Politics

Economy not secure enough to weather shock, banking inquiry told

Former secretary general Tom Considine says crisis could have been prevented

Tom Considine, the former secretary general of the Department of Finance, arrives for the banking inquiry at Leinster House, Dublin. Photo: Gareth Chaney Collins
Sarah Bardon
Thu Jun 18 2015 - 01:03

The Irish economy could have weathered the crash if the Department of Finance had more measures in place, a former official told the banking inquiry yesterday.

Tom Considine, who was secretary general of the department from 2002 until 2006, said buffers were put in place to avoid any potential shock.

He admitted those were not strong enough but claimed if it had doubled its efforts the crisis might have been prevented. “If we had had, you know, greater buffers in our system, say, just for argument’s sake, twice as much as we had, we would have been able to withstand this,” he said.

“I’m not saying that we’re not responsible for what happened to us, but the trigger for what set it off came from outside.”

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Stabilise the economy

The former secretary general said the then minister for finance

Brian Cowen

had taken measures in 2006 to “cool the property market” and to stabilise the economy.

“Given the general belief that the economy was strong and the then-perceived healthy state of the public finances, the pressure on government for additional spending and tax reliefs was intense,” Mr Considine said.

“Clearly, lower increases in day-to-day spending would have increased the buffers available to tackle the crisis.”

Restricting tax reliefs

“Nevertheless, the 2006 budget did include a range of measures restricting tax reliefs on property-related projects. Those measures were designed to cool the property market without themselves causing the market to crash.”

Mr Considine said those measures had proven to be inadequate to prevent the crash. He said he regretted that he had not foreseen the crisis during his time at the department until his retirement in 2006.

However, he said that pressure from politicians intensified from 2005.

“This is a political system and advisers are there to advise, politicians are there to make decisions and that’s where it ends up.

“Now you can always criticise us for saying if we had provided the advice, if we had shouted louder or something, but you know, you can’t ignore the fact that that’s how it works.”

Mr Considine confirmed he has been a public interest director at Bank of Ireland since 2009 and has earned more than €500,000 during that period. He also has an annual pension of € 118,000 from the Department of Finance.