Taoiseach acted 'in good faith' as finance minister

TAOISEACH BRIAN Cowen defended his record as minister for finance during a series of statements on the recent OECD and IMF reports.

His regret, he said, was that he did not manage to predict that such a seismic shock to the world economy was going to happen and neither did anyone else.

“If my crystal ball had been better than those of the IMF, OECD and ESRI, I would have done more to reduce spending so it would have been easier to deal with this international recession,” the Taoiseach added.

“However, I stand over the decisions I made based on the best information and advice that I had.” Mr Cowen said that when times were good, he had chosen to spend on badly needed public services but, against the wishes of the Opposition who wanted him to spend more, had also run budget surpluses and brought down the national debt.

The cumulative current budget surpluses for 2005, 2006 and 2007 amounted to €22 billion. The national debt, as a share of national income, fell from 30 per cent in 2004 to 23 per cent in 2007.

He added: “At all times, decisions were made in good faith to reduce the debt and improve public services. This was the political consensus at the time and this was consistent with the view of many of the IMF directors at that time.

“When I was finance minister in 2006 and 2007, the Ireland country reports commended our economic management and sound fiscal position.

“By definition, nobody has the benefit of hindsight. What I can do, and will do, is provide honest and strong leadership through this crisis.” Mr Cowen said that in 2007 the IMF expected economic growth to remain robust over the medium term. Nevertheless, it did warn of a possible overheating in the housing market.

Regarding the aspects within his control, he had moved, as minister for finance, to end the tax incentives that then existed in the property market.

“In Budget 2005, I announced a review of tax incentive schemes,” he added. In Budget 2006, in line with the recommendations, I announced a termination date of July 31st, 2008, for all existing property-related tax incentive schemes with the exception of private hospitals, registered nursing homes and childcare facilities.”

Most importantly, said Mr Cowen, despite a concerted attempt in the media and on Opposition benches, he had refused to get rid of stamp duty, the largest transactions tax on property in the EU. “If we had heeded those calls to remove stamp duty, the brakes would have been off entirely and we would be in far greater trouble than we are now,” he added.

“What all this goes to show is that none of us were right in what we thought would happen,” Mr Cowen said.