Marc MacSharry (Fianna Fail)

A wide variety of characteristics brought about this crisis. I refer to the joint committee's meetings on Friday and this morning. For those Members who missed the former, Senator Ross gave a good account of it in his article in the most recent edition of the Sunday Independent. Those Members who attended the aforementioned meetings would have learned there were substantial international factors, of which everyone now is aware. If they were specifically and simply home-grown, one wonders how Fianna Fáil managed to swing it in so many other economies as well as in this one. At today's meeting, the governor, Professor Honohan was in a position to outline for members what in his view the breakdown of the home-grown nature of the crisis has been. He was in no doubt that in the context of what was home-grown, the primary factor was the role of the banks, their boards and their views. I refer to what they have done, the lack of governance and appropriate procedures therein, as well as the disregard for prudential lending practices. Second — Senator Ross had the benefit of being present this morning and can confirm this was the order in which the governor gave it -our regulatory regime completely and utterly failed, as we all know. This of course also was an international factor because international regulatory regimes were far too lax. However, sticking specifically to our own position, in third place were the Government's macro-economic and fiscal policies.

Senator Twomey referred to how we blew the boom and to how the moneys were expended. Senator Ross may be able to confirm that I took the opportunity at today's committee meeting to ask questions regarding two Opposition policies in the run-in to the last election. The first concerned the effect of the abolition of stamp duty and whether that would have limited our potential to deal with the problem or would have exacerbated the problem at the time. The governor, Professor Honohan, made clear that this would have been the case. I note this was Fine Gael policy at the time. Moreover, I recall that at that time, the finance spokesperson for the Labour Party advocated strongly that the National Pensions Reserve Fund should be raided to pay for infrastructural development. This again was something that Professor Honohan was in a position to confirm today would have been short-sighted and would have greatly impeded our ability to deal with the crisis.

I note that from a political perspective, Fine Gael and the various other parties have focused on fiscal policies when criticising the Government. However, it is important to acknowledge the backdrop of that time. Members on this side of the House undoubtedly are fully accepting of the mistakes that have been made. Moreover, with the benefit of hindsight, the pro-cyclical fiscal policies that were being implemented turned out not to be those that we would set out to repeat, had we the opportunity. However, we do not. When deciding on what fiscal policies to implement, one considers one's level of resources, the projections available based on those resources and on activity at the time, as well as on the needs of the nation as a whole. One also would, as Professor Honohan and Messrs Regling and Watson were prepared to do last week, depend to an extent on advice given and to use such advice to back up or influence change to the policies of the day. Members now know that such advice was not available at that time to the extent it should have been. Indeed, in a glowing report, to quote Governor Honohan, the IMF's financial sector assessment programme in late 2006 adjudicated that all was okay. Similarly, international surveillance organisations such as the OECD, the IMF and the European Commission, as well as our home-grown ones, such as the ESRI and others, stated that the situation here was okay. Last Friday Mr. Regling admitted that all of the establishment, that is, the nations of the world and the organisations that adjudicate on such matters, were highly impressed with the model of Irish success and considered that what was being described in many ways was a new order in which such excessively expansionist expenditure policies were backed up by Mr. Greenspan, the European Commission and the OECD. Undoubtedly, with the benefit of hindsight, these turned out to be disastrously wrong.

I will turn to a concern I have expressed many times in the House. On one occasion, the Minister of State, Deputy Mansergh, took me up incorrectly. I believe he thought that I was advocating that Ireland should leave the euro area, which I was not. However, over the last few days Senator Ross will have heard me asking twice about the potential to cool our economy when we are not in full control of our own monetary policy in the context of interest rates. I still have this concern for the future, given that we constitute only 1% of the eurozone economy and that the focus is on inflationary concerns, rather than on Irish economic concerns. It is a matter of concern when money is available at 2% and growth is at 8%. An uninformed economic mind such as mine might suggest this is great, as one can borrow at 2% and as there will be 8% growth, this is a no-brainer. Having raised this issue at both recent meetings of the committee, I still am somewhat at a loss as to what is the full range of counter-cyclical measures available to a small open economy like Ireland, which may wish to offset the impact of a very low interest rate at a time when very high growth is being experienced. This is a matter that Members should examine in the future.

The most important aspect of the reports, apart from confirming what many Members knew already, was that we have been on the right road since then.

I apologise but I must conclude because I am feeling unwell.