Ruairi Quinn (Dublin South East, Labour)

I would like to structure my comments in three parts. First I want to review the history of events before 29 September 2008. Second, I want to consider the options presented to this House at that time and the directions that were taken subsequently. Third, I want to examine what we must now do. I will try to speak as quickly as possible and I hope brevity will not be confused with a scarcity of thought.

History is always rewritten and the voices that have an alternative view are dismissed or ignored, unless it suits the prevailing orthodoxy not to do so. In the run-up to the crisis, many people were saying the Irish economy was out of control and that the banking system was over-reliant on property. It was also stated we were excessive in our spending. The Minister of State, Deputy Mansergh, referred to people saying that this country was awash with money. I remind him that it was his colleague, the former Tánaiste, Deputy Harney, who made that observation. It was said there was excessive spending and that we were just going along with the good times and the boom and that there was really no alternative. Ms Margaret Thatcher referred to this as "TINA".

There was an alternative. When the rainbow coalition left Government in 1997, we were moving relentlessly in the direction of qualifying for the single currency. That single currency presented two phenomena that this economy never had before, namely, low interest rates and low inflation, which the Germans had battled for following the collapse of the Weimar Republic due to hyperinflation and the rise of Nazism. Germany and the rest of Europe had to learn this lesson at a very costly price.

As somebody said to me when I left the Department of Finance in 1997 and as we entered the harbour of the euro zone, instead of the Department of Finance and the then new Minister for Finance learning how to behave like Germans, they continued to act like Italians. There was a failure in governance in the Department of Finance, both at official and political levels. Ultimately, ministerial political responsibility is the final point of authority. Not only was there failure in the Department but also in the Central Bank, including in respect of the subsequent division of the regulatory authorities, which was done at the expense of allowing the Central Bank to continue as it had done. Mr. Michael McDowell, former Minister and Attorney General, was obsessed with the separation of the two. Even when the then Governor, Mr. John Hurley, published his quarterly reports and drew attention to the over-reliance on property, nobody seemed to be listening. Since there was nobody listening, inflation in the property sector was to many people a connivance and a conspiracy, with the Galway tent the symbol of the unhealthy political relationship between landowners, developers and builders and the Fianna Fáil Party in Merrion Street. Long after they were no longer needed, pro-cyclical tax breaks were retained which ensured that everybody at the front end of the transaction chain was incentivised to encourage more lending, more property development, more rezoning, and more selling on to innocent would be landlords who believed becoming a landlord would be easy.

I will relate an anecdote to illustrate the point I am making. In the early spring of 1997, on a visit to Sligo and Leitrim in the run-up to the election later that year, I met our then parliamentary colleague, Declan Bree, in Carrick-on-Shannon for the start of a one-day tour of that constituency. The first meeting that had been organised was with the Chamber of Commerce in Carrick-on-Shannon, a place that is familiar to most Deputies. The usual formalities were observed; I am sure the Minister of State, Deputy Mansergh, is more than familiar with the protocols associated with these types of meetings. When I asked the chamber members how we could assist them, the response was that what they sought was section 23, which had become the generic term for tax breaks on property and which in this case referred to the urban renewal scheme which was first introduced in the early 1980s. When I asked them what part of the town they had in mind they told me I had misunderstood them and that they did not wish to discriminate within the town of Carrick-on-Shannon nor within the county of Leitrim. In other words, they wanted what were officially known as urban renewal tax-led incentives for the entire county.

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