Of course, the troubles in the Irish banks arose because everyone wanted to copy Anglo Irish Bank. They were giving out stupendous business loans and 100 per cent mortgages to anyone who asked, and so the other banks began to grumble and wonder why they couldn’t do the same. We saw the echoes of that in the 2011 Presidential debates, when Mary Davis was castigated — unfairly, I thought — for being on the board of the Bank of Ireland’s ICS Building Society, which was granting
‘100 per cent plus’ mortgages. Anglo Irish was of course engaged in very dodgy dealings, lending massive amounts of money to speculators and to property gobbler-uppers. Yet for so many at the time, it seemed that this bank and Seán FitzPatrick were doing wonderful things. I remember being at a function some years prior to 2008, and somebody saying to me, ‘Do you want to meet Seánie? He’s the real man of the moment!’ I can recall replying, ‘No, not particularly: I don’t want to meet him.’ FitzPatrick was like a god whose toga people wanted to touch and clutch onto. But he turned out to be a false god and the emulation by fawners of what he represented was destined to contribute to our downfall.
The prices of houses rose and rose. Young people queued for hours to put down a deposit on a very ordinary semi-detached house which they now regarded as nirvana. The price of a property which might have previously been going for about €200,000 was now creeping up to €500,000 and the banks were starting to grant these ‘100 per cent plus’ mortgages. At the end of the day, of course, the banks can be blamed for the speculation in which they engaged, but at the same time they were responding to demands from the people themselves. It is the people who pressed for such financial facilities. Everyone wanted the bigger house, the next holiday, the private school for their offspring, and so it went on and on. There was just no end to it, and we were all living in a bubble. I remember very clearly the words of Brian Lenihan, in an interview on Prime Time in November 2010 — for which he would later be greatly reproached by some: ‘I accept that there were failures in the system. I accept that I, as a member of the governing party during that period, have to take responsibility for what happened. But let’s be fair about it — we all partied.’ And he was right — we did all party, and for too long. And in many senses, Brian Lenihan merely inherited the legacy of what had already been happening for some years.
Regulation of the banks — or the lack of it — is where so many of our difficulties lay. When I was at the Cabinet table between 1997 and 2002, I remember a huge ongoing debate on this subject — the general consensus was that the lighter the touch a government could have in terms of financial regulation, the better. But that was utterly wrong. And once the Central Bank and the Financial Regulator realised that those in political authority were not keen on ‘nanny’ regulation, they too went soft on regulatory standards and guidelines. For all the time leading up to the disintegration of the banks, the Central Bank kept saying we were headed for an easy time and that we would get out of any troubles which arose without too much hassle. And houses were still being built and the construction taxes continued to flow in, and everything seemed well. Shortly into his term as Minister for Finance, Brian Lenihan appointed Matthew Elderfield to be the new Financial Regulator and he was regarded far and wide as an excellent appointment, and as somebody who held out great promise for us. But in a sense by that stage, much of the damage occasioned by a lack of stringency for so long had already been done.
In my view, the whole idea of loose regulation goes back to a key tenet of the Progressive Democrat philosophy. I am not saying this in the hope of somehow exculpating Fianna Fáil from our share of the blame — far from it — but certainly in the earlier days, particularly during the time I was in Cabinet from 1997 to 2002, and could observe all that was going on, there was a great sense of mutual understanding and collaboration between Mary Harney and Charlie McCreevy. Now it was very naturally the case that these two Ministers should operate well together, given their points of confluence in terms of political values and outlook, their long years of working together, and the fact that in the past they had been comrades-in-arms against Charlie Haughey. In fact, when the PDS first formed their party in 1986, it had been expected that Charlie McCreevy would become one of their number. But he had stayed put and I often think it was because of his love and remembrance of his dear mother, who was an avowed and everlasting Fianna Fáiler.
Despite never joining the PDS, Charlie McCreevy remained a neoliberal at heart and therefore, during the time they worked in Cabinet together, he and Mary Harney were essentially the nexus of much that happened there. It was always my strong impression that it was in essence they who decided budgetary policy, and that they would only allow the Taoiseach in at the end of such deliberations, so to speak. It often seemed, to me in any case, that coming up to Budget and Estimates time, the parameters and the small print of the Budget and Estimates were often worked out between Charlie McCreevy and Mary Harney, and that Bertie was sometimes peripheral to the fine detail of such things. This is not in any way an attempt to incriminate Mary Harney — far from it — she was and is a very fine person, but her mantra and the mantra of the PDS was always to cut taxes as much as possible. But of course, you can’t continue to cut taxes all the time and still keep education and health services intact. It just wasn’t feasible, but every year it seemed more and more that the Holy Grail was to get as many people as possible out of the tax net.
