iPhone/iPad users: click here. Streams provided by HEAnet.
Updated: 15.10
THE BANKING INQUIRY launched its second set of Oireachtas heavyweights in one day into the mix with Labour leader/Tánaiste Joan Burton and Pat Rabbitte coming before the committee this afternoon.
The pair were respectively Labour’s spokesperson on finance and the party leader as the financial crisis began to unfold.
In his opening remarks to the inquiry Rabbitte said that Labour had sought to address the issues of property regulation and soaring house prices while in opposition in the early 2000′s.
However, he acknowledged that despite having great concern with regards to the property market, he personally “did not make the connection” that the Irish banking system might fail until autumn 2008.
Burton meanwhile addressed the issue of governmental spending while Labour were in opposition in her opening address.
“It was no coincidence that public spending went up immediately before the 2002 and 2007 general elections,” she said.
Spat
A spat emerged early in the afternoon session when Fianna Fáil’s own finance spokesperson Michael McGrath suggested that Labour had been in favour of continuing the then government’s spending policies before 2007′s general election.
When Burton’s reply went on for a length of time McGrath asked “is that a 7-minute way of saying yes?”
In the context of the figures for growth that were provided in 2007, nobody anticipated the entire collapse of the banking and construction systems,” replied the Tánaiste.
McGrath then asked what Labour’s alternatives to the government’s approach to the banking crisis in September 2008 would have been.
With Burton’s reply beginning to wander once more, McGrath expressed his dissatisfaction to inquiry chairman Ciaran Lynch.
“She won’t answer my questions, I’m wasting my time,” he said.
“We would have let the banks that were most exposed, Anglo and Irish Nationwide, fail or be nationalised,” Burton eventually replied.
“And who would have ended up not getting paid, how would that have saved money?” McGrath persisted.
Having dominated the first half an hour of the afternoon’s questioning, McGrath then turned his attention to Pat Rabbitte.
“The government want to do good things, the opposition always want the government to do more good things, would that sum up Labour’s approach while in opposition Deputy?” he asked.
“We can’t say we had a defined idea or alternative for the crisis because we didn’t know it was going to happen,” Rabbitte replied.
Soft Landing
Committee chairman Ciaran Lynch (Labour) then focused his questioning on the Tánaiste.
“There is a general assumption that a theory of ‘soft landing’ was en vogue at the time, did you ever contact the Department of Finance to seek documentation that supported such a soft landing theory?” he asked.
A soft landing is generally seen as a rate of economic growth that is high enough as to avoid a recession.
Burton replied that Finance published documentation, but they didn’t make any available in other ways other than occasionally through their head of research who wasn’t an economist.
She said that she did not periodically meet with officials from the Department of Finance despite being party spokesperson on finance at the time.
“I did meet officials from the NTMA and Central Bank however,” she said.
With the Central Bank I repeatedly made my concerns about sub-prime lending known.
And I engaged with Finance via committees and other public avenues. They were available in that fashion but not in other ways.
‘Pulling a Tánaiste’
Labour Senator Susan O’Keefe then asked her party leader if anyone had sought her advice as the banking crisis unfolded.
“The only person who ever sought any advice from me, either from the political or property worlds, was the late former Minister for Finance Brian Lenihan,” Burton replied.
When pressed on the issue Burton said that Lenihan “asked a lot of Deputies a lot of things”.
I told him he needed to get very good advice, and expertise in relation to the difficulties that seemed to be unfolding.
Burton also said that in summer 2008 whe was “very, very disappointed” that the then government “went off in June, July 2008 and didn’t come back until September when the crisis was to the fore”.
Finally, a lighter moment reared its head as Senator Marc MacSharry went head-to-head with Rabbitte.
“Deputy, you’ve a reputation as being someone who calls it as he sees it,” said MacSharry.
“Well I certainly called the Connacht Final didn’t I,” replied Rabbitte (MacSharry is from Sligo, who suffered something of a hammering at the hands of Mayo last Sunday).
“I think you underestimated that one actually,” replied MacSharry to general mirthful noises.
As MacSharry followed up with his questioning he implored Rabbitte to be brief and not “pull a Tánaiste on it”.
In the context of his response Rabbitte told MacSharry “I think Deputy, that sometimes talent skips a generation” (MacSharry is the son of former Fianna Fáil minister Ray MacSharry). Zing.
MacSharry then posed a follow-up to his question this morning to the Taoiseach, this time to the Tánaiste, that being whether or not she had a hand in the altering the make-up of the committee, and whether or not she approved of that makeup.
“I wasn’t leader of the Labour party at the time,” Burton replied.
I’m just pleased that all parties are here, and everyone is represented
The latest phase of the inquiry is seeking to examine the role the Oireachtas (in this case, as per this morning, the opposition) had to play as the financial crisis played out. Rabbitte resigned as leader in 2007 after that year’s general election.
Per the inquiry chairman, today’s hearing is to focus on the opposition’s role from three standpoints: financial scrutiny, contribution to budget policy, and the relationship between the government and Oireachtas and banking and property concerns in advance of the banking crisis.
Earlier…
This morning, Taoiseach Enda Kenny denied Fine Gael had the same links to property developers as Fianna Fáil.
