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People being made to pay the price for this bankrupt Government – Ó Caoláin

15 June, 2010 - by Caoimhghín Ó Caoláin TD


Speaking in the Dáil debate against the Fianna Fáil/Green Government’s motion of confidence in itself, Sinn Féin Dáil leader Caoimghín Ó Caoláin said the Irish people are being made to pay the price for the disastrous failures of successive Fianna Fáil-led Governments. He said that Sinn Féin had consistently advocated alternative polices and warned against the direction being taken by Finance Ministers McCreevy, Cowen and Brian Lenihan.
He said:
“The people who are being made to pay the price by this bankrupt Government are the 440,000 people unemployed in this State, the jobless young people whose dole has been cut, the social welfare recipients whose payments have been reduced, the carers whose already meager support has been reduced further and older people whose home help hours have been slashed.
“The price is being paid by children in our schools and by patients in our hospitals. It is being paid by families who are losing their homes or who are living in poverty and debt because they are saddled with huge mortgages, legacies of the Fianna Fáil property bubble.
“Fianna Fáil has shaped this economy in a way that no previous Government could have shaped it because of their length of time in office and the massive resources at their disposal. Clearly, there is not a shred of credibility in their effort to shirk responsibility for what has happened to the Irish economy.

“There is a myth being peddled now by Fianna Fáil that all political parties in the Dáil were part of this collective self-delusion and encouraged the economic policies pursued between 1997 and 2007. I will let other parties speak for themselves but Sinn Féin stands on its record and during that period we repeatedly advocated a radically different direction for the economy. In the 2007 General Election itself we were the only party not promoting a policy of tax-cutting.

“In successive pre-Budget submissions from 1997 onwards we called for fundamental tax reform, the development of public services on a sound basis, wealth redistribution and housing policy based on social need not speculators’ greed. The proposals of Sinn Féin and of other progressive voices were treated with contempt by the Fianna Fáil government and – let it be recalled – by the vast majority of economic and political commentators who cheered on Finance Ministers McCreevy and Cowen.” ENDS

Full text follows

Motion of ‘No Confidence’ in Fianna Fáil/Green Government 15.6.10
Caoimhghín Ó Caoláin TD, Sinn Féin Dáil leader

Today should have been the day when the spotlight was solely on an appalling Fianna Fáil Government which has been exposed as the principal cause of the recession in Ireland. It is a grossly incompetent Government. But we have a situation where the pressure has been taken off one set of incompetents – Fianna Fáil - by the political ineptitude of another set of incompetents – Fine Gael.

The Irish people now know all too well where the political leadership of Fianna Fáil has brought this State and this economy. But where would the political leadership of Fine Gael bring us? With the Fianna Fáil government on the ropes, Fine Gael has managed to deliver a knockout punch – to themselves.

We have no confidence in either Fianna Fáil or Fine Gael. But the motion before us today is about the Taoiseach Brian Cowen and the Fianna Fáil/Green Government and we have no hesitation in opposing this motion of confidence in them.
When a motion of no confidence in this Government was tabled at this time last year I stated that the coalition of corrupt politicians, property developers and bankers brought this economy to its knees and they will not and cannot lead it into recovery.

Those words have been vindicated by the reports on banking published last week. I doubt if any Government during its term of office has been the subject of such a damning verdict on its stewardship of the economy over a prolonged period.

Fianna Fáil came to power with the Progressive Democrats in 1997 and they have been in office continuously since then. They have shaped this economy in a way that no previous Government could have shaped it because of their length of time in office and the massive resources at their disposal. Clearly, there is not a shred of credibility in their effort to shirk responsibility for what has happened to the Irish economy.

After a decade in office they brought the economy to a critical stage in 2007. In many ways this was a key year. The electorate was already disillusioned with Fianna Fáil but there was a sense that there might be economic problems ahead. And so, during the course of the General Election of that year, many wavering voters swung back to Fianna Fáil, seeking stability and continuity and believing that the so-called Celtic Tiger could be prolonged.

The people were in fact being deceived by the Government and the bankers. As the report of Patrick Honohan states, as late as 2007 the Central Bank was predicting a soft landing for the economy. Mr. Honohan’s report says:

This appears to have been a triumph of hope over reality. More generally, a rather defensive approach was adopted to external critics…

It was in 2007, in the wake of the General Election, that the re-elected Taoiseach Bertie Ahern lashed out at those he accused of “cribbing and moaning” and he wondered “why don’t they commit suicide?” It was a nasty little outburst that revealed the deep insecurity underneath the Fianna Fáil swagger.