Some of our policies on tax would ultimately work to compound the problems associated with the construction boom. An initiative which was introduced during Albert Reynolds’s time as Minister for Finance was to be continued with gusto by Charlie McCreevy, as parts of Ireland were carved out, in which tax rebates would be made available for any developers who came in. One of these was the upper Shannon area, where all around County Leitrim, tax rebates were given and this led to the building on a large scale of estates of holiday houses ‘on spec’ — these would become the ghost estates which haunt our countryside today. Soon the demand arose for similar measures to be put in place for those of us living in the mid-Shannon area as well and in other parts of the country. We all wanted the same thing, so it is a pointless exercise to actually blame any one particular person. We all thirsted for these tax benefits and the cry became, a tax rebate for this, a tax rebate for that. But such tax breaks meant a corresponding depletion in the resources of the Exchequer in the long run, and that was a dangerous thing.
As well as this, one of the key sources of our subsequent difficulties was, as I have said earlier, the construction boom in itself. Bertie Ahern loved the construction ‘buzz’. I remember one day, as I was coming out of the lift on the fifth floor of Leinster House with him, he drew me to a window and said, ‘Look at the number of building cranes there are out there,’ — there were perhaps 20 or so on the horizon — ‘Isn’t it wonderful?’ Yes, of course it was — it meant almost full employment and, as the construction taxes kept coming in, much of the consequent spending was good social spending. But the difficulty was that at a crucial point, no one shouted ‘stop’ on construction, and spending got out of control and policies became increasingly wayward.
If I were to pick out one other key governmental transgression of the years preceding the downturn, it would be the policy of decentralisation. In a way it is easy for me to explain what this policy meant in practical terms, because Athlone had been a benign focus for decentralisation long before it ever became known as that. Decades ago, in the late 1960s, when Brian Lenihan Snr was Minister for Education and Charlie Haughey was Minister for Finance, the then government took a decision that they would relocate sections of some Departments to rural areas. In this move towards decentralisation, Athlone became the new base for a huge section of the Department of Education. A few other urban centres also benefited from such an initiative. This, however, was the selective decentralisation of very specific parts of Departments — those which could be easily detached and operated as separate entities from their main units.
&
nbsp; Some years later, when we came in under Charlie Haughey in 1987, he and Ray MacSharry proposed a further wave of decentralisation. Again, this concerned the operation of carefully chosen areas of certain Departments being transferred to towns where there had already been some decentralisation. For example, Social Welfare went to Longford and Sligo, while Athlone became the new base for another tranche of the Department of Education. For Athlone, this move to decentralisation would represent an important economic boon, because we now had up to 600 civil servants whose lives were based in our area. Of course, there were those who commuted from Roscommon, Longford and Offaly every day, but in the main, most of the civil service workers who came to Athlone made their homes and reared their families there, sending their children to school and then college and so on, in our area. As with towns such as Sligo and Longford, Athlone was a fine area to which to bring decentralisation, because it had a good transport structure, great secondary schools and a third-level educational institution. All in all, Athlone was well able to successfully accommodate such initiatives.
The programme for wholesale decentralisation set out by Charlie McCreevy at the end of 2003 was a very different proposition altogether. Firstly, Charlie unfolded his proposal in a budget speech, without having first run it past the civil servants in his Department. In one sense, I can understand why he followed this policy of non-disclosure in relation to his own Department colleagues — he probably wanted to make sure the public did not hear of it until he was fully ready; he also wanted to cut off any incipient refusals from his civil service staff. But the announcement had no place in a budget speech: it was not a budgetary measure, after all. Yet Charlie knew that he would make the maximum impact if he announced it as part of his budget and so this is what he did.
Charlie McCreevy’s plan was wholesale decentralisation, in that complete Departments would be moved to rural towns and some relatively remote areas. He saw the advantage in this as being — and there was a grain of truth in this — that such decentralisation would bring an economic boost to the areas in question through the presence of so many civil servants now basing their lives there. He also believed that such an initiative would inevitably shake up the various Departments and enable their revitalisation and reorganisation in a positive sense. This I can fully understand.
There were some successes in the Charlie McCreevy decentralisation, of that there is no doubt. The Pensions branch of the Department of Finance was transferred to Tullamore, and that certainly seems to be operating well. The relocation of another branch of Education, the School Building branch, was similarly relocated to Tullamore and seems to be very successful too. But by and large, the whole escapade was ill-judged. The result was widespread uproar from many quarters. In terms of the public and political response, there was absolute delight on the part of those whose town or area was mooted, and absolute fury from those whose town or constituency was not being considered. There was a never-ending series of delegations from Opposition deputies and from government deputies too, who lost no time in beating down the doors of Charlie McCreevy and the Taoiseach to make known their determination to get decentralisation at any cost. Because Athlone had already been an important focus for this policy, I did not get involved as such myself but I could understand in some senses how people felt. And so there was a veritable mayhem of desire and uproar, as the cry resounded throughout the country: ‘We want to get a portion of decentralisation too!’ That is how foolish we all were.
