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JOINT COMMITTEE ON FINANCE AND THE PUBLIC SERVICE díospóireacht -
Monday, 5 Jul 2010

Commission of Investigation into the Banking Crisis: Discussion with Minister for Finance

This meeting has been arranged to consider issues that should be covered by the terms of reference of the commission of investigation into the banking crisis and related matters. I welcome the Minister for Finance, Deputy Brian Lenihan. I request that all mobile telephones be switched off. I remind members that the meeting will be webcast live and mobile telephone signals disrupt the sound signal going to the website. Members are reminded that, under the salient rulings of the Chair, they should not comment on, criticise or make charges against any person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

We will discuss a number of issues. The first is the terms of reference of the commission of investigation. We can then move on to other matters. I understand the Minister wishes to make a statement with regard to the terms of reference. I know Deputy Burton has amendments which are being photocopied.

I would like to see the amendments, if possible.

I have submitted amendments to the secretary. However, I have not yet had an opportunity to read the Minister's comments. If the Minister wishes to go through his statement, our amendments are being circulated. It is to add two new sections——

Has the Deputy received the statement?

Yes, I have just received it.

I thank the committee for the opportunity to continue a discussion in public session on the two preliminary reports prepared by Governor Honohan and by Mr. Regling and Mr. Watson last month.

Our discussion on this subject two weeks ago was productive and constructive. It gave an interesting perspective on the terms of reference for the policy review. We also had some discussion on the commission of inquiry. As I said in the Dáil recently when the terms of reference of the commission of inquiry were debated, the two preliminary reports deserve to be considered in a rational manner. It remains my objective to seek to secure a consensus about the next steps in this process before the draft order to establish the commission of investigation is put to a vote of the Houses shortly.

I believe we can all agree that the two preliminary reports provide a comprehensive examination of the crisis of the banking sector. One of the key purposes of the preliminary reports was to identify specific matters that required more detailed examination by a statutory commission of investigation. Mr. Regling and Mr. Watson distinguish clearly and explicitly between those issues that are amenable to further investigation through a legally orientated process and other issues which are less concrete and verifiable and may be more appropriately the subject of policy review.

I would like to draw the attention of the committee to a number of points in regard to the draft terms of reference. First, both reports, but in particular that of Mr. Regling and Mr. Watson, describe in some detail the nature of the explosion in the availability of credit in the Irish banking sector and characterise the failures in governance and risk management in our banks as "disastrous", and ultimately leading to systemic difficulties in the banking system. It is, therefore, essential and necessary to investigate, in the institutions guaranteed by the Government, the main causes of the very serious failures to implement and adhere to appropriate standards and controls, and to ensure prudent risk management policy and procedures.

Second, it is clear that there were particularly egregious failures in corporate governance and risk management at Anglo Irish Bank and Irish Nationwide Building Society. Certain matters are already the subject of investigation by the relevant authorities but there is a need to examine more deeply and broadly what went wrong in these two organisations. The activities of the boards and senior management of these institutions, in particular the business models and strategies which resulted in these institutions experiencing severe financial distress, need fuller investigation. I believe the public expects us to find out what went wrong and why in these two institutions that have cost the taxpayer so dearly.

Third, it is proposed that the commission investigate whether the external auditors commented in their audit reports on the standards and controls, the risk management policy and procedures, the business models and strategies and the business and lending practices that played an instrumental role in the severe difficulties experienced by our banking system.

Fourth, building upon the analysis by Governor Honohan of the failures of financial supervision, there is a need to examine in more detail the nature of supervision and oversight of the banks by the regulator. It is proposed, therefore, that the commission should examine the failures of the Central Bank and the Financial Regulator to regulate and supervise the covered institutions and maintain financial stability.

I agree that the Governor's report contains a full analysis of what went wrong in the Central Bank and the Office of the Financial Regulator in the run-up to the crisis. The report will provide a strong basis, on which the commission can choose to build its investigation. In his evidence to the committee on 15 June the Governor discussed the rationale at this stage for a commission of investigation with broad terms of reference extending to all of the covered institutions. In this context, he referred to the comprehensive assessment available from the two preliminary reports. He also indicated that, on the basis of his report, there was, in his view, a clear understanding of what had happened in respect of the regulatory role of the regulator and the stability role of the Central Bank.

My assessment and that of the Government is that the draft terms of reference are appropriate in the light of the findings made in the preliminary reports. Moreover, the terms of reference are closely aligned with the main recommendations made in the Regling and Watson report on the legally verifiable matters which should be investigated by the commission. The Governor highlighted in his contribution that not enough was yet known on the risk management, governance and decision-making processes in the major banks. I welcome the committee's views on the draft terms of reference and any suggested amendments. The Government's view is that these matters have had a substantial impact on the State and on its financial position and that their consequences will continue for some time to come. It is essential that we identify what happened in the banking system and learn from it in order to ensure effective management practices and appropriate procedures will be in place for the future in order that these events can never recur.