There is a myth being peddled now by Fianna Fáil that all political parties in the Dáil were part of this collective self-delusion and encouraged the economic policies pursued between 1997 and 2007. I will let other parties speak for themselves but Sinn Féin stands on its record and during that period we repeatedly advocated a radically different direction for the economy. In the 2007 General Election itself we were the only party not promoting a policy of tax-cutting.

In successive pre-Budget submissions from 1997 onwards we called for fundamental tax reform, the development of public services on a sound basis, wealth redistribution and housing policy based on social need not speculators’ greed. The proposals of Sinn Féin and of other progressive voices were treated with contempt by the Fianna Fáil government and – let it be recalled – by the vast majority of economic and political commentators who cheered on Finance Ministers McCreevy and Cowen.

Before the property boom really took off we in Sinn Féin identified the social and economic damage that would be caused by a housing policy based solely on the market. When the Housing Act 2002 was being debated here in February of that year I stated:
[Government] housing policy, such as it is and as reflected in the Bill, relies almost totally on the market, and the profit motive of developers and the construction industry, to meet a massive social need. This policy has failed and always will…The Bill provides a legislative basis for what is called social and affordable housing. The very terminology is an admission of failure. It reflects the reality that decent housing is beyond the affordable reach of huge sections of our society. The National Economic and Social Forum in its report on social housing concluded that ‘home ownership is now beyond the reach of most people on average incomes’.
In the marketplace, on which the Government relies totally for housing provision, what matters most is the price of houses as products for sale and as investments, not their value as homes for real people.

The Taoiseach has claimed credit for abolishing some of the property-based tax relief which was done very late in the day. Again in 2002, I stated:

In Budget 2002, the Government restored interest relief on rented residential property and reduced stamp duty rates for investors. This will worsen the housing crisis by increasing property prices.

In November 2000 we stated, in our pre-Budget 2001 submission:

Sinn Féin's approach to the economy is distinctive ,radical and rational. We are not prisoners of the unbridled free market thinking which has dominated the Fianna Fáil/Progressive Democrats Coalition. We reject their primary economic policy of cutting taxes in a way which has disproportionately benefited the higher paid.

To go back further, in November 1998, we pointed out that Irish banks “enjoyed a return on their equity which was double the European average, making them among the most profitable banks in the industrialized world”. It is clear now that greed and arrogance in Irish banks was inflated in such a situation and the ground was prepared for the property bubble and the lending spree to come.

We called for an increase in Corporation Tax for Irish retail banks with the resulting tax funds earmarked for community and local development projects in the most disadvantaged areas throughout the State. We said that ultimately the banking sector should be nationalized so that the Irish people could be the true beneficiaries of this vastly profitable business.

We know what happened. The only bank nationalized has been the zombie Anglo-Irish Bank, the pet bank of the Golden Circle and now a parasite on the Irish economy.

In 1999 we called for no more reductions in Corporation Tax and Capital Gains Tax. In 2000 we pointed out that the Government’s agenda was to implement tax cuts that primarily benefited the highest incomes. While those on low incomes were quite rightly being taken out of the tax net the Government refused to introduce wholesale tax reform. On the banks we said:

It has been clearly shown that the private and public banking companies have at times been active participants in systematic tax fraud. Their activities were compounded by a regulatory system that, at worst, was unwilling to tackle tax fraud and was, at best, incompetent and unable to enforce the tax laws of the State.

Crucially, in 2000 we also called for the control of land prices with a statutory ceiling on the price of land zoned for housing to stop speculation and reduce soaring house prices. And we called for a Constitutional amendment to allow for this if necessary.

In November 2002, in advance of Budget 2003, we called for a cost benefit analysis of the battery of tax reliefs set up by successive Finance Ministers. Of course that analysis was never done and untold millions were lost in property-based tax reliefs that fuelled the disastrous property bubble.

Speaking here on the Housing (Miscellaneous Provisions) Bill in 2004 my colleague Deputy Morgan said:

Rather than tackling the housing crisis through the provision of increased levels of social housing and taking real measures to tackle house and land prices, the government is appeasing bankers and developers by introducing measures which may result in over borrowing.

