Fianna Fáil governments to blame for economic collapse, says Kenny

Taoiseach Enda Kenny has launched a withering attack on the economic policies of Bertie Ahern's Fianna Fáil governments.

In an address to the Oireachtas banking inquiry, Mr Kenny said Fine Gael under his leadership voted against every one of the budgets from 2002 to 2007 and opposed all the economic policies of the then coalitions.

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"By 2007, an uncompetitive, bloated, over-borrowed and distorted Irish economy had been left at the mercy of subsequent international events, without the safeguards, institutions and mindset needed to survive and prosper as a small open economy inside the euro area," the Taoiseach said.

"By this point, the economic costs of the banking and wider collapse had already been incurred, even if the true scale of the disaster would take several more years to fully reveal itself."

In a hard-hitting defence of Fine Gael policies while in Coalition government in the mid-90s Mr Kenny launched an assault on the tactics of former finance ministers Charlie McCreevy and Brian Cowen in the run-up to the economic collapse of 2008-10.

Mr Kenny said the lion's share of blame for Ireland's bankruptcy was domestic economic and financial mismanagement.

"For hundreds of thousands of lrish families, however, their dreams turned into a nightmare, as boom turned to bust and as stability was replaced by policy recklessness and regulatory failures," he said.

"To be sure, design flaws in the euro architecture as a whole contributed to the crisis here and elsewhere in the euro zone. While much work remains to be done, these flaws are gradually being repaired.

"But the Iion's share of the damage to the Irish economy was the fault of domestic economic and financial mismanagement."

Mr Kenny was joined by Jobs Minister Richard Bruton to set out the party's take on policy in the years before the crash.

Mr Bruton said the economic meltdown was not caused by a tsunami of international problems but successive bad ideas at home over an extended period of time.

He claimed this was highlighted by speculation on property and debt and the "sluggish, wasteful and self-indulgent" ways the governments spent their money.

Within the first 10 minutes of the inquiry Mr Kenny clashed with Sinn Féin finance spokesman Pearse Doherty who repeatedly asked the Taoiseach to explain a Fine Gael plan to slash income taxes if elected in 2007.

Inquiry chairman Ciaran Lynch also pressed the Taoiseach to focus on the specific question as to whether the cut would further narrow the tax base.

After more than five minutes on the one point Mr Doherty said he was "still none the wiser" before Mr Kenny interjected and said: "No, I don't."

The Taoiseach was also asked to address claims that he twice phoned former chief financial officer in Anglo Irish Bank Matt Moran to discuss rumours about how the bust lender was to be dealt with after the €440bn bank guarantee was introduced in September 2008.

It had been alleged in the Sunday Independent that Mr Kenny rang Mr Moran on November 17 and 18, 2008 to brief him on Fine Gael's plans.

"I don't accept the article that you refer to or the truth of that," the Taoiseach said.

"I made a call because I was asked to make a call and that he had something to say to me. In any event I had no conversation of any substance with Mr Moran."

Both men are from Castlebar.

Mr Kenny said he knew Mr Moran's brother Michael, a businessman in the Co Mayo town, and he had asked him to call the banker.

Mr Doherty read emails from inside Anglo and asked if they showed the then Fine Gael leader told bankers that the rogue lender was to be turned into "an offshoot of Bank of Ireland" or a deal was being planned between Anglo and the then Irish Life & Permanent.

The Taoiseach denied he briefed Anglo.

"It was never my business to be in contact with senior members of banks in the first place. I made the call because I was asked to do it by his brother," Mr Kenny said.

"I reject that assertion, or that allegations in that newspaper report, or that email completely."

Mr Kenny said his only association with the former Anglo chief executive David Drumm was at one meeting Fine Gael sought with the bank at the lender's former headquarters on St Stephen's Green.

About seven or eight senior bankers attended the meeting in 2008 and a presentation was made to the party chiefs where bankers stressed the rogue lender would come out of the recession fitter than any other.

Mr Kenny revealed he first heard of the blanket guarantee for the main Irish banks at about 7am the morning after it had been agreed.

He was waiting to do an early interview in TV3 studios when the phone call came through from the late Brian Lenihan who asked how Fine Gael would respond to the idea.

The question of political donations, mainly from developers, was also raised during the Taoiseach's appearance.

Mr Kenny issued a frank denial that Fine Gael was as close to builders and speculators as Fianna Fail was in the boom years.

“Certainly not,” he said.

Socialist Party TD Joe Higgins repeatedly asked Mr Kenny what the difference was between the Fianna Fail tent at the Galway Races and Fine Gael’s golf classics.

The Taoiseach said: “If anybody wished to participate or to contribute in a Fine Gael golf classic, which no longer applies, or whatever, it certainly had no bearing from our party’s point view in any particular interest they may have had.

“Let me assure you that insofar as the Fine Gael party was the relationship that you refer did not apply and anybody who participated in a golf match or whatever I’m not sure how they played.”

Mr Kenny said the vast majority of money taken in by Fine Gael was from the party’s national draw.

The inquiry also heard the Taoiseach say he did not have any meetings with the financial regulator during his time as opposition leader from 2002-2011.

The Taoiseach was pressed on more than one occasion about connections with developers and donations from them.

“I didn’t go on a campaign of developers asking: ’Please give me money’,” he told the inquiry.

“I have never been on the trail of developers or contractors.”