That concludes what I have to say about the terms of reference of the commission. I do not propose at this stage to go into the policy issues, but I am in a position to assist the committee on two distinct issues. The first is the discussion we have had to date on the policy issues and how we can approach them, while the second is the nature of the review being carried out in the Department of Finance. On the terms of reference, the proposal from the Government at this stage is based on the reports and what they saw as capable of investigation in a legally verifiable process. That is fundamental.

The matters proposed in the terms of reference relate primarily to the management of the banking system, corporate control through the board structure of these institutions and also through the system of supervision which should have functioned in respect of them, and the system of external audit. The terms of reference proposed by the Government go somewhat further than those recommended by Mr. Regling and Mr. Watson in that they also involve communications from the Department of Finance on questions of supervision, an issue about which there is legitimate public concern. It is proposed that all of these matters should be subject to a commission of inquiry with a tight time limit of six months. On the resolution of any disputed issues of fact — many of the issues of fact may not be in dispute — the Oireachtas will be in a position on the foundation of the report to conduct whatever inquiries it sees fit.

I have just received a copy of the Labour Party amendments to the draft terms of reference. The Chairman will appreciate that I need time to study them.

We can suspend the sitting for five or ten minutes if the Minister so wishes.

Perhaps Deputy Burton could speak to the amendments while I read them. That would allow us to proceed.

That is fine with me.

Before Deputy Burton begins, I welcome Deputy Noonan.

I am substituting for Deputy Barrett.

No, we have been notified that the Deputy is now a member of a committee. We are back to the 1997-2002 team. I wish the Deputy all the best in his new position as Fine Gael spokesperson on finance and the public service. I also welcome Deputy Thomas Byrne who has been appointed to the committee in replacement of Deputy Grealish. I wish him well during his term. I now invite Deputy Burton to proceed.

Most people do not understand we are entering into three follow-on inquiries, as the Minister outlined, following the two preliminary inquiries made by Mr. Regling and Mr. Watson and the Governor of the Central Bank, Mr. Honohan. The first inquiry is the formal public commission of inquiry; the second is an inquiry to be undertaken by the committee into future oversight of the budgetary and fiscal process, in respect of which we are close to all-party agreement on the possibility of establishing a council of wise individuals; and the third is the review announced separately by the Minister of the Department of Finance and how it may have reacted or not as the case may be to the crisis.

On the formal commission of inquiry to which the Government agreed sometime ago in the Dáil, I am bringing forward a series of amendments to the proposed terms of reference. The document I have provided includes notes setting out what the proposals seek to achieve. My proposals Nos. 5 and 6 set out additional terms of reference which seek to have included in the formal inquiry the role of both the Office of the Minister for Finance and the civil servants who provide information for the Minister.

Proposal No. 6 seeks to extend the date of the inquiry up to 15 January 2009. The reason for this is that the terms of the inquiries to date have extended to and presumably included the night on which the guarantee to certain financial institutions was agreed. The Government has decided that everything after that must be excluded from inquiry, the reason apparently being that many of the actions subsequent to the guarantee were subject to legislation and, therefore, subject to debate and discussion in the Dáil. In the run-up to the inquiry the Government and all of the various agencies involved told us — in committee, privately and on the floor of the Dáil — that the Irish banking system was sound and that stress tests had proved this.

By December 2008, however, the Minister had publicly admitted that Anglo Irish Bank and the Irish Nationwide Building Society were suffering from serious difficulty. As we later learned, they were on the verge of financial collapse. The Government has always maintained that it nationalised Anglo Irish Bank because of wrongdoing on the part of management. It has not acknowledged to this day that it nationalised the bank because it was completely bust, even after €22 billion and counting has been sunk into it. In addition, staff in the Department of Finance and the Minister seem to have been convinced that the head of the Irish Nationwide Building Society had insights into banking which nobody else on the planet had and which, therefore, rendered the bank a special case in terms of its particular style of management. It is important, therefore, that the terms of reference be extended up to 15 January 2009, as I have proposed, the point at which the Government finally acknowledged that Anglo Irish Bank would be nationalised and that the Irish Nationwide Building Society would also, in effect, be looked after by the Government.

The Government and the Department of Finance must be included in the terms of reference of the commission of inquiry because the most basic requirement in respect of any inquiry, statutory or non-statutory, is that the outcome be credible. This means that both the persons chosen to conduct the investigation and the terms of reference given to them must stand up to independent scrutiny and give rise to public acceptance that their report will be sound and reliable. However, a commission of inquiry, such as the one proposed, that omits completely from its remit two principal participants, namely, the office of the Minister and his Department, will lack fundamental credibility. When in private session at the last meeting, the Minister told members that he had set aside €1.8 million in this year's budget for the work of the commission of inquiry up to the end of this year. Given the crisis we face, for example, regarding the care of people with a mental handicap and other disabilities, €1.8 million may not be much to the Department of Finance. However, in the context of the life and death decisions that are being made when budgeting, the sum of €1.8 million before the end of 2010 actually is a great deal of money.