During the morning inquiry session, Socialist TD Joe Higgins raised a February 2011 Daily Mail article that claimed Fine Gael raised up to €150,000 from business donors including property developers, bankers and the racing industry.
The paper said it did this by hosting “lavish golf days at luxurious British and Irish courses”.
Kenny said all donations received by the party comply with rules set by the Standards in Public Office (SIPO). He noted that most of the party’s donations stem from its national draw.
When pressed on whether on not Fine Gael had the same links to property developers as Fianna Fáil, Kenny said “certainly not”.
In a previous banking inquiry session, academic Elaine Byrne noted that many donations received by parties are not disclosed as they fall below the required threshold.
When questioned by Fianna Fáil’s Michael McGrath, Kenny was again critical of the approach of McGrath’s party.
“An opposition party was certainly labouring against a situation here where government held all the aces, held all of the opportunities to make its decisions removed from scrutiny of the Oireachtas in a way that’s very different from how it is now,” Kenny said.
This led McGrath to reply: “We’ll argue that point somewhere else.” To which Kenny said: “Indeed we will.”
Warning Fianna Fáil
Earlier, Kenny told the committee Fine Gael warned the Fianna Fáil-led government many of its initiatives introduced from 2002-2007 were unsustainable.
While the main party in opposition, Kenny said Fine Gael launched campaigns to “highlight the scale of government waste of taxpayers’ money as public expenditure escalated rapidly”.
He said his party demanded “proper cost-benefit analysis to be applied to the proliferation of tax shelters and incentives, particularly for the property sector”.
Kenny said Fine Gael also warned the the Fianna Fáil/Green government “regarding the deterioration in the country’s international competitiveness”.
He said that the party’s Rip Off Ireland campaign “highlighted the growing divergence in price and cost levels for consumers and businesses between Ireland and our trading partners”.
Sinn Féin’s Pearse Doherty noted that Fine Gael’s 2007 election manifesto sought to increase current expenditure by €17.4 billion and capital expenditure by €3.4 billion over a five-year term.
Doherty pointed out that this level of spending increase represented twice the projected growth rate.
Kenny said the figures “speak for themselves”, but added Fine Gael’s economic model was “vastly different” from what Fianna Fáil proposed.
‘Take MacSharry out’
During one of the more heated, but then lighter, moments in the meeting, Fianna Fáil Senator asked Kenny why he changed the configuration of the committee and if he called the leader of the Seanad asking him to “take MacSharry out”.
Kenny and several others laughed.
MacSharry did not.
“I would never say ‘Take Macsharry out’. I’ve had many discussion with your good father [Ray MacSharry] about politics and the west of Ireland,” Kenny assured him.
Earlier, MacSharry questioned Kenny on whether or not he ever took lifts from developers. Kenny said MacSharry was entitled to ask the question but he deemed it “ridiculous”. He said he has never “been in the business of seeking hospitality by air or road”.
The men shook hands and shared a laugh after the session.
‘A real emergency’
Kenny said “design flaws in the euro architecture as a whole contributed to the crisis here and elsewhere in the eurozone”. However, he added: “The lion’s share of the damage to the Irish economy was the fault of domestic economic and financial mismanagement.”
The Taoiseach said Fine Gael supported the bank guarantee as Ireland “needed a functioning banking system” in terms of protecting the economy, business and trade.
“We took the view it was a real emergency.”
When asked about a phone call he made to former Anglo Irish Bank executive Matt Moran in November 2008, Kenny said he made the call because Moran’s brother asked him too. He denied the pair discussed nationalising Anglo.
‘Inappropriate relationships’
Jobs Minister Richard Bruton is also appearing before the committee to discuss his role as Fine Gael’s finance spokesperson.
He said the crisis “wasn’t a tsunami from nowhere”, noting the seeds of economic crash were sown over an extended period of time.
In his opening statement, Bruton said: “The hard lesson which Ireland has learnt from the crash is the central importance in a small open economy of strong export-oriented sectors supported by a suite of public policies that sustains strong jobs growth and improving living standards based on strong competitiveness.”
Bruton said it’s clear there were “major failings in economic and regulatory policy” ahead of the crash.
The Jobs Minister said “a number of systemic failures” contributed to “inappropriate relationships and a laxity of approach”. He said these included a planning system that “conferred huge benefits from zoning and development” and encouraged “urban sprawl” and “economically unsustainable costs”.
Bruton described the “lack of distance” between the Central Bank and the Department of Finance was “inappropriate”. He added that the “weaknesses of the Oireachtas in scrutinising, evaluating and holding government and its agencies to account” and “the lack of independent economic scrutiny of “group thinking” also played a role, with the latter leading to the view the economy would have “a soft landing”.
Some commenters view the banking inquiry as an attempt to lay blame for the crisis primarily at the feet of Fianna Fáil ahead of the general election.
Meanwhile, in response to Fianna Fáil’s #FFacts campaign, Fine Gael has been sticking the boot into the party on Twitter over its role in the economic collapse:
When giving evidence last week, former Taoiseach and Fianna Fáil leader Bertie Ahern noted that, when in opposition, Fine Gael was looking for spending increases in the budget.
Tánaiste Joan Burton and TD Pat Rabbitte will appear before the inquiry this afternoon to discuss Labour’s role in opposition.
Additional reporting Cianan Brennan
To embed this post, copy the code below on your site
have your say