He went on – and if only the Government had listened:

It is easy in a favourable economic climate to forget the dangers, for those who over borrow, of any significant rise in interest rates. They will end up paying mortgages way beyond their means and facing the threat of repossession. If the house price bubble bursts, they will end up with negative equity.

In that same debate Deputy Ó Snodaigh pointed out that banks were giving mortgages of three times the salary of the principal earner and the amount of the salary of the second earner. He reminded the Government that these were the same institutions which had been involved in many scandals and ripped off the State time and again.

Only eight Deputies voted against that Bill which helped to fuel the property bubble. They were the five Sinn Féin TDs and three others.

We in Sinn Féin were not alone in calling for a different economic direction and warning of the consequences of Government policy. But all dissenting views were dismissed by an arrogant administration that expressed supreme confidence in its own wisdom.
Where is that supreme confidence now? It seems now that they weren’t in control at all and certainly not responsible for the collapse. The Taoiseach has blamed the advice of the Central Bank and international factors. The Minister for Justice Dermot Ahern was the best of all when he said: “No one really is responsible. It just happened.”

I wonder how many times the dog ate Dermot’s homework when he was in school?
We know now who the culprits are but who is being made to pay the price by this Government? Not a banker or developer or speculator or so-called regulator has spent even a night behind bars. A handful have been removed from their positions. Most of them have had a very soft landing.
Patrick Neary, the Chief Executive of the Irish Financial Services Regulatory Authority retired with a €630,000 payoff. In addition, he is receiving an annual pension of €142,670.
John Hurley was the Governor of the Central Bank until 2009. He received a payment on retirement of €525,000 and will receive a pension of around €175,000 a year.
Eugene Sheehy was Chief Executive of AIB until 2009. He earned €2.1 million in 2007 and €1.15 million in 2008. His pension is around €450,000 a year.
Brian Goggin was Chief Executive of Bank of Ireland until 2009. His pay peaked at €3.1 million in 2007 and his pension is around €650,000 per year.
So much for the soft landings. What about the crash landings?
The people who are being made to pay the price by this bankrupt Government are the 440,000 people unemployed in this State, the jobless young people whose dole has been cut, the social welfare recipients whose payments have been reduced, the carers whose already meager support has been reduced further and older people whose home help hours have been slashed. The price is being paid by children in our schools and by patients in our hospitals. It is being paid by families who are losing their homes or who are living in poverty and debt because they are saddled with huge mortgages, legacies of the Fianna Fáil property bubble.
The tragedy is that this situation need never have developed if the right policies had been pursued. But nothing has really changed and nothing will change under this Government.
We have a Health Service Executive that has proven to be even more dysfunctional than we thought it was. But how could it be otherwise? It was established to act as a buffer between the Government and, specifically, the Minister for Health & Children, who uses the HSE to insulate herself and her Cabinet colleagues from responsibility and accountability. And the HSE was established to underpin a grossly inequitable two-tier health system.
By that one act alone – maintaining such an inequitable and inefficient health system – the Fianna Fáil Government has forfeited any claim to the confidence of the people that it ever had.
The atrocious stewardship of the Government and the HSE has been exposed yet again in the scandal of the deaths of children in State care and in the miscarriage misdiagnosis scandal. And at this very time, just to show that nothing has really changed, the Government has approved the appointment as HSE CEO of a former CEO of the privatised Eircom with a salary greater than that of the Taoiseach or Cabinet Ministers - €322,000 per annum of public money.
Returning to the immediate issue that triggered this confidence debate, the banks, the two reports by Patrick Honahan, and by Klaus Regling and Max Watson vindicate what we in Sinn Féin have warned about for years. We called for:
* stronger regulation
* caps on remuneration for bankers
* an end to property inflation
* fair tax policy based on stable direct taxation
* corporate law to be improved
* a tax on speculative trading
* counter-cyclical budget policies.
These reports show how Fianna Fail governments recklessly managed our economy and led us directly into the current financial crisis. They are an indictment of Government policy and particularly of Brian Cowen’s role as Finance Minister. They are also an indictment of the financial regulator, rating agencies and bankers.
Sinn Féin stood alone in our warnings among the political parties. Fine Gael and Labour also wanted to feed the property bubble – they wanted to lower direct taxes and abolish stamp duty in 2007, all of which would have added fuel to the fire.