While members have already discussed this at length with the Minister, the Governor of the Central Bank, Professor Honohan, proposed to this joint committee that there should be a singular inquiry, to follow on in private from his inquiry, into each of the guaranteed institutions to ascertain relatively quickly what went wrong and what caused each of those institutions to collapse. I note the Minister's statement repeats his earlier comments that while he accepts Professor Honohan's proposition is reasonable, he will not accept its recommendation to push back the terms of reference. The Governor suggested that the formal commission of inquiry be pushed back in favour of a more rapid initial inquiry into each of the covered institutions. During the joint committee's private deliberations last week, this was not acceptable to the Minister and clearly remains unacceptable, according to the statement he has just read to members. I accept that he is the Minister and that he has the votes in the Dáil. Consequently, my point is that the dates encompassed by the inquiry, particularly in respect of the spectacular failure of Anglo Irish Bank and Irish Nationwide Building Society, which were at the rotten heart of the destruction of the Irish economy and our reputation, must be far broader and wider and must be extended.

In addition, I refer to the section that deals with auditors. While its inclusion is positive, an issue would arise were auditors to come into this inquiry. Under law, auditors are required to do certain things. However, they are not required to comment on the business plans, objectives or purposes of the organisations they audit. Consequently, were one to hold a commission of inquiry into such matters, anyone could write down on the back of a cigarette packet what would be the outcome. That is not within the legal remit of auditors. While they may consider that certain things business people do are unwise or wrong, that is not what they are reporting on. If, as the Minister is suggesting, one makes this some kind of central feature of the inquiry, it probably will have the outcome of a nil result. While it is very important that in the future, in the case of banks auditors should perhaps consider their financial stability, financial strength and so on, as matters stand they are governed by the requirements of the Central Bank.

The other broad issue in respect of the commission is how can the Minister suggest that the Central Bank and the regulator would be subject to the rigours of a full commission of inquiry? Many people in those institutions will put up the Nuremburg defence that they were simply doing their job and that the people to whom they reported ultimately, over and beyond their statutory responsibility, were in fact the Minister himself and, more specifically, the Department of Finance. How are they are expected to get a fair hearing when they are included in a full commission of inquiry but the Department of Finance and the Office of the Minister for Finance, including the Minister's predecessors and himself over the period leading up to the inquiry, are rigorously excluded? They would have grounds for arguing levels of unfairness in respect of the basic structure of the inquiry.

I acknowledge that as a lawyer, the Minister's response has been quite clever. He has suggested that a separate inquiry should be held into the Minister for Finance and the Department of Finance, by way of a separate review that the Minister will commission, presumably from an international expert, which will benchmark the practices of the Department of Finance against its peers. However, this is not adequate to the crisis into which this country has fallen. Of itself, that may be a worthwhile exercise but it in no way complements for the rigorous exclusion of the office of successive Ministers for Finance and the Department of Finance from the examination of their roles in what has led to a point at which 450,000-plus people are unemployed, 100,000 people have emigrated and people who seek the most basic services in respect of health and disability find there is no money to fund those services. In future years, the outcomes for and education received by children going to school will be severely restricted because of the banking collapse. Does the Minister seek credibility in terms of the citizens of Ireland, who are being asked to take this extraordinary debt burden and carry it on their backs for an unknown period, while excluding the Department?

Finally, a story appeared on the front page of today's edition of The Irish Times stating that the outcomes for NAMA and its draft business plan, which I understand——

The Deputy is trawling a little.

I will finish on this point. The Minister might confirm my understanding that the draft business plan was given to his Department last week. I also understand the previous business plan is no longer operable and that the level of losses that are likely to be incurred by NAMA will be, on average, approximately twice the level of loss that the Minister had predicted.

This is not on the joint committee's agenda today.

That simply is not correct.

I will finish on this point. As a consequence of that report, if true, and I note members are meant to receive a copy of it, the losses that Irish taxpayers will carry in respect of debt exposure will be even more severe——

Deputy, we can discuss that matter when we receive that report.

——and this is the reason a full inquiry is needed.

We must return to the items that are on today's agenda. I call Deputy Noonan.

I recommend the Labour Party's proposals to the joint committee and I hope they will receive all-party support.

As I have not studied these recommendations in recent weeks, the Chairman will forgive me if I catch up while members go through this debate today. First, I welcome the Minister's initiative and thank him for the two reports that already have come to hand. They were of benefit to anyone who is trying to get to the bottom of these issues and made very interesting reading. Professor Honohan himself stated there were certain matters that he was not investigating. In particular, he mentioned the role of auditors and stated quite bluntly at the outset of his report that a further inquiry should deal with the issues that he considered to be outside his terms of reference. This is what has left members where they are now.

The Minister's argument appears to be that the role of the commission of inquiry can be ended on 28 and 29 September 2008 because matters that happened subsequently were the subject matter of legislation and that the Dáil, the Seanad and their Members had an opportunity to discuss everything subsequently while the legislation was being processed. This appears to be the argument in favour of the cut-off point. It is a mistake to have the cut-off point on 28 and 29 September. I remember that when the Minister introduced the legislation on the guarantee on 30 September 2008, in his introductory speech on Second Stage the Minister argued the case that he needed to guarantee the financial institutions because they were facing a liquidity problem, not a solvency issue. Even though some of us asked questions, the legislation was debated on this basis. The Honohan report agrees that liquidity was discussed that night. I am not saying the Minister misled us. He gave us the information he