Tuesday 23 July 2019

Banking inquiry: 'It breaks my heart the last few years have been extremely tough' - Bertie Ahern

Mr Ahern will tomorrow afternoon appear before the Oireachtas Banking Inquiry committee at Leinster House
Mr Ahern will tomorrow afternoon appear before the Oireachtas Banking Inquiry committee at Leinster House

Clodagh Sheehy

Former Taoiseach Bertie Ahern has admitted he did make mistakes “but so does everyone who governs”.

Mr Ahern told the Banking Inquiry it “breaks my heart” that the last few years “have been extremely tough on many ordinary families, but the work of our democratic political system must prevail”.

The former politician who was Taoiseach from June 1997-May 2008 added: “Of course I apologise for my mistakes, but I am also pleased that I did get a lot of things right”.

He conceded while he did not get everything right during his three terms as Taoiseach, he could “honestly put my hand on my heart and say I did try my very best to do the right thing by the Irish people”.

Mr Ahern emphasised that during his term as Taoiseach “Ireland finally caught up with and then surpassed average EU living standards”.

He wished the recession had not happened but “it is disingenuous to suggest that all the gains in this country made have been wiped out”.

Despite the recession a lot of progress was still in place benefiting thousands of our citizens.

“All the time, as Taoiseach, what I wanted to do with budgets was to improve the quality of life for ordinary people and to provide services that our country did not have before,” he stressed.

“Those who say we squandered the boom forget that in my time as Taoiseach we actually recorded budget surpluses in 10 of our 11 budgets.”

Mr Ahern felt that criticisms of the regulatory system “have validity” but it was his opinion “that the severity and unprecedented nature of the events that unfolded meant that such shortcomings as existed in regulatory capacity could not have been overcome.”

It was true there were some warnings about over-reliance on property.

“But it is important to be clear about the record. In October 2004, the IMF alluded to a possible overheating in the housing market even though, subsequently, they themselves and other economic commentators implied there was no bubble.”

At the time “Our stamp duty was already the largest transaction tax on property in the EU. “Despite a concerted campaign by some to get rid of that tax, or to reduce it substantially, I refused to go down this route.”

The former Taoiseach insisted “ If I had listened to these calls, this would have added fuel to the housing market and we would have experienced far greater difficulties than we ultimately experienced.”

There was no doubt the housing boom caused mainly by cheap credit due to low interest rates had created a structural weakness in the economy.

The international downturn had ensured this has turned from a soft landing into a very hard one.

“I wish this didn’t happen and with hindsight, of course, I would have done things differently,”said Mr Ahern.

He added that the winds of the greatest international recession since 1929 “did batter our country after my departure” but as that storm abates, it would become increasingly clear a lot of progress had been made and these had “not been washed away”

He felt Taoiseach Enda Kenny and Ministers Michael Noonan and Brendan Howlin “have shown a lot of commitment and courage in tackling the financial crisis”.

He believed that “one of the lessons we should all take from this crisis is that maybe our politics needs to be less partisan and that as a small island we should all pull together”.

Mr Ahern told the committee that as head of government he accepted responsibility for the over-heating of the property sector but he took no responsibility for what was happening in the Central Bank or the offices of the Financial Regulator. “None”.

This was outside his control.  “So I take stick for lots of things but not stick for something I had zero control over”, he insisted to Deputy Eoghan Murphy.

Mr Ahern described to Deputy Pearse Doherty how when too many homes were being built “I thought we could manage our way through”.

When he came into office the number of builds was low and the experts believed if the number could be brought up to 60,000 a year that would take the heat out of the property market.

The boom “got boomier” when it went over that figure but he said he was not aware of the bubble until he had left office in 2009.

He was aware of the overheating but did not see “this was heading for bust”.

Asked by Deputy Michael McGrath whether personal issues raised by the Mahon Tribunal had affected his job as Taoiseach, Mr Ahern said he did not give much time to it. Initially he had ignored the Tribunal which was to his own detriment later.

When it became a daily issue not just for him but for his cabinet colleagues, he agreed it had led to his resignation as Taoiseach.  He would have liked to stay another 18 months.

On light touch regulation he told Senator Michael Darcy he believed “maybe naively that the central bank and the regulator were on top of these issues”.

When he found out the numbers in supervisory roles in charge of the banks “I was horrified”.

He told Senator Sean Barrett that the profits of the banks were massive, more than other banks in the European banking system with only a handful of people regulating them.

There had to be another system but he also believed “the banks should have a levy on their profits for ever more”.

Asked about Fianna Fail’s relationship with property developers with particular reference to meetings in the Party tent at the Galway races, Mr Ahern dismissed this as “no big deal”.

He personally did not have much interaction with property developers.  He said he did meet with the Construction Industry Federation because they were one of the social partners but it was “not that many meetings”.

He said said Fianna Fáil was wrong to abandon the Galway tent as a fundraiser and he did not accept it left a grubby impression of the party.  "It was a bit of craic, the rest of fundraisers were nuisances" he said.

Asked by Senator Susan O’Keefe whether people going to the Galway tent were effectively paying for access to the Taoiseach of the day or whoever was in the tent, Mr Ahern said that was not what they were paying for.

He said people would be sitting at their own tables.  He would make a practice of going around thanking them for coming. They were from every walk of life.

It was a social occasion. “I mean I’d hate to think that political parties that look for the votes of the people bring in regulations that they can’t meet people. That’s be a sad day”

Irish Independent

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