The Government claims it has learned from its mistakes. It hasn’t. One of the criticisms is that it followed a pro-cyclical budgetary approach and relied on unstable taxes. Pro-cyclical is Charlie McCreevy economics – spend money when you have it, don’t worry about saving. A counter-cyclical approach saves in the good times so you can spend in the bad, and spends in the bad times to re-inflate the economy.
The Government is still pursuing these fundamentally flawed policies. Its pro-cyclical approach now means cut, cut, cut which intelligent economists say is the wrong approach because it is deflating the economy.
The authors of reports published last week were not permitted to investigate anything that happened in the banks subsequent to the night of the guarantee in September 2008. Since then the government has nationalised Anglo Irish, one of the most corrupt banks in the world; awarded a million-Euro pension to the former CEO of Irish Nationwide Michael Fingleton; established NAMA, a body designed to buy €54 billion worth of bad loans that are probably worth much less; recapitalised several banks to the tune of billions, with the result that AIB is all but nationalised. Apparently inaccurate, if not fraudulent, accounts have been signed off at several banks by Government appointed Directors and auditing firms that were subsequently awarded contracts with NAMA.
The reports could not be clearer in showing that the crisis is domestic and that the Government’s excuses about the collapse of Lehman Brothers are spurious. They find, essentially, that the Government’s economic policies caused the crash. The banking inquiry arising from these reports will start over the summer and run for six months, but its terms of reference are already compromised by the Government. It is refusing to let the inquiry investigate Government economic policies, instead appointing an Oireachtas committee, which of course will have Government members in the majority, to report on the Government’s macro-economic policies.
Mr. Honahan’s Report states that the bank guarantee was necessary and justified to prevent the banking system imploding – but that the terms and conditions fell short. That is close to the position that we in Sinn Féin took. We accepted that action had to be taken on the banks to protect people’s deposits but we wanted strict conditions.
We urged that the guarantee be used as the first step to full nationalisation and was necessary to stop the banks imploding, based on the information put in front of us at that time. But the terms and conditions fell far short of what was required, they amounted to a bail-out of the culprits, so we voted against them.
We wanted Anglo-Irish Bank wound down. We wanted taxpayers, not bondholders protected. We wanted the main banks taken into public ownership and turned into a state bank.
Regrettably the Labour Party took a totally short-term and contradictory position, opposing the guarantee, but not presenting their alternative. They did not say what they would have done when it looked like people would be getting up the next day and finding they were not able to access the wages in their bank accounts. When Labour did get round to saying they would nationalise the banks - and nationalisation is a guarantee of sorts because the State takes on all deposits and loans - they followed it by saying they would give the healthy nationalised banks back to the private sector. So Sinn Féin will take no criticism from that quarter about our position on the banks.
Sinn Féin would remove all the bank executives and directors involved in causing the crisis who are still in positions of power. We would also make sure the criminal aspects of what happened were prosecuted. We would start taking care of ordinary citizens ruined by the banking crisis and being forced to pay for it when it wasn’t of their making. That entails protecting people in negative equity, facing repossession, and struggling with debt. It includes protecting viable businesses struggling to access credit. We would nationalise AIB and BoI and create a state bank from the two. We would wind up Anglo-Irish and let other banks fold if they could not exist on their own, taking their good assets into the larger banks.
We need rid of this rotten Government and we need a new beginning to Irish politics. That will not happen under a Government led by either Fianna Fáil or Fine Gael. For the first time it may be that a majority of voters are prepared to vote for parties other than these two conservative blocs that have dominated politics for so long.
We in Sinn Féin have a vision for a re-built Irish economy. This would be done through saving and creating jobs; reforming the tax system to ensure the wealthy are paying their fair share; eradicating waste in public spending, such as exorbitant executive salaries; reforming national and local governance; drawing up a realistic debt repayment structure on the basis of a growing economy, that will grow if it is invested in; and fully regulating a new finance system with necessary secure measures like stronger capital requirements for banks and the supervision of credit rating agencies.
All of this would be done to build an economy to serve the people. It would provide the basis for a transformed, equitable and efficient health service, education with access for all, decent and affordable housing, sound social welfare support for everyone who needs it and security for our older citizens.
The first step must be removal of this Government and therefore we oppose this motion of confidence.

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