Colm MacEochaidh (former FG candidate in Dublin South East) speaks with the TD and Fine Gael spokersperson on Finance.
What did you think of Brian Cowen’s infamous radio interview?
I thought that he was asked questions about five or six of the fundamental issues that are now facing the country, and he failed to answer them with any clarity. My analysis of the present situation is that even though there are real economic problems, there is an underpinning problem which is to do with confidence, and unless the political leadership is decisive and makes decisions, that will continue. Whether he was drinking at night or not is immaterial to me.
When you said “the game is up” did you mean the game was up for him personally or for the Government?
I think the two hang together, I think they are joined at the hip, aren’t they?
Some people say his problem is an inability to communicate. Has he also made policy mistakes?
He was quite a good communicator across a series of Departments before he became Taoiseach. It’s only since he became Taoiseach that he seems to be quasi-paralysed. It’s as if the economic downturn was so unexpected in his world and that it came at him like a thunderclap, that he hasn’t been able to cope with it, because there has been a change of personality and certainly a change of the ability to set out the narrative. I think that’s a big problem with him now, because in modern politics, the 24 hour news cycle is so immediate that unless your leader can have a narrative that people will subscribe to, you don’t get the kind of social cohesion to plan forward.
Some grow in the office of Taoiseach, John Bruton for example. Has the office diminished Brian Cowen?
He looks a much less significant political figure on the Irish landscape than he did the day he took over.
Do you disagree with the Government’s approach to the problem created for the Irish banking system by Anglo?
I do. I think that the Government’s banking policy is an absolute fiasco. I think they have got it wrong from the start and I think the two Brians are equally culpable in this. It is quite clear that when you look back, the wrong decisions were taken. The guarantee was needed but not covering so many areas of financial activity. They were taking decisions on totally incorrect financial information. When Anglo Irish Bank was nationalised, Brian Lenihan estimated the total potential cost to the taxpayer at €4.5 billion. It’s gone to €25 billion and it’s rising.
Some say €39 billion, some say €70 …
Alan Dukes said €39 billion the other night and he is the Governor of Anglo, but there is an aspect in the debate here as well which I think requires explanation; some people are using gross figures. If you take Alan’s figure of €39 billion, that’s a gross figure. When the assets disposed of over a 5 or 6 year period, there will be a recovery of €10 billion or so. So, the net cost, and this is from information I am getting from the Central Bank, is likely to come in just under €30 billion.
Again the international financial press bemoans the lack of certainty about the outcome of the Anglo debacle. That’s regrettable, isn’t it?
Yes.. They decided on a wind-down, but disguised it as the “good bank, bad bank” formula, which Anglo itself had recommended. But of course it wasn’t that at all, it was a wind-down in two parts. And they provided neither a costing nor a timeline for the wind-down. And then when they talk about giving certainty, the Taoiseach says things like “Oh we’ll be announcing the capital requirements of the two banks in the next few weeks”. But you see the capital requirements of the two banks is different altogether from the liability of the taxpayer. Again, he is using language that misleads the public, but it doesn’t mislead the finance houses of London or the international bond markets and they know he’s spoofing when he says things like that.
Was it right to bail out a builders’ bank?
Well, I’ve studied economics in UCD. Garret Fitzgerald was the lecturer and when we were doing the theory of banking, it was very clear what the order of risk was. This theory that the taxpayer is the first in line is pretty ridiculous, especially when it was a private bank serving a very small cohort of people involved in the property development. Certainly mistakes were made by Brian Lenihan, and I would excuse Brian Lenihan because he was making decisions on extraordinarily bad advice.
Two years after the collapse of Lehman Brothers, it looks like Ireland is the last country to be still suffering real pain. Is that because of the mistakes made over Anglo?
It’s because of a general kind of tardiness that we have in politics and public administration. An inability to move from theory to practice and get things concluded. I read “Too Weak To Fail”, about the Lehman collapse and the pressure that came on the other investment banks in New York. And, typically when the pressure came on they moved in at 4pm on a Friday afternoon and they worked right through the night and the day; and before the markets opened on Monday morning, they came up with a solution to steady the markets and then they acted on it. And four months later, not only had the system stabilised but the banks who had got money from the Exchequer had paid back the money and were trading profitably again. We’re fooling around with Anglo, you know. Two years and people don’t know the bottom line yet. Europe led by Germany, is growing again, and has had six months of phenomenal growth at 3.7%. I don’t know if you have ever been surfing but – if you miss the wave – you will be floundering around in the shallows. And if we miss the European wave, we’re going to be in recession for a long time. But if we can position ourselves to take the wave, we will rise with Europe because we are in the same currency zone with the same market.
What do we need to do to ensure that we can catch that wave?
Even though Anglo cost a lot of money, it’s a once-off payment that adds to the national debt but it’s not a recurring annual charge like expenditure in or education or health and the country can afford it, even though its painful. It will knock about 1% off growth going forward. The Government should make sure that the commitments to fully recapitalise AIB and Bank of Ireland are delivered by Christmas. I’d wean the banks off the guarantee. I would progressively start charging them more, so you know that if you continue getting the guarantee, there is going to be pain inflicted because you have bigger charge to the Exchequer for the benefit of the guarantee, and I think you’ll have them off the guarantee by March.
And is that something that you would announce publicly if you were Minister for Finance, the guarantee is coming to an end?
Would you fear capital flight?
I don’t think there would be capital flight because I think we’d have the full backing of the European Central Bank and of the Commission to do this. They want us off the guarantee. We were the only country in Europe that gave a guarantee which covered all the banks liabilities. All the other guarantees in Europe, and I think there was 17 or 18 of them across the European countries, they were more limited in their scope than what we did in Ireland.
