This is a speech made by Joan Burton last week
SPEECH BY JOAN BURTON TD
Deputy Leader of the Labour Party, Spokesperson on Finance
To Humbert Summer School, Ballina, Co May0
Friday, August 21st, 2009
NOT FOR USE BEFORE 11.30AM
NAMA A MONUMENT TO GREED THAT CREATED CRISIS
I’m sure you all remember a great poem from Leaving Cert English. Shelley’s Ozymandias sonnet tells the tale of a traveler who came across a vast derelict statue in a far off desert.
Two vast and trunkless legs of stone
Stand in the desert
The words on the pedestal tell the story of Ozymandias his ambitions and his destructive folly.
I mention this because Ireland is today littered with monuments to similar folly and the delusions of the past decade. As part of the NAMA process we are likely to take into public ownership many properties, hotels, apartment blocks and office blocks of little or no value.
Perhaps NAMA will choose to hold on to some and erect a plaque to remind a future generation of the greed that created the situation we now face with the NAMA Bill.
That Bill will be a critical test of our political institutions.
I wish I could say to you here that every clause will be scrutinized with care. That is unlikely. Take the Bank Guarantee. I recall going for a briefing to the Department of Finance. I suggested a few amendments that might impose some limits on taxpayer exposure only to be told that the Government would not accept any amendment.
The role of the Dáil was to rubber stamp the Bill and no other.
It would be intolerable if that same attitude prevailed next month.
The NAMA Bill rests on one particular clause Section 58 which sets out the rules for valuing the bank loans. It is a shoddy piece of work that does no credit to the Minister.
It could hardly be otherwise as Brian Lenihan is attempting, like Janus of the ancient Roman myth, to show two faces to the world looking in opposite directions.
One face is the Minister who needs to insist on the protection of the public interest. So the clause sets out current market value, however diminished, as a principle. That is what the former Swedish Minister Mr Lundgren recommended in his evidence to the Finance Committee. The results from AIB and the evidence presented in some of the High Court cases show just how heavy a discount is properly called for.
But Minister Lenihan also presents a different Janus face, reflected in a second basis of valuation contained in Section 58, a potentially bogus concept called Long Term Economic Value, which is the convenient cover he and Mr. Cowen use for a policy to pay way over the odds for the banks’ dodgiest loans on the pretext that the assets so acquired have an enduring value that is not reflected in the current market. That is political and economic mumbo jumbo.
I cannot believe that Dáil Eireann will pass so flawed a clause as section 58. Surely there are Cabinet Ministers who have qualms. Surely there are FF and Green backbenchers who will baulk at the shocking abdication of public interest that is inherent in Section 58.
This is the coming test of our parliamentary institutions:
To fight or to abdicate on Section 58.
To abdicate responsibility and to allow this clause to stand is to abandon the legislative role of the TD and to install a Cowen –Lenihan parliamentary dictatorship that is allowed to rule by decree without scrutiny or amendment.
Section 58 cannot pass proper scrutiny. It fails every test. Long Term Economic Value as defined in this section merits the exact words, ‘fanciful’ and ‘ lacking in reality’ used by Judge Kelly in rejecting Liam Carroll’s application last week.
The discount to be applied by NAMA has to reflect the current reality. Any consideration of future value has to be postponed till conditions in the economy generate such value. I can appreciate Professor Honahan’s suggestion that banks could share in any future value when the State has recovered its costs in full. But the evidence remains overwhelming that nationalization remains the safest policy as it does not require early valuations to be placed on the transfer of loans which would be between different public bodies. Mr. Lundgren emphasised this aspect on his visit to Dublin last month and it has a compelling logic that deserves greater public debate as an alternative to the gaping flaws of the entire NAMA set up.
There are many other reforms that could make our political institutions fit for purpose.
I think it should be possible to allow a genuine Private Member’s initiative to get to the floor of the Dáil. If a TD can demonstrate a significant degree of interest in a public interest proposal with some evidence of cross party backing then time should be available to debate such an idea and if it commands a second stage majority it should get committee stage examination.
I served on the Public Accounts Committee and came to admire the work of the Comptroller and Auditor General (C&AG). I want to suggest an extension to his mandate. The USA has the Congressional Budget Office that does independent evaluations of spending proposals. Our C and AG can only report after the event. The mandate should be extended to enable a mandatory evaluation of cost to be tabled with every new proposal. We have bitter experience of rabbits out of hats on budget days that turn out to cost way in excess of what was first indicated. The decentralization fiasco is a case in point as is the 2002 announcement of the medical cards for the over 70s which came with a cost tag that did not reflect in any way the true ultimate cost. An extension to the C and AGs function could do that job as long as it was mandatory. It should also cover regular policy audits to see if the stated objectives of particular policies have been met.
