Banking Inquiry, Irish Economy, Banks
STAFF in the Department of Finance went home on the night of a budget to see what measures had been announced by Government, a witness told the Banking Tribunal.
Rob Wright, former secretary general in Canada’s finance ministry, said he also uncovered very little written formal advice between public servants and Government at the height of the crash amid fears it might have to be released under a Freedom of Information requests.
Mr Wright was being pressed on his 2010 report into the failings of the Department of Finance in the run up to the crash, which stopped short of saying it was not “fit for purpose”.
He was the second witnesses at the inquiry, which has wrapped up after two days until January 15th because of the Christmas Dail break.
Mr Wright told the 11
members inquiry team he was in Dublin working on the report when the Budget was
announced.
“People in the Department of
Finance went home on budget night to find out what was in the budget,” said Mr
Wright, who was also known as Canada’s deputy finance minister.
“Why didn’t they know? They
were in the Department of Finance. I found that incredible."
Mr Wright’s report examined
what advice had been given to Government in the run up to the crash, and if the
advice had been taken.
“We found dept had provided
clear warning, recommended a level of spending and tax measures that were more
moderate than the government done,” he said.
“Some advice more direct
than country knew about. With very few exceptions this advice was exceeded.”
However on the risks of
pro-cyclical policy he said: “There was just very little written advice. Very
little written advice.
“You could get snippets here
and there but on something as vital as that - particularly when you have
regular engagement with international institutions like the IMF, the OECD and
the EU where concerns had been expressed.
“You would have anticipated
a consistent flow of advice through that period. We really could not find much
of that.”
The Freedom of Information
Act was cited as “the most dominant reason” behind the lack of information
deficit, he revealed.
Mr Wright if a message sent
to a minister suggests a different path than one stated in public it’s very
damaging to relationships and controversial.
The Wright report made 50
recommendations for improvement and concluded that the civil servants were
often “overshadowed by politically driven forces” and that the department “was
not effective in responding to these pressures.”
He said while social
partnership had achieved a great deal for Ireland, it lead to massive excess
spending that was so huge it overwhelmed fiscal framing for Government.
Mr Wright also highlighted
the lack of an "independent voice" to restrain the economy because
Ireland is part of the Euro.
"You are in a monetary
union, we have an independent monetary policy in Canada. The Governor in Canada
has great authority. Here, you do not have someone independent to restrain the
economy when it needs to be restrained. That has to be you the
politicians," he said.
Mr Wright said there was a
lack of engagement between the department’s 500 plus staff at the time with
senior officials, who included just 37 personnel with an economy background.
Staffing levels have since
dropped to 300 and, on his recommendation, almost 100 have an economy
background and half of those are of masters level and some seconded from
outside agencies.
“More progress has to be
made,” he said.
The long-awaited €5m Bank
Inquiry is examining events leading to the Government €440bn 2010 bank
guarantee started yesterday. It will resume on January 15th.