But of course the biggest obstacle to the policy’s overall success — and one which clearly had not been anticipated at the planning stage — was the refusal on the part of many civil servants to go along with the proposed relocations. They dug in their heels and obstructed these moves in any way they could. They simply said ‘no’ and no trade union or Ministerial dictat would make any difference to this decision. (And it should be said that no trade union dictat was forthcoming in any case.) If they didn’t want to go, they simply wouldn’t go. And so gradually, bit by bit, decentralisation ran into the sand.
When looking at where we as a government went wrong in the years leading up to the downturn, it would be naïve to deny that there were aspects of our collaboration with our political partners in government which contributed to a lack of effectiveness. As we have already seen, Fianna Fáil had a long-standing coalition arrangement with the PDS which had been sustained through a succession of governments. There were certainly positive sides to this collaboration. Bertie Ahern and Mary Harney had forged a very strong and good relationship together, which went back to 1997 and continued through 2002 and then 2007. The two genuinely liked one another and Mary Harney proved a loyal and workmanlike comrade for Bertie and Fianna Fáil to have in government. In 2004, Mary had looked herself for the punishing portfolio of Health, leaving the Department of Enterprise and Employment behind her, where she had had many successes, and had at one point been able to oversee almost full employment in Ireland.
Mary Harney said that she wanted to bring about a journey of reform and recovery within the health service, but little did she know of the daily vicissitudes which awaited her. Michael McDowell was also a great colleague for us to have in the coalition. During my Cabinet years 1997 to 2002, I found him as a member of Cabinet and indeed Attorney General to be rock-solid, professional and always helpful. In 2002, when Michael became Minister for Justice, I experienced for myself as Leader of the Seanad the breadth of his intellect and his forensic attention to detail. My fellow Senators and I were fortunate in that he brought many of his important Justice Bills, once they had cleared Cabinet, to the Seanad rather than to the Dáil.
In 2006, Mary Harney surrendered the leadership of the PD Party and Michael McDowell took it over. The PDS, such as they were throughout the country, felt perhaps that the constant barrage against Mary Harney in Health would not augur well for their party in the forthcoming election. In the General Election of 2007 they got a scorching, returning only Mary Harney and Noel Grealish in Galway. Subsequently, the PDS disbanded in 2008 and Mary continued in office as an Independent member of the Cabinet. There were some terrific PDS who lost their seats during that election, but for me, the person who was most sorely missed from political life was Liz O’Donnell. Yes, she was glamorous and wonderful, and she was also sound and steady and had a lot to offer.
While we had the benefit of these strong and very worthwhile connections among the PDS, there is no escaping the fact that some aspects of their central philosophy and the concrete measures which this engendered — such as policies on taxation and financial regulation — undermined our effectiveness during a crucial time in government.
We had another partner in the coalition during our last term in government, in the form of the Green Party. What did those of us on the backbenches, the rank-and-file of Fianna Fáil, make of the Greens, you might wonder? In the beginning, all looked well. Bertie was able to claim that Fianna Fáil had always been a green movement and that by going into coalition with the Greens, we were in fact going back to our roots! Not many of us actually believed that, but in the heady, triumphant mood of forming a new government, many were prepared to suspend their disbelief.
John Gormley was leader of the Greens, and he was dogged, single-minded and joyless. I realise it might seem an odd thing for me to say, but there was very little of humour among our Green partners. As time went on, from 2007 onwards, there was very little to be humorous about, but even from the beginning, they were persistent and dogged. They unstintingly got their points put forward in the Joint Programme for Government, as had always been the way with our coalition partners, but we soon began to feel more and more uneasy and stifled as their partners. Yet it must be said too that Brian Lenihan consistently drew from the steady support and friendship of Eamon Ryan at Cabinet.
I hope that some of the reflections and observations above go some way to clarifying my views on what went so wrong for us as a country and for Fianna Fáil as a party in recent years. As I have said ear
lier, the 2011 General Election dealt us a massive blow, not only in a substantial loss of seats, but also in terms of severe damage to our reputation and standing as a party. While I believe that this vilification of our party is grossly unfair to our rank-and-file and the many members who have always conducted themselves honourably and given of their best to the Irish people over many years, it cannot be denied that some of those who held key positions have not always acted with the same integrity.
The twists and turns of the Mahon Tribunal, and its successive revelations over the 15 long years for which it ran, could not but have a devastating effect on the credibility and public reputation of Fianna Fáil and those who headed the party. I’ll never forget that day in early April 2004 when I appeared before the tribunal myself to give evidence. I had been summoned there to give my account of that pivotal meeting which Tom Gilmartin said had happened in the Dáil in February 1989, and after which it seemed that he had been asked, in a bare-faced and blatant way, for a huge sum of cash for access to Ministers. The tribunal had written to everyone whom Gilmartin said he met in the Dáil on the day in question, but, as Jody Corcoran remarked in a lead article in the Sunday Independent just prior to the day I was to testify, it seemed that I was the only one who remembered meeting Gilmartin on that occasion. As it transpired, I was the only one prepared to tell the truth.
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