The economy is in recession and the banking system has failed, but the Government’s only solution is to “revive a model that has failed, rather than to totally reform the system”.
This is the view of Labour Party president and Galway West TD Michael D Higgins, who was speaking on the controversial NAMA Bill in the Dáil last night (Wednesday ).
Dep Higgins said the public have ‘major concerns’ over NAMA but that these are not being addressed.
“There is nothing we have heard so far from the Minister for Finance that ensures that an enormous debt undertaken by this, and future, generations of Irish taxpayers will lead to such liquidity as is needed for the retention and creation of jobs in the real economy,” he said.
He said the public is “scandalised” by the €54 billion that is being transferred to the banking system from the taxpayer - particularly money to Anglo Irish Bank, “a bank which has no role in the real economy,” according to Dep Higgins.
However he added that such funds will be raised by the Irish banking sector from the European Central Bank on foot of Irish Government bonds and guarantee. He alleged that these will be used by the banks to defray their commitments from the foreign banking sector from which they have borrowed. Thus, he argued, the proportion that will be available for liquidity in the Irish banking system for the real economy will be considerably reduced.
Dep Higgins said that, instead of using the situation as an opportunity to reform the banking system, the Government’s strategy is to “revive a model that has failed”.
“Rather than reform the banking system and relate it to a version of the real economy that addresses issues such as export generation, employment creation, infrastructural development, and social cohesion,” said Dep Higgins, “the Government’s statements so far suggest all of this must wait until the needs of the banking system have been addressed.”
Dep Higgins also said the collapse of the Irish economy needs to be examined as several important questions remain unanswered.
“Among the questions, “ he told the Dáil, “that need urgent response are: How did the Irish financial system come to be imperilled? By whose actions did the crisis arise? What were the failures in regulation? How much was owed to external environment of wild, unregulated capitalists? How much was crafted by the new breed of Irish developer, powered by irresponsible, tax-driven measures? How did a culture of facilitating speculative ventures at the cost of the real economy come to prevail in the banking sector?”
Dep Higgins said these questions must be addressed by the immediate establishment of an Oireachtas committee with similar powers to those of the DIRT enquiry in the late 1990s.
