Joan Burton (Dublin West, Labour) | Oireachtas source

I want to thank the Chairman of the inquiry, Deputy Ciarán Lynch, and the members of the committee for their hard work and dedication over the past year. The work they have done has given a very good service to parliamentary democracy in Ireland. I would like to single out my Labour Party colleague, Senator Susan O'Keeffe, as the only woman involved in the inquiry. People said of Lehman Brothers that it only ever had brothers; there were no Lehman sisters. It seems that in the case of the inquiry only the Labour Party, which also opposed the bank guarantee, was ready, willing and able to put forward a woman to serve alongside men on the inquiry on its behalf.

A very important element of the inquiry, unlike previous ones, was that witnesses were met in public. The people responsible for the destruction of the economy and the near-ruin of our State were brought into the glare of public scrutiny to answer questions that people wanted asked. The IMF described the Irish banking crisis as the costliest crisis in advanced economies since at least the Great Depression. It resulted in a €64 billion bill for the taxpayer to recapitalise the banks. It saw the economy collapse, with more than 300,000 people losing their jobs and unemployment soaring above 15%. It bought the public finances to the point of bankruptcy. The deficit reached an incredible level of over 30% of GDP in 2010 and public debt increased fourfold to over 120% of national income. The result was the troika arriving into town on Fianna Fáil's watch. All of this was a far cry from the cheapest guarantee in the world so far, as described by the then Minister for Finance in 2008. In fairness to the late Brian Lenihan, he was left grappling with a situation that his colleagues in Fianna Fáil had stoked for several years. Nonetheless, the reality was catastrophic. That is what the Labour Party and Fine Gael Government was elected to tackle. The report describes in great detail the role of the many actors in this tragedy. The banks, which abandoned any semblance of prudence, lent recklessly to the property sector, feeding a property bubble of historic proportions overseen by external auditors which adopted a "See no evil, speak no evil" approach.

The regulator and Central Bank had sufficient powers to intervene, but chose a light-touch approach to regulation which, in effect, amounted, as we heard over the months and weeks of the evidence, to no regulation at all. Overseeing all of this was the Fianna Fáil and Green Party Government, which ignored all of the advice available to it and pursued policies that made the crisis many times worse.

Property tax incentives fed and nurtured the bubble - the kind of tax breaks that I spoke out against time and again in this House. The report notes the lost opportunity to mitigate or reduce the property bubble from 2003, when the Government failed to reduce or abolish property tax incentives as originally planned, although the then Minister for Finance established a review of these schemes in 2004. By 2006, most were still in place and deadlines were still being extended. Against the clear advice of officials, successive Fianna-Fáil-led Governments doubled up on pro-cyclical policies and hollowed out the tax base, masking an enormous structural deficit in the public finances. Over the ten budgets between 1999 and 2008, the contrast between the proposals in the June fiscal framework and the size of the tax and spending measures in the subsequent budget reveals the recklessness of their policies. In only one year, 2003, was the size of the subsequent budget day measures less than recommended. In that case the difference was marginal. In 2001 and 2007, on the eve of the disaster, the gap was particularly shocking, with the size of budget measures almost double what was recommended. I note that in 2011, Deputy Micheál Martin apologised for the many disastrous mistakes Fianna Fáil made in government. The publication of this report and the debate today would be a timely occasion for Deputy Martin and his colleagues to repeat that apology, rather than conveniently develop amnesia about it.

Fianna Fáil will say that it was chiefly a global crisis that caused our collapse, but what is particularly striking in the report is the dominance of domestic actors in propagating the crisis. International events and actors played a role, and the weakness of external surveillance from international organisations such as the OECD and the IMF is notable. However, in cases where clear warnings were given, such as the European Commission ruling on fiscal policy in 2001, they were ignored.

The report is a survey and story of what happened. The purpose of the report is to tell the story of what happened so that future historians, and possibly PhD students, will mine it for commentary on what brought our island down. We now need to focus on what is helping Ireland to recover. The schedule of loans and anticipated interest rates provided for when the troika came into town show that, for instance, last year we were expected to pay €11 billion in interest on our borrowings. In fact, the current Government reduced that suggested interest to less than €7 million.

In opposition and during the run up to the last general election I advocated that probably the worst feature of the deal struck by Fianna Fáil was the promissory note. I was very happy in government that we were in a position to renegotiate that, put it out into very long-term loans, and provide for significantly reduced rates of interest. The consequence of that has been billions of euro in savings for Ireland and for Irish people.

The key issue is that of the 330,000 people who lost their jobs. We now have 135,000 people back at work and modest stimulus into the domestic economy. The result of that has been to see families and people on very low incomes such as the minimum wage getting small increases from 1 January this year. For public servants, particularly lower paid public servants who bore significant wage cuts and tax increases imposed by Fianna Fáil in 2009 and 2010, we have seen the beginning of a modest restoration as well as a reduction of the universal social charge, USC, the emergency additional income tax introduced by Fianna Fáil at the height of the crisis. Not only have people on low and middle incomes, up to €70,000, seen their USC reduced in the last budget and again in this budget, we have also been able to remove 700,000 low paid workers from the USC net.

We are now experiencing a recovery. The principal aim of Government policy is to learn from the facts and figures set out in this report. When Regling and Watson did their initial report into what went wrong in our banks, they said that while there were international elements to the crisis, it was very much a home-made crisis, and that happened on Fianna Fáil's watch. We now have a much reformed and improved system of regulation and it behoves us all to ensure that this regulation continues to operate as toughly as possible so that if difficulties arise in the future, the public institutions that regulate will be in a position to respond as quickly as possible.

I compliment all the people who took part in the inquiry. I know there have been many differences among the committee members in reaching a desired outcome. I know that the work of the committee was restricted to some degree by very narrow legal guidelines but it is important to have this report, the documents and the information on the public record. Many documents we never saw previously were brought out into the public domain. In historical terms, that will be very important to future students and guardians of the regulation of banking and finance in Ireland.

See this speech in context