Taoiseach says crash was down to Fianna Fáil governance

Party politics took centre stage at the Oireachtas banking inquiry when Taoiseach Enda Kenny and Tánaiste Joan Burton launched blistering attacks on Fianna Fáil’s management of the economy in the years leading up to the crash.

Fianna Fáil leader Micheál Martin hit back in a statement later on Thursday, in which he accused the Taoiseach of trying to rewrite history.

Mr Kenny told the inquiry: “The lion’s share of the damage to the Irish economy was the fault of domestic economic and financial mismanagement.”

By 2007, he said, “an uncompetitive, bloated, over-borrowed and distorted Irish economy had been left at the mercy of subsequent international events”.

The Taoiseach said this had happened “without the safeguards, institutions and mindset needed to survive and prosper as a small open economy inside the euro area.”

He accused the Fianna Fáil-led governments of “abandoning the competitive, export-oriented, flexible economic model needed to prosper inside Economic and Monetary Union”, which he said had been bequeathed to it by rainbow government of the 1990s.

Tighter management

Mr Kenny said tighter management of public spending would have moderated economic overheating and left the public finances in a much strong position to protect living standards.

The Tánaiste described the economy from 2002 to 2007 as being like an athlete on steroids.

She said that she wanted to “nail the lie of the last Fianna Fáil-led Government that we were all responsible for the national bailout crisis. This is absolutely untrue”.

Ms Burton said the Irish people were the victims and those responsible were the Fianna Fáil-led government, the boards of the banks, the Central Bank and the Financial Regulator.

The fatal combination of reckless lending and tax breaks “led inevitably” to the collapse of the economy, she said.

“A series of catastrophic economic policy decisions by the Fianna Fáil/Progressive Democrat government created a huge distortion in the structure of the Irish economy” she said.

“It destroyed our competitiveness and, in the process, inflated the biggest property bubble in any advanced country in modern times.”

Responding, Mr Martin said that while he was disappointed, “I am not surprised that the Taoiseach decided to be party political at the banking inquiry. This inquiry was set up to get to the facts and the Taoiseach was trying to rewrite history.”

He said Mr Kenny could not credibly expect people to believe that Fianna Fáil should have seen the crash coming when Fine Gael didn’t.

“He cannot blame Fianna Fáil for spending too much and eroding the tax base and then try to convince people that he was right calling for more spending and less tax.”

Mr Martin said the Taoiseach should have been more open and contrite.

“The facts are that Fine Gael were demanding more tax breaks, for stamp duty to be abolished for first-time buyers and they wanted to increase the pension to €300. He cannot have it both ways.”