When fault always lies elsewhere

Banking inquiry

The ability of former ministers for finance to deny personal responsibility for the consequences of decisions taken, or avoided, in government continues to amaze. In the case of Charlie McCreevy it reached bizarre levels. On the grounds that the system appeared to be in good health when he departed for Brussels in 2004, he maintained that no blame attached to his stewardship. Brian Cowen was marginally less defensive. Expressing regret for the hardship and fall in living standards imposed on the public as a result of the 2008 crash, he gave the impression of having been a sleep-walking bystander, acting in good faith and on the best possible advice. Fault lay elsewhere.

It wasn’t as simple as that. The economic crash was a double-barrelled burst arising from unsustainable government spending and crazy banking and construction activities over a number of years. The bank guarantee might have been a final, decisive step, but it represented the cherry on a badly burned government cake. Members of the Banking Inquiry tried, with their separate political agendas, to explore cause and effect. But focus was lost and there was a lack of forensic thoroughness in questioning. The exercise, however, offered Ministers a platform for self-justification and obfuscation.

Nobody expected Mr McCreevy, who had been seven years in the job, to beat his breast. It was never his style. The “if I have it, I’ll spend it” minister was slapped down for refusing to answer some questions but then, reluctantly, did so. Unlike Mr Cowen, he had never pretended to accept unpalatable advice. As he told the Dáil in 2001, the government would “listen to fair advice” from the EU Commission but “we decide ultimately what is best for Ireland”. What was “best for Ireland” in that pre-election budget involved providing national agreement pay increases of 13.5 per cent; refusing to appoint a stand-alone, independent financial regulator at the Central Bank and raising current government spending by 23 per cent. If the election was won, he teased, they would be drinking “loads of champagne” in the Dáil bar. They were.

When a bursting international dotcom bubble threatened economic disruption, the government responded with tax breaks for the construction and banking sectors. Holiday-home buyers also benefited. It worked. Employment grew and income from stamp duty, VAT and capital gains tax roared ahead. By the time Brian Cowen took over, public sector expenditure and loss of competitiveness were having an effect. Personal consumption had become the main driver of the economy. But rising revenues from the housing and construction sector kept this volatile show on the road. When it collapsed in 2008, so did the government’s ability to pay its bills. But, as ministers insisted during the week, it wasn’t their fault.