Banking on vulnerable people to pay for crisis

TOM O’CONNELL, an assistant director general of the Central Bank, is probably a fine fellow and probably never misspent a cent of public money in his career, certainly nothing on the scale of John O’Donoghue’s wanton excesses, for which he deserves banishment from public office in quick time. And, incidentally, isn’t the nervous, tentative response of the political establishment to O’Donoghue’s excesses telling? Not too keen are the boys and gals in the political establishment to have much focus on the gravy train and no wonder.

Tom O’Connell is doing just fine as head of the economic analysis and research division of the Central Bank. No talk of redundancies at the Central Bank and anyway, no doubt, Tom O’Connell is not the kind of person who would be let go even if there were redundancies.

The Central Bank itself might well have been a candidate for redundancy, so great was its responsibility for the awful mess we are in and for the hundreds of thousands of redundancies that have occurred in society over the last year. They failed to blow any of the array of whistles the directors and executives of the Central Bank are paid to blow.

Yes there was a cautious comment about the boom in property prices buried in a few of their reports, but none of the headline stuff which they are capable of commanding. Nor did they sound any of their sirens, not even their whistles, about Anglo Irish Bank, which they should have known was heading for the rocks at least from 2007. Michael Somers of the National Treasury Management Agency knew Anglo Irish was in trouble, how come the Central Bank did not know?

And no sirens or whistles about the other banks. Instead the Central Bank was telling us, reassuringly, that all was well with the banks; they had adequate capital, no need to worry. They were telling us that up to a few months before this society had to inject several billion to keep these “sound” banks afloat and then tens of billions to bail them out via Nama.

You would think, given that record, the Central Bank might be a bit reticent in telling us how our society should be managed and how the government finances should be fixed, since they made such a spectacular mess of the area for which they had direct responsibility, the banks. Not a bit of it; and it is here where Tom O’Connell comes in.

Yesterday morning, off his own bat it would seem, during the launch of the latest quarterly bulletin of the Central Bank, O’Connell said during the period 2001 to 2007, unemployment was never over 4.5 per cent “yet welfare payments increased by 100 per cent”. (“Yet”: what had “yet” to do with it?)

He then went on about welfare. He said child benefit quadrupled. He said there had been “massive outlays on the welfare side”. Then he said: “We would all like welfare increase and so on, but if this can’t be sustained, this is another matter.”

I searched this quarterly bulletin to see if Tom was quoting from it, but there was nothing at all there about “massive outlays on the welfare side” and about these welfare increases being unsustainable.

But to be fair to Tom O’Connell, what he said reflected the tenor of the report, which, by its character, is restrained and understated, although in the case of the emerging bank crisis, not understated – nothing stated at all.

The understated bit in the quarterly report comes in a reference to the McCarthy report on slashing public expenditure.

The Central Bank says “this [the McCarthy report] provides a valuable framework”. And goes on: “While raising a number of clearly difficult and sensitive policy options, very significant savings are required to ensure that Ireland moves towards meeting its Stability and Growth Pact obligations”.

Earlier in the report, it states: “It is now necessary to strike a new balance between expenditure and taxation – the scale of the increase in public spending during the boom period adds to the scale of the needed adjustment.”

So well done Tom O’Connell for telling us what the Central Bank really means by these covered references.

It joins with the Government and employers’ body Ibec and Fine Gael: the crisis in the State’s finances must be resolved not by getting those with wealth to share it more evenly, but by making this society even more unequal by cutting or curtailing the income of those paid least – people dependent on social welfare – and impairing the health and education services upon which these people rely.

It is particularly hard to take this from the Central Bank, one of the institutions that was most spectacularly negligent in allowing the crisis of this depth to happen.

Essentially what they are about is saying: we, the well-paid public servants of the institution that bears such grave responsibility for this crisis, now call on the Government to rectify the chaos to which we contributed by inflicting most pain on the least advantaged in the community.

Would they not just shut up?