JUST AS THE country is showing signs of recovery, Brian Cowen’s interview with TG4 has cast our minds back to the worst crisis in the country’s history. Cowen’s alarming admission that he believed the Government’s own spin that the economy would experience a soft landing paints a picture of a government that was asleep at the wheel.
But what really rankles with me is that five years on from Ireland’s economic collapse, Brian Cowen and Micheál Martin continue to peddle the line that no one could have foreseen the international banking crisis. They are deliberately missing the point. Even if the international banking crisis had never happened, Ireland was on course for an economic collapse regardless of external economic factors.
Last week Mr Cowen said, ‘There was no incumbent government, in Europe or the developed world, who can honestly say that they saw the implosion of the financial markets in the way that it happened. And that’s a fact.’
While the financial crisis of 2008 did not help anyone, countries that were competently and prudently run weathered the storm. How come other small economies in northern Europe like the Netherlands, Belgium, Denmark and Austria have not experienced the same economic turmoil as Ireland?
Let me be clear, Ireland’s economy did not collapse because of the international financial crisis. It collapsed because Fianna Fáil spent a decade indulging in giveaway budgets in order to win elections; had an economic model that was based on the construction and sale of houses; and turned a blind eye to the lack of financial oversight of our banks which bankrolled our so called property boom.
The economic boom was the ideal time to bring in a sustainable property tax that would generate a more permanent flow of income for the State. Instead, 40 per cent of the cost of every house was paid over in taxes that fuelled Fianna Fáil’s vote driven splurge on public spending.
While much of the money went into increased public service salaries, a huge amount was ploughed aimlessly into Government Departments. It was fundamentally wrong to engage in long term spending based on short-term boom time taxes.
Ireland’s health budget rose from €3 billion in 1997 to €15 billion in 2007. It’s fair to say we did not get a health service that was five times better.
One of the few Departments not to experience massive spending increases was the Department of Enterprise. Our boom time taxes should have been generating long term, sustainable, enterprise driven jobs. Instead Fianna Fail gave us construction based jobs that disappeared with the property crash.
Investing in small and medium businesses was not part of the Ahern and Cowen roadmap. Why put money into slow yielding job creation programmes when the State was creaming it from the property feeding frenzy and the related construction boom?
Charlie McCreevy was rightly criticised for his zealous approach to deregulation, the disastrous legacy of which we are all aware of. However, I believe that he saw the danger in overheating the property market and paid for it with his political career. His efforts to curtail banks in handing out 100 per cent mortgages and his decrease in public spending following the 2002 election, spooked Bertie enough to send McCreevy packing to Europe.
Cowen was chosen to succeed McCreevy as Minister for Finance in 2004 because Bertie saw him as a yes man who would do his bidding. The brief he was given was to keep the money coming in from the property and construction markets and to keep spending it in an effort to get Fianna Fáil re-elected.
After a decade of election driven Bertienomics we had a perfect storm of low taxes; high public service salaries; an over-dependence on the property sector for employment and tax revenue; and hundreds of thousands of people mortgaged up to their eyeballs.
By 2007, one year before the global crisis, it was clear that our economy was in serious trouble. When we were dealt the double whammy of our own domestic slowdown and the international financial crisis of 2008 our economy collapsed like a house of cards and chaos ensued. The Irish people have suffered extreme hardship as a result.
The next time a Fianna Fáil representative is asked to comment on the causes of Ireland’s economic woes, I would ask them to respect the intelligence of the Irish people. The Party needs to stop blaming international circumstances for an economic disaster that was inflicted on us by its short term, self-serving, unsustainable economics.
Damien English is Fine Gael TD for Meath West and Chairman of the Oireachtas Committee on Enterprise, Jobs and Innovation.
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