Time for Government to level with the people
Last night, the Seanad debated renewing the Bank Guarantee Scheme. Although the Labour Party voted against it, it passed the house 26-19. I used the opportunity to raise the events of the past few days in my own speech…
I listened to the debate with some interest. Some of the points made were not without significance, especially one or two points made by Senator Boyle to which I will return. I was most struck by what Senator Quinn said. I understood him to say, essentially, that this debate, unfortunately, can be reduced to the proposition - these are not his words, I am paraphrasing what he said - that the Seanad has no choice but to support the motion.
I will not support it because there is a choice. This harks back to what happened in September 2008. On the question as to whether there was no choice on the fateful night in question, the Governor of the Central Bank, Professor Honohan, has never stated the Government was faced with only one option or that it could have taken only one course of action, namely, that of providing a blanket guarantee. Neither the Honohan report nor any of the other reports bears out the proposition that only one course of action was available. The central consequence of what took place on the night in question and subsequently when the Houses endorsed the Government’s approach was that options were closed off. The introduction to the heart of the Government’s banking policy of a guarantee of the nature and extent of the bank guarantee closed off all other options.
There has been much debate about burning bondholders and so forth. The Fine Gael Party took the perfectly legitimate view that the bondholders should have been required to share some of the pain. It was not possible, however, to achieve this outcome once the guarantee was in place. A number of the policies advocated, including the Labour Party policy of taking the banks into public ownership for a period and the policy of sharing the pain, as it were, the position taken by the Fine Gael Party, were recognised by Professor Honohan and others as legitimate options. However, it was not possible to achieve any of them once the guarantee was introduced.
Senators have argued that it is time to forget the banking crisis because it is not connected to the deficit of €19 billion and instead look to the future by focusing the debate on how we deal with the deficit. It is absurd to suggest the legacy of the banking crisis can somehow be divorced from what we need to do to address the budget deficit. The budgetary and banking crises may be different issues, but they are intimately bound up with one another.
Last night’s television and radio coverage featured a great deal of commentary. Stephanie Flanders of the BBC nailed the issue very well when she noted that bondholders who had looked at the Irish deficit of €19 billion and were advised that the Government planned to introduce a budget and four-year plan to slash the deficit only had to look a little deeper to see that the legacy of the banking crisis lay right beside the deficit problem that needed to be addressed. They do not only see that the current deficit must be reduced to below 10% next year, by a further margin in the subsequent year and to 3% by 2014, the reason being they do not see the issue in a mechanical way. While the Senator may want the House to debate the deficit and forget about the banks, the legacy of the banking crisis spooks the whole crisis, both in its economic and budgetary aspects. It forms part of the crisis and cannot be divorced from it. If anything, the events of recent days and the insistence by eurozone and ECOFIN Ministers that there cannot be a direct feed of aid to the banks, as Senator Boyle described it, indicate that the Government is on the line. The Irish sovereign has been infected by the banking crisis. The position of the sovereign and the financial position of the Government, as perceived internationally, are undershot by our banking problems. There is no point in wishing these problems away because they are at the heart of the crisis.
Senator Boyle made an interesting and welcome remark on two occasions today. I concur with him that any solution adopted in September 2008 would have led to problems, in other words, none of the available options, including those advocated by the Labour Party and Fine Gael and that advocated and ultimately settled upon by the Government, would have settled the matter on the night in question. It was clear that the issue would not go away simply because the Government had made a decision in an overnight session in the Oireachtas because legacy issues would have remained, regardless of what was done. Senator Boyle makes a fair point, therefore, when he argues that the problem would not have been buried on the night in question.
Senator Boyle’s central point, with which I agree, concerned his acknowledgement that if other options - sensible ones - had been taken, they might have reduced the scale of the problems we face. I believe these were the words he used. He is in the position of being able to state that if we had taken a different policy option on that occasion, things would not be as bad as they are now. Let us not pass over that statement because it is no small thing to say things would not be as bad as they are now. That is a fair comment which I enthusiastically and heartily endorse. However, it draws one inevitably into the debate on the extent of the guarantee and its targets in terms of its scope. It is clear the guarantee drew us into a vortex from which we could not emerge. That is the position in which we find ourselves and the reason the Government is seeking to further extend the guarantee. Let us not pretend we can divorce the banking crisis from the budgetary crisis.
Another issue that is knocked about in the House ad nauseam is what the Opposition should do and the need for everyone to pull together. As public representatives, Members on this side are as worried about what is happening as our colleagues on the other side. However, one cannot command trust or seek to involve the Opposition simply on the basis that the Government will propose something and the Opposition will dutifully agree with it. How many times must we say such an approach will not work or achieve the cohesion Senators Boyle, O’Malley and others seek? There is a lack of trust, not only on the part of Opposition Members but also among members of the public who have lost trust. How does one expect ordinary people to react when Ministers flatly deny that anything is going on by way of negotiations in the European Union, state that it is a fiction to suggest such negotiations are taking place and shake their heads on camera saying they do not know anything about what is being suggested and then, within 48 hours, it transpires that negotiations have been taking place?
To secure legitimacy, a Government must be elected and a Taoiseach appointed with the support of the Dáil. One of the central features of the legitimacy of any Government is credibility, in other words, a Government needs to be believed. For the purposes of the point I propose to make, I will allow for the cynical view that I would never agree with the Government because I am a member of the Opposition. What members of the public and I expect is not to be able to agree with the Government but to be able to believe the words that come out of its members’ mouths. Once trust ceases, one can almost see and hear the legitimacy flowing away from the Government. At this very tense time, the last thing we need is a situation where people do not even believe the basics from the Government.
The credibility of the Taoiseach and the Minister for Finance is on the line. Regardless of what they say, people raise question marks. We can make jokes about turning corners or, as was stated in September, closing the final chapter on the banking crisis. We were also told repeatedly that we had reached the point at which there would be a new beginning.
However, one can only get away with doing that so often. One can only get away so often with telling people something that is shown to be wrong two weeks later.
I will conclude by appealing to the Government that if it does nothing else in the coming days and weeks, it should level with people. People can take it as they already face dreadful situations in respect of their own lives, families and workplaces and many have lost their jobs. They can take hard, tough news at this stage and consequently, the Government should stop the spinning and the nonsense about turning corners, that everything is fine, that a chapter is being closed and that everything will be okay. Everything will not be okay but will be extremely difficult. However, the Government should level with people and be honest with them.
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