We could also borrow another procedure from the US Congress. I refer to the rule that certain public appointments be subject to committee scrutiny and vote. The Office of C and AG, the appointment of Ombudsman are already subject to a Dáil vote but this is a formal process. I want the nominees to face a polite but thorough interview. The offices I have in mind, apart from the two I just mentioned, are Financial Regulator, Central Bank Governor, Chair of the proposed Election Commission and certainly the Chair of NAMA.
My party has long demanded a new law to protect whistleblowers. No institutional reform would be complete without such a measure. The Freedom of Information Act has proved its worth beyond measure and a new Government committed to reform will extend its scope and restore most of the sections that were deleted by FF in 2003.
Eamon Gilmore has already indicated his determination to overhaul the laws on election spending, on the disclosure of donations and limits on the size of donations. The present law is a joke. Millions were spent in 2002 and 2007 but the two big parties disclosed no donations above the threshold for disclosure. SIPO has drawn attention to this and I repeat here that Labour will insist on far reaching changes.
Political lobbying is a secret world that needs to be opened out and examined. One simple reform would be a register of lobbyists and I support that as a first step. It gets more difficult then but that is no reason to avoid the issue in a deeper way.
When does a pleasant lunch cross the line between a social occasion and a lobbying exercise? Even I was invited to have breakfast with the board of AIB, a strictly tea and toast affair, I assure you. Did my two cups of tea (the toast had run out by the time the plate reached me) constitute an AIB lobby of the Labour Party?
Frank McDonald and Kathy Sheridan describe an episode in their book on developers. They report an annual lunch organised by a leading auctioneer where Brian Cowen as Minister for Finance could meet the big players among Ireland’s developers while the Budget was in preparation. The venue was a private dining room in the Radisson Hotel on Merrion Road.
Ostensibly it was a social function with no purpose other than to eat, drink and be merry among friends. Equally one can assume these hard nosed businessmen (there are no women at these events) took the opportunity to let the Minister know what they would like to happen on the policy front in any Budget or Finance Bill that was in the offing.
Now how could you describe that event? Is it lobbying or is it lunch? It certainly wasn’t a free lunch. Mc Donald and Sheridan report that one participant had to write a cheque for €5000 to FF soon afterwards.
As a Sean O’Casey character might say, there’s lobbying and there’s lobbying.
Lobbying is one of the dark arts of influence peddling. We need to know more about it and to have stricter rules.
We have had 12 years of tribunals and still we don’t have a modern enforceable Anti Corruption Law. Amazingly even people who were named by Judge Flood in 2002 for corrupt payments and tax evasion, have never been disqualified as company directors let alone face more serious penalties. It beggars belief that this Government has done nothing to update the law on corruption, the penalties for corruption, the criminal procedures and the standard of proof required to secure conviction. Such a law, in my view, is a basic requirement of political reform.
May I briefly return to NAMA.
‘I have been reading remarks by Simon Johnson, a former IMF official with long experience of economic crises. This is what he has to say:
the real concern of the fund’s senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis. Typically, these countries are in a desperate economic situation for one simple reason—the powerful elites within them over-reached in good times and took too many risks’.
So how does the IMF judge a Government’s resolve?
The IMF staff looks into the eyes of the Minister of Finance and decides whether the government is serious. The fund will give a country a loan but first it wants to make sure the Minister is ready, willing, and able to be tough on some of his friends. If he is not ready to throw former pals to the wolves, the IMF can wait.
I wonder how an IMF team would judge the capacity of this set of Ministers to face down their old cronies. Would a serious IMF team look at Brian Cowen in the eye and see there a man with the resolve with the determination to show his former friends the door.
Well would he? I think we all know the answer to that. It might have to come to that eventually but first this Government has a mindset that the plain people of Ireland are to be the first in the firing line, the children of Ireland are to be the target of cuts in welfare, in education, in health care before any effort is made to face down the elite that has been the favoured recipient of public largesse, of tax breaks, of easy tax exile status, of Cinderella rules, of public contracts.
ENDS CHECK AGAINST DELIVERY