Enda Kenny and Joan Burton missed an opportunity at Banking Inquiry

Stephen Collins: Taoiseach and Tánaiste gave the most politically partisan accounts of any of the witnesses to date about the events that led the country to the brink of disaster

Question of the Week: Have we learned anything from the crash? Stephen Collins, political editor gives his view. What do you think? Have your say below.

 

Talleyrand reputedly said of the Bourbons that they had learned nothing and forgotten nothing from their experience of the French revolution. The banking inquiry indicates that the Irish political system is responding in a similar fashion to the trauma of the financial crash.

At the inquiry on Thursday, Taoiseach Enda Kenny and Tánaiste Joan Burton gave the most politically partisan accounts of any of the witnesses to date about the events that led the country to the brink of disaster.

It is natural that leading politicians who were in opposition when the crash happened should lay the blame at the door of Fianna Fáil, the party that held power for 14 uninterrupted years between 1997 and 2011.

The problem is that in their desire to score political points Kenny and Burton have contributed to a narrative of events in which a small number of politicians and bankers can be blamed for everything that went wrong while the rest of society is absolved.

It was not only the Fianna Fáil government that was living in a fools’ paradise at the height of the boom. Kenny highlighted the contribution social partnership made to the disaster but his point would have had more force if he had acknowledged that his party didn’t get everything right either.

Fianna Fáil’s Michael McGrath pointed out to the Taoiseach that Fine Gael in the run-up to the 2007 election promised to deliver 2,300 more hospital beds, 100,000 more medical cards, to raise the old-age pension to €300 a week and to increase current spending by €17.4 billion, including a tax package of €2.4 billion.

Now there is a massive difference between opposition promises and government behaviour. Pat Rabbitte justified the demands of the then opposition parties for even more State spending during the boom, telling the inquiry: “In our adversarial system of parliamentary democracy, governments always want to do good things and oppositions always want governments to do more good things.”

Nonetheless, the failure of Kenny and Burton to accept that they or their parties might have got anything wrong contributes to a misleading narrative and, more importantly, will do nothing to help the country avoid making a similar mess in the future.

Political promises

Making election pledges that cannot be fulfilled is something that contributes to the low esteem in which politicians are held, yet they can’t seem to resist doing it over and over again.

The election will be framed by a wider public debate on where society goes now that the economic recovery has taken hold, but it seems that already the lessons of the crash have been entirely lost and not just on politicians. Pressure groups of all kinds are queuing up to demand extra State spending on a massive scale without the remotest concern about where the money is to come from.

The national economic dialogue a week ago, at which the former social partners and a range of interest groups from the voluntary sector engaged in discussion about what should happen next, was a perfect illustration of the problem.

Prof Alan Barrett of the Economic and Social Research Institute, who was asked to review the talks, pointed out that the discussions involved demands for “considerable” extra spending but few suggestions about where the taxes to pay for the extra spending was to come from.

Michael Noonan has remarked that one of the big gaps in public discourse in Ireland is that while there are incessant demands for better services nobody speaks for the taxpayer and asks how they are to be funded.

The facts show Ireland has one of the most redistributive tax and welfare systems in the developed world but you would never guess that listening to most of the debate on current affairs.

Most voters have forgotten, if they ever knew in the first place, that the fundamental cause of the financial crisis was not simply the failure of the banks but the fact that tax revenues collapsed in 2008. That left an enormous gap between the €50 billion or so the State spent on public services and the €30-odd billion it was bringing in in tax revenue.

Thanks to the EU-IMF bailout the previous government and the current one have been able to virtually eliminate that yawning gap in a phased manner that has imposed the least possible hardship on the most vulnerable.

If the bailout had been rejected, as advocated by Sinn Féin and some leading economists, the adjustment would have had to be done in a very short space of time and the impact on all citizens, but particularly the least well-off, would have been devastating.

Yet this gradual bringing of tax and spending into line is widely dubbed “austerity”, as if there was a simple, pain- free alternative. One German living in Ireland remarked some time ago: “What the Irish call austerity we Germans call living within our means.”

The big challenge facing this country in the years ahead is how the political system and society in general is going to cope with living within our means. It will take courageous politicians to confront people with the real choices facing them rather than pandering to the array of pressure groups with contradictory demands for ever greater State spending.

The Taoiseach and Tánaiste missed an opportunity at the banking inquiry to boost their political credibility in advance of the election by taking their, admittedly limited, share of responsibility for how it all went so wrong.

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