INSIDE POLITICS:Acceptance of tough Budget measures does not mean that public anger at irresponsible banking has subsided, writes STEPHEN COLLINS
BANKING RATHER than the Budget is likely to dominate proceedings when the Dáil resumes on Tuesday. The Opposition parties have lined up to demand a parliamentary inquiry into the banking crisis, while the Government has signalled its intention of unveiling its own approach next week.
It is a tribute to the political skill of Minister for Finance Brian Lenihan that one of the toughest budgets in the history of the State has generated such a muted response. The issue has slipped down the political agenda, at least for the present.
One of the reasons the Budget was greeted with a whimper rather than a bang was the broad acceptance that the crisis in the public finances has to be tackled immediately and not put on the long finger. The experience of the 1980s, when the opposite approach resulted in a lost decade, played a large part in convincing people of the need for short-term pain in the long-term national interest.
The acceptance of the need for tough measures to deal with the public finances does not mean that people are prepared to forgive and forget those who brought the country to its knees. There is a strong demand for accountability, as well as a desire that lessons are learned so that the same mistakes are never made again.
Unsurprisingly, the Opposition parties have pounced on the need for an inquiry in response to public anger at the fact that so few people in the world of banking and regulation have paid any price for decisions that destroyed the livelihoods of tens of thousands of people and left the Irish taxpayer with unlimited liability for the mess.
The responsibility held by the politicians who presided over such disastrous policies has to be faced as well. The manner in which decision-makers at every level in the political, administrative and banking systems not only failed to damp down the property boom but actively sought to inflate it at every stage is something that cannot be ignored.
The question is what form that inquiry should take. Taoiseach Brian Cowen has insisted that it should not be an adversarial one involving political point-scoring, while Fine Gael leader Enda Kenny has responded by saying the Dáil inquiry he is seeking should not be turned into a political football.
Both statements should be taken with a grain of salt. Cowen’s desire to avoid a search for heads on plates is clearly designed to protect his own, given that he was minister for finance from 2004 to 2008 when the bankers and developers were allowed to spin out of control. Kenny’s claim that it will not become a political football was quickly contradicted by his insistence that the Taoiseach should be an important witness in any Dáil inquiry.
The Government does not have much time to work out its approach. In contrast to Cowen’s cautious response, Green Party leader John Gormley came out in support of an inquiry before Christmas and in recent days has insisted that the Minister for Finance shares his views. Brian Lenihan is due to bring proposals to Cabinet on Tuesday, so the approach he proposes will be critical.
At the first Cabinet meeting in January, Ministers spent a lot of time discussing the broad banking issue as well as the calls for an inquiry. In a statement afterwards it stressed the need to restore a properly functioning banking system, “including the obvious need to learn lessons from the events that led to current problems”.
It appears the Government is focused on three options. The first is the establishment of a Dáil committee, on the lines of the one set up after the defeat of the first Lisbon poll.
The second option is the appointment of a senior figure to interview witnesses and compile a report into the banking collapse, while the third would involve a combination of the two approaches. This would entail the compilation of an expert report, which would then be considered in public by a Dáil committee. It would hold hearings along the lines of the Dirt inquiry conducted by the public accounts committee (PAC).
Fine Gael and Labour are both proposing a Dáil inquiry, although there is one significant difference. Fine Gael believes a Dáil committee could be established immediately, while Labour believes a change in the law is necessary to ensure that it could not be challenged in the courts, as happened in the past. Labour will use its time in the coming week to debate a motion calling for an inquiry.
One thing nobody in the political world is advocating is a judicial tribunal. The bitter experience of the cost and delays involved in the various tribunals established since 1997 has undermined their credibility as a valid form of inquiry. Whatever the rights and wrongs of the allegations against Michael Lowry, he certainly did have a point in attacking the €300 million cost of the 11-year inquiry into a decision he made as a minister in the space of four months in 1996.
A proper Dáil inquiry into the banking crisis is clearly the correct way to proceed. Former Labour leader Pat Rabbitte, who served on the Dirt inquiry, rightly said during the week that “a parliamentary power of inquiry is necessary and intrinsic to the proper functioning of a representative, responsible, parliamentary democracy”.
The PAC inquiry into the Dirt tax abuse is clearly the way to go, but to work properly the members of the committee will have to be selected with care. The commitment and energy of the late Jim Mitchell was vital to the success of the Dirt inquiry. If a banking inquiry is conducted by a small committee of substantial figures with a knowledge of finance like Michael Noonan of Fine Gael, Pat Rabbitte of Labour and Seán Ardagh of Fianna Fáil, it should be able to produce a valuable report in a relatively short time.
Hopefully the Government and Opposition will be able to agree next week on the format for a Dáil inquiry that can give people clear answers about what went wrong and why. This will be the best protection against a repeat and, far from damaging Ireland’s reputation as some people fear, it will show that we are on the way to being a mature democracy, capable of learning from its mistakes.