The desire shown by all sides to look after the national interest helped repair some battered reputations, writes Stephen Collins
NOW THAT the plan to deal with the Irish banking crisis has been signed into law and stock market jitters have been calmed, at least for the moment, the focus has moved on to the budget. The calamitous collapse in tax revenues revealed in the exchequer returns shows once and for all that we are now in a financial and economic crisis comparable to the 1980s, if not the 1930s.
The hubris that dominated Government thinking up to very recently, when Ministers deluded themselves into thinking that a housing bubble had turned us into one of the richest countries in the world, has well and truly vanished. It may take some time for the political consequences of the rapid turnaround in the country's fortunes to manifest themselves but the backlash could be profound.
The past week was one of the most extraordinary in the Dáil for a long time. Not since the arms crisis has the Oireachtas sat all through the night. Just as Irish democracy was on the line in May 1970, the Irish economy was teetering on the brink this time.
The Dáil and Seanad did something for the battered reputation of Irish politics by the serious and considered way all sides approached the debate on the Government's bailout of the banks. The attempt by the Government to ram through the legislation in just two hours on Tuesday night was rejected by the Opposition and the Ceann Comhairle, John O'Donoghue, rightly allowed a great deal of flexibility in the committee stage debate.
While some of the speeches during the long sitting on Wednesday and into Thursday morning were rambling and repetitive, a concern for the country's future dominated proceedings. The massive majorities in both Houses for the Bill, despite deep misgivings on the part of many, demonstrated a commitment to the national interest above party politics.
The Government gained some credibility by the way it has handled matters since last Monday night. After six months of setbacks and dithering since the change of taoiseach, the decisiveness of its response to a crisis was impressive. Although Fianna Fáil certainly has to bear a great deal of the responsibility for encouraging the recklessness and profligacy that made the Irish banking sector so vulnerable in the first place, it responded well when presented with the crisis.
The Minister for Finance, Brian Lenihan, enhanced his reputation by deciding on a clear strategy to deal with the problem and by the calm and competent manner in which he explained it to the Dáil and the public.
On Monday night he faced the near certainty that one Irish bank would go down the following day unless the Government stepped in. Although a number of reputable economists have argued that it would have been better for the country in the long term to let a bank go, politicians have to live in the real world where their decisions have immediate implications for the entire population.
Lenihan had to ensure that the entire Irish banking sector was not pushed over the edge by the collapse of one, or even two, of the riskier operations. After the failure of the US House of Representatives to ratify its government's bailout plan on Monday night came on top of the collapse in Irish bank share prices earlier in the day, it was imperative that he had a clear plan in place by Tuesday morning.
His decision to opt for a strategy to protect the entire system was politically the best option available and with a bit of luck may prove an economically sound option in the long term as well. So far events have justified his decision although in politics, as in finance, there are no guarantees about the future.
The Minister was barely out of the all-night banking debate on Wednesday morning when he was into a Cabinet meeting to consider the crisis in the public finances. He is now faced with the task of bringing in the first hair shirt budget in two decades. Although most of the Opposition may have rallied around on the banking crisis there will be no sympathy for the Minister's plight on the budget. Fianna Fáil has been running the country for the past 11 years and will have to take full responsibility for the scale of the spending cuts now urgently required.
Fine Gael's finance spokesman, Richard Bruton, didn't waver from a determination to put the country first during the banking crisis. Although he was critical of some aspects of the Government measure there was never any doubt that Fine Gael would back the Bill. The main Opposition party was right to avoid the temptation of courting short-term support on an issue on which the Government was so vulnerable because of its own reckless behaviour in recent years.
By adopting the position it did, Fine Gael has shown that it is capable of being an alternative government. Bruton will be able to compensate for that understanding attitude when it comes to the budget debate. Of all the politicians in the Dáil he has been the most consistent in pointing out inherent flaws in the Government's economic policy over the past four years and will be fully entitled to reflect that position in his response to the budget.
Labour opted to take a more populist line on the banking crisis and was the only party to vote against the Bill in the end. The party had every reason to be suspicious of the legislation and, having been out of step with its own supporters on the Lisbon Treaty, probably felt the need to reflect the public anger at the bailout of bankers and property speculators.
It was ironic, though, that the party ended up voting against a piece of legislation which gives the Government of the day enormous powers over the banking sector, even to the point of nationalisation, given that it was a long-held aspiration of Labour to nationalise the banks.
Sinn Féin took the opposite view to Labour and while it criticised the banks and the Government the party voted in favour of the Bill. That decision could mark an important step by the party into the political mainstream and help transform it into a potential coalition partner in whatever scenario emerges after the next election. The fact that the legislation caused such outrage in Britain was probably an unexpected bonus for the party.