Fine Gael and other parties, it should publish the briefing documents, correspondence with the banks and so on in the interests of transparency and accountability. It is not acceptable that, almost two years on from when our country was first declared to be technically in a recession, we are still in the dark. That neither we nor the public have access to this information is unbelievable. The documentation and correspondence relating to the short period preceding the creation of the bank guarantee scheme, the famous night in September, should be made available to Members of the Opposition and the public. It is essential that the Minister for Finance publish this information. Otherwise, the whole notion of reform, starting with a clean sheet and cleaning up the regulatory system is a farce.

The third matter that must be addressed by the Minister for Finance and the Government in the Bill is the mechanism for appointments to the board of the Central Bank. My colleague, Deputy O'Donnell, touched on this issue. Under the legislation, such appointments are to be made by open competition unless the Central Bank Commission believes doing so to be inappropriate. This is bizarre. No definitions or criteria are set out as to how the commission would conclude that an open competition was inappropriate. It is a vague section that is open to abuse. There is a potential for widespread abuse of the system, given a lack of clarity in its interpretation. There is also a potential for the continuation of the now familiar culture of jobs for the boys. There should be transparency, open competition and independence in respect of these crucial appointments.

The European Central Bank has expressed major reservations and concerns at the breadth of power and influence wielded by the Minister for Finance over such key appointments. Up to eight members of the board will be appointed by him. Despite significant protestations, lobbying and attempts by the Opposition to influence the Minister in this matter over many months, if not years, there is no proposal to introduce a level of transparency via the Oireachtas. Once more, we are seeing the diminution of the powers and relevance of this House, this seat of Parliament, this bastion of democracy. It is completely ignored by the legislation.

As the Minister of State is aware, Fine Gael published a public appointments Bill last year. It would have allowed for hearings at Oireachtas committees for appointments not only to the Central Bank, but to all quangos and semi-State bodies. No body is so relevant and so badly crying out for transparency and additional democratic legitimacy as the Central Bank, yet there is no proposal in the legislation to allow for that. An Oireachtas committee should have oversight and its confirmation of board members of the Central Bank should be a requirement. This would be important from the point of view of accountability, transparency and - please do not underestimate this last - public confidence. The public has no confidence in the system or the Government's desire to clean it up.

Ours is not an outlandish proposal or a strange request. It is the case in other countries like the United States of America, a country with which we have a strong relationship. In our nearest neighbour, the United Kingdom, the Treasury Select Committee scrutinises and hears evidence on proposed appointments to the Bank of England. Let us take a leaf out of their book. This is international best practice. Let us try to follow in their footsteps. If we can improve and raise our standards by learning from other jurisdictions, let us do so. Why not? We have nothing to lose and everything to gain.

The challenge of dealing with failed financial institutions is an important matter. During the past two days in the House, there has been much heated discussion about Anglo Irish Bank and Irish Nationwide, but it is incredible that they are ignored in the Bill. As pointed out by Deputy Bruton yesterday, it is obvious that the Bill should provide for bank resolution powers to take failing banks into administration. It is a simple proposal that has been enacted in other jurisdictions. The failure to provide for it once again shows the Government's determination to expose taxpayers at every turn in order to protect risk investors and bondholders. That is highly unjust and extremely inequitable and it is also completely out of kilter with best practice in other jurisdictions. I hope that fact will be taken into account and that the Government will take action.

Everyone agrees that there is a desperate need to reform the banking and financial regulatory system. However, such reform should be informed and should be based on the facts that would emerge from a detailed and extensive public inquiry. I hope the Government will, in the spirit of co-operation and at such an important time in the country's history, take on board the points being advanced by the Fine Gael Party in respect of this matter.

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