Bertie Ahern and Brain Cowen ‘ignored Irish financial meltdown warnings’
Published 02/03/2011 | 05:52
Former Irish premier Bertie Ahern and his Finance Ministers Charlie McCreevy and Brian Cowen shattered the Republic’s public finances after ignoring |repeated warnings from their civil servants.
The damning revelation in a new report detailing how Fianna Fail politicians swept aside civil servants' advice came as Fine Gael and Labour began talks to strike a coalition deal centred on fixing the public finances.
In a major independent review of the Irish Department of Finance's performance between 1999 and 2008, details emerged of how the Fianna Fail/Progressive Democrat governments ploughed ahead with tax and spending packages that were €6bn more generous than the Budgets recommended by officials within the department.
This is almost two thirds of the €10bn gap that now stands |between government spending and taxes this year.
The report, compiled by Canadian expert Rob Wright, exposes how Department of Finance officials repeatedly warned the Irish government about the dangers of its economic policies over the last 10 years. But crucially, their advice was ignored.
The report found that the Budget-making process was overwhelmed by programmes for government and social partnership. And it says the biggest surge in Budget spending happened in 2001 and in 2007 in the run-up to general elections.
In 2001 — despite having agreed a Budget worth about €1.3bn with the Department — the then Finance Minister Charlie McCreevy subsequently delivered the now infamous “giveaway Budget” worth €2.7bn that extended tax reliefs and accelerated spending.
But the biggest giveaway was in 2007 when Mr Cowen brought in a Budget that was even more generous than Mr McCreevy's pre-election one in 2001. That year, the Ahern-led government added another €1.3bn to the Budget package, introducing tax cuts and spending that was almost twice as much as the Department was recommending in another bid to win votes.
Similar to 2003, once the government was re-elected the following year, the report shows the Budget drifted lower again and was almost in line with the Department of Finance's |recommendations.
Mr Wright says that all along, the Department officials continued to warn the government about the dangers of its economic |policies.
Reacting to the report yesterday the Association of Higher Civil and Public Servants (AHCPS) said it had vindicated the decisions and actions taken by its senior members at the Department of Finance.
“This report clearly states that the actions of politicians, rather than civil servants, were the primary factors in, firstly, adopting short-term policies that ultimately led to economic collapse; secondly, ignoring repeated warnings of an impending downturn; and thirdly, failing to respond appropriately when it hit,” AHCPS general secretary Dave Thomas said.