Martin Mansergh (Tipperary South, Fianna Fail)

I welcome the Central Bank Reform Bill, which is a clear necessity in light of the events of the past two years in order that we might strengthen greatly the effectiveness of the regulation carried out by the Central Bank. In conjunction with related items of legislation that are to follow, this Bill forms part of an overall strategy to put Ireland back on its feet economically and to restore confidence. The Minister referred to a number of examples which show that there is confidence in this country's approach to its problems. That confidence has important implications in respect of both the ability to borrow and the cost of borrowing. For an indication of those implications, one need only consider the difficulties faced by Greece.

This is not the first item of legislation to deal with this subject during the past decade. I had just been appointed as my party's spokesperson on finance in the Seanad when what became the Central Bank and Financial Services Authority of Ireland Act 2003 was introduced. At that stage, the focus was on separating prudential regulation from the consumer interest. The Government of the day was criticised by the Opposition for not agreeing to a complete separation. As Deputy Rabbitte of the Labour Party stated, quite factually and correctly, at the time, the most basic protection sought by consumers was that the institutions to which they entrusted their funds should be financially sound and that the system should be fundamentally solid. During the debate on the 2003 Act, Deputy Rabbitte said: "We take that as read, just as we take as read that the Central Bank has a good record in prudential supervision." His contribution also contained references to Allfirst, Enron, Ansbacher and Tony Taylor. The possibility that mainstream Irish financial institutions could be at risk never occurred to anyone at that point.

Much of the debate on the Bill before the House has - like the remarks I have just made - been retrospective in nature. It is the duty of the Opposition to challenge, play devil's advocate and put forward alternatives. As is the case with historians, it is possible to argue endlessly and inconclusively about counterfactual hypotheses. One can never definitively indicate what would have happened if different courses of action had been pursued at particular times. Even when governments adopt opposition strategies wholesale, they still remain primarily responsible for the consequences of their decisions. In that context, it is the Government of the day which must measure the risks.

The different conspiracy theories being put forward are not credible. The crisis of confidence which had been building internationally was precipitated by the decision to allow Lehman Brothers to fail. When representing the country at the IMF conference in October 2008, I heard the US Treasury representative admit that the collapse of Lehman Brothers had precipitated the global financial crisis. What happened made smaller and weaker countries more vulnerable. We are asked to believe that allowing Anglo Irish Bank to fail would not have shaken the position of our other financial institutions. The decision to allow Lehman Brothers to collapse had a widespread effect on financial institutions in the US.

The Government has taken the view that it is vital to maintain credit, even if the flow thereof remains unsatisfactory. The current crisis has revealed woeful inadequacies and reckless irresponsibility on the part of some of those who held leadership positions in financial institutions. The autocratic-idiosyncratic style cannot be permitted to obtain in the future.

Apparently, the two most secure investments during the past 30 years were banks and property. However, both have recently suffered major setbacks.

In light of my background, I am somewhat bemused that the heavy hitters - there is no doubt that the public has been heavily hit - sometimes benchmarked their achievements against those of the old ascendancy. I doubt if much comfort will be derived from the fact that at least a handful of these individuals will go down in the annals of infamy alongside some of the worst landlords of the ascendancy. In the days before democracy, star chambers or, as was the case in France when Louis XIV held the throne, chambres de justice made people disgorge information relating ill-gotten gains. However, we cannot employ such methods because ours is a written Constitution.

Have we learned lessons? I am not always so sure. Do we know how to say "No"? Property developers and similar individuals come forward with schemes which, according to them, will create hundreds of jobs but they ignore the entire question of sustainability. The banks, or at least some of their leading executives, etc., seem to continue to adopt a macho approach and show little humility or penitence in respect of the consequences of their previous actions.

As far as the investigations are concerned, the Opposition parties are seeking highly politicised explanations. I can easily understand the attractions of Iceland from that point of view. What are required, however, are much cooler appraisals of systemic failures.

I was disappointed by some of the more extreme charges levelled at the Taoiseach and others. How credible is it that a Minister or Taoiseach would seek to undermine this country or its people? Deputy Gilmore has a leftist party background and comes from a tradition that specialised in the virulent denunciation of political opponents. I would certainly be slow to use a word such as "treason" in a republic, but how would one describe wanting to subvert our parliamentary democracy by creating an irreversible socialist republic by revolutionary methods, having one's party's general secretary seek £1 million from the Communist Party of the former Soviet Union or forging currency in the basement of one's party headquarters? That which I have outlined seems to have been a woeful misjudgment. However, Members on all sides of the House have at some point made fundamental mistakes of one kind or another. No side of the House has a monopoly on such mistakes.

As far as the charges relating to property incentives go, when he served as Minister for Finance, the Taoiseach, Deputy Cowen, tried to phase out many such incentives which then existed and resisted demands for the abolition of stamp duty.

The Government has done a good job of crisis management and has placed the country on the road to recovery by creating more robust institutions and introducing effective regulation. Competence and competitiveness are key to recovery, investment and jobs. There are few short-term fixes. We are ready to do whatever is necessary and that has included bigger nationalisations than ever carried out by any party opposite but not losing sight of the fact that we need to maintain and recover a mixed social market economy and get private enterprise back on its feet. Undoubtedly, there was far too much hubris and there is need for a strong State working in constructive partnership.

I note Fine Gael seeks two terms of single party government in a single Chamber Oireachtas without obvious input from the Labour Party. The people will decide in due course what it has done to merit that degree of trust. The Labour Party is claiming the office of Taoiseach by implication without earning it by becoming one of the two largest parties in a potential coalition. There are some precedents abroad for that but not good ones. I need only refer to Lloyd George and Ramsay MacDonald. Undoubtedly, we need practice of government and governance put on a new and more rigorous footing. Which parties are best able to implement that in government and will be chosen and entrusted to do so remains to be seen.

I would be interested in the IMF proposal published today to be submitted to the group of 20 for consideration and then, presumably later, to the whole EU and other bodies. That is certainly part of the agenda that must be considered.

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