Banking on Economic Recovery

[edited contributions from Seanad Order of Business 16th,17th & 18th November 2010]

 

While we acknowledge the many good things our membership of the EU has secured for this country, it is only honest for us to note that we are dealing in some cases with forces that do not have our best interests at heart. At a time when we are not borrowing and we have sufficient funds to last until next June, why are we suddenly coming under pressure to take the bailout route? I was struck by a point made by a commentator to the effect that when we had our own currency our banks were assisted by our Central Bank, but now we are depending on the European Central Bank. While I accept the European Central Bank has been putting money into our banks, I suggest that it needs to see this problem as its problem as well as our problem. We have already heard the comments of Chancellor Merkel, which could be considered to be unhelpful to our interests. We are famous for our negotiating ability. It will be important for Ireland to work with its allies and to push back against attitudes that might serve the interests of larger and more powerful countries in the EU, rather than assisting us in our immediate crisis.

 

Despite the gravity of the situation we must not forget the vulnerable in our society. Members will be aware of the priorities set out by Inclusion Ireland for people with intellectual disabilities in its proposals for the forthcoming budget. It emphasised the need to avoid cuts in the front-line health and education services provided to people with disabilities and to improve the personal advocacy services set out in the Citizens Information Act 2007. We cannot afford to lose sight of such priorities. Any reduction in disability supports of any kind must be a last resort. In light of the waste involved in Irish politics and Government Departments — I refer to the inflated wages of some top public and civil servants, the massive proliferation of quangos, the gross overruns and unreasonable expenses associated with the tribunals and our willingness to throw good money after bad into our banking system — it is inconceivable that we have reached the last resort in expenditure cuts. The vulnerable should not be a viable economic target. We have to find a way to keep this issue front and central, even while recognising and working within the grave situation we have.

 

We must ask, therefore, why the guarantee is being extended and why bondholders have been compensated for credit risk. Should we not at least be considering withdrawing the guarantee, from Anglo Irish Bank and Irish Nationwide at a minimum? While we need to protect our two major institutions, we can argue that the peripheral ones are of less consequence to Ireland. If we do not reassess this matter, future generations of taxpayers will be guaranteeing the recklessness of developers and banks.

 

Accepting the inevitable bailout without looking at cutting the guarantee may do nothing to relieve the burden on the Irish taxpayer. It is simply that we are kicking the problem further down the road. Our circumstances today are no worse than those that would have obtained had we not guaranteed the banks in the first instance. That is a debate we need to have. It is inevitable that there will be certain developments, and the bailout looks like it will be among them. We should at least be considering this issue. People do not feel they have had a satisfactory answer to the question of why we continue to support the past irresponsibility of banks and bondholders who took certain risks. They seem to be the ones who are not paying the price.

 

 

Yesterday I spoke about the confidence game that has been played during the years. We have had a corruption of language and a culture of spin and they have to be brought to an end. It should not be the case that the Governor of the Central Bank is the one to let the cat out of the bag, so to speak, when politicians will not speak straight about the problem we face and the situation in which we find ourselves. Our way of talking in politics has not worked. We need to engage in straight talking and not patronise the people anymore. If it is a bailout, that is what it is. A bailout covers any situation where money is received from outside, whether one has to pay it back with interest. That is what the people expect from us. We do not have to see this as a moment of national humiliation if we understand the difference between humiliation and humility. We certainly have to have the humility to learn from our mistakes. We will also have to consider what it was in our political system that allowed us to be led into this situation. We have had too much cronyism in government. There has been a certain collusion between the Government and the media and no one was in a position to scrutinise seriously what was going on in recent years. If we had had a stronger Legislature, where instead of sucking up to Government or Opposition leadership, politicians saw themselves as having a responsibility to scrutinise and assess what the Government was doing, we might not have let ourselves fall into this hole. If we have the grace to learn from our mistakes, we will do so. However, if we play the blame game or seek to be politically opportunistic, we will most likely make these mistakes again in the future.

What will be done about investment in education? There is a startling statistic that not a single student who commenced a university course in pharmacy or medicine in 2008 or 2009 came from an unskilled background. This statistic shows that the issue is not whether we reintroduce university fees but how we invest in primary and second level education in order that children from lower socio-economic backgrounds can gain the points necessary to attend university and from the benefits of life.