I have re-read Fine Gael’s policy New Era, which is a plan for investment and job creation dated April 2010. Is it out of date and is it overly optimistic, do you think, because the cost to us of borrowing money now is of a different order?
At the moment, we spend something around €52, €53 billion and we take in about €32 [billion] in tax, so there is a gap of about €20 billion and we won’t bring the budget into balance unless there is growth in the economy. So I can fully support the government target of taking €3 billion out of the next budget because it has to be done. Otherwise we won’t be able to fund the country in the future.
I think we also need a stimulus package. New Era is a classic kind of New Deal stimulus package. The advantage of it is that we would invest in technology which we need anyway going forward. It would be for new technology and it would be for infrastructure which would be the arteries of the modern economy.
It’s affordable because it’s not on the balance sheet of the State. We have the successful State companies like the ESB, Bord Gáis and some others. We can build on their capital programmes.
Ed Balls, in the context of the leadership election in the British Labour Party, said that the reason Ireland was paying so much money to raise money internationally was that we had cut too quickly and too deeply. Is he right?
Cameron and Clegg have signalled they are going to cut very hard, and they’re not providing a stimulus. Within the parameters of the debate in the UK, he is using Ireland as an example to support his case. But he’s wrong and he’s wrong for this reason; he argues that Ireland has a choice. Ireland has no choice because if we don’t cut we won’t be able to get funding for the €17 or €18 billion we require next year to keep the health service and education funded.
During the boom years we had an artificially-active economy. For long-term economic growth, don’t we need to invest in high skilled workers, third level education, so that we have a pool of extremely well educated persons, available for the next wave of the information era?
Absolutely, we also have to provide new blue-collar work. It is not possible to do a magic trick and turn redundant building workers into electronic engineers, or PhDs in pharmaceuticals.
It seems to me from my own involvement in Fine Gael that Fine Gael perhaps is beginning to look less progressive than it was under Garret. It’s looking more like a small minded conservative party. I don’t think that’s the Fine Gael that you support. Is Fine Gael faced in the wrong direction?
I don’t think so, I see Fine Gael as progressive. I see their circumstances have changed as well. You know, Garret’s constitutional crusade and the liberal social agenda to a large degree has been delivered. We had the divorce referendum. We had the bills on family planning, we had the end of criminalisation of homosexuality. So there are a whole series of things that have been done and it might not satisfy everybody – but it has satisfied mainstream Ireland who wanted action on these issues. So that political agenda which was there right through the 80s and into the 90s, is no longer the priority. The decline in the economy has made people more conservative. People are more limited in their vision in times of recession.
There are other ways in which progressive politics is expressed. Climate change, ethics in politics for example. You announced a policy of breaking the link between politics and big business as Party Leader but that has been reversed. Could Fine Gael do better on these progressive issues?
Yes I think we have to have a progressive policy on climate change but there is also another political reality as the people everywhere are reacting to the Green Party because they think they’re interfering unnecessarily with lifestyle, particularly in rural Ireland. Even among progressive people, there is an adverse reaction to the green agenda. However, this should not prevent Fine Gael from being progressive.
David Cameron very successfully promoted the Conservative Party in England as the true Green Party. Shouldn’t Fine Gael become a true Green Party, attractive to Green voters?
Promoting sustainability …
I think that’s happening. There’s an antipathy to the Green Party which is working against the implementation of the desirable parts of their agenda.
Should Fine Gael take up the slack?
Yes, particularly on the bigger issues of climate change..
The Labour Party are oddly silent or reticent on the question of the introduction of property tax. Are you?
No. Enda Kenny made an announcement that we wouldn’t introduce property tax. On the other hand, he said we would introduce a charge on water where it was being wasted. An allocation would be given to a household which would be free and beyond that, if it was wasted, there would be a charge.
Is the Labour Party targeting Fine Gael rural seats? I ask this because it seems to me that the Labour Party is becoming less ideological, less obviously a party on the left and becoming more populist
Well, I don’t think that they’re targeting Fine Gael seats particularly but they certainly are contesting in every constituency and sometimes identifying community leaders or independents or people who have resigned from other parties as their candidates. In a lot of cases it will be the Fianna Fáil seat. Garrett FitzGerald predicts that Fine Gael and Labour will get 100 seats on a divide of 70 Fine Gael and 30 Labour.
Will a Fine Gael/Labour coalition be cohesive?
Do you admire the leadership of Enda Kenny?.
I do. I think he has… actually I think he did very well when he was challenged because the worst thing I could envisage in Government is that if you’re sitting at a Cabinet table and you fear that your Taoiseach or your Finance Minister will fold under pressure. I’m sure Enda Kenny is not going to fall under pressure.
Some would say that you haven’t always admired Enda. You didn’t appoint him to your own front bench when you became Leader in 2001.
We had differences of opinion alright but they were never personal. We have a very good working relationship and we get on well.
I told a number of people I was going to interview you today, and all of them said they were moved by your Frontline interview when you spoke about your wife.
It had a bigger impact than I expected it to have. Based on the letters and calls I’ve had, it obviously touched people. I didn’t think I was going back into frontline politics the night I did that interview, but the Alzheimer’s Society of Ireland were very good to us as a family, very helpful, and they asked me to do it, to highlight the issue. I felt I owed them and that’s why I did it. Now I’m conscious of the fact since then that the interview has impacted on my political life. That was never the intention.
How do you enjoy being back in the frontline of politics?
It’s very busy. I’m absolutely swamped with work and very often I’m getting other people’s constituency work too. And I don’t have a lot of help. You never have in opposition and my secretary is absolutely inundated with work at the moment. So the workload is gone up an awful lot, but I like the job.
Colm MacEochaidh stood unsuccessfully in Dublin South East for Fine Gael in the Dáil elections of 2002, when Michael Noonan was its leader.