TAOISEACH BRIAN Cowen has defended his record as minister for finance and insisted that he has no more cause for regret than the International Monetary Fund (IMF) or anybody else.
Speaking in the Dáil debate on the recent reports from the IMF and the Organisation for Economic Co-operation and Development (OECD), Mr Cowen again resisted calls from the Opposition to apologise for his stewardship in Finance, saying that nobody had predicted the global financial crisis which had done so much damage to the Irish economy.
“My regret is that I did not manage to predict that such a seismic shock to the world economy was going to happen and neither did anyone else. If my crystal ball had been better than those of the IMF, OECD and ESRI , I would have done more to reduce spending so it would have been easier to deal with this international recession.
“However, I stand over the decisions I made based on the best information and advice that I had,” said Mr Cowen.
He added that when times were good he had chosen to spend on badly needed public services and had also run budget surpluses and brought down the national debt. The cumulative current budget surpluses for 2005, 2006 and 2007 amounted to €22 billion and the national debt as a share of national income fell from 30 per cent in 2004 to 23 per cent in 2007, added the Taoiseach.
“At all times, decisions were made in good faith . . . This was the political consensus at the time and this was consistent with the view of many of the IMF directors at that time. When I was finance minister in 2006 and 2007, the Ireland country reports commended our economic management and sound fiscal position,” he said.
The Taoiseach said the IMF’s latest analysis showed that the housing boom had been mainly caused by cheap credit due to low interest rates. This combined with rising incomes, a fast-growing population and workforce, and pent-up demand for housing, to create a structural weakness in the economy now exposed by the international economic crisis. However, our interest rates are set by the European Central Bank, not the Irish Government.
“Regarding those aspects that were within my control, as minister for finance, I moved to end the tax incentives that then existed for the property market. In budget 2005, I announced a review of tax incentive schemes. In budget 2006, in line with the recommendations, I announced a termination date of July 31st, 2008, for all existing property-related tax incentive schemes with the exception of private hospitals, registered nursing homes and childcare facilities.
“Most importantly, despite a concerted attempt in the media and on Opposition benches, I refused to get rid of stamp duty – the largest transactions tax on property in the EU. If we had heeded those calls to remove stamp duty, the brakes would have been off entirely and we would be in far greater trouble than we are now.”
Mr Cowen said that when he took up office as Taoiseach in May 2008, the experts in the IMF, OECD and ESRI were predicting growth of more than 3 per cent this year and are now predicting a contraction of between 8 per cent and 10 per cent.
“In simple terms, nobody predicted what has happened globally or in Ireland,” said Mr Cowen.
In response Fine Gael leader Enda Kenny said Ireland now faced a “lost decade” similar to Japan in the 1990s, and that because Fianna Fáil hadn’t done their jobs, hundreds of thousands of people would lose theirs.
Labour leader Eamon Gilmore said the banking crisis was likely to leave everyone in the country facing a bill of nearly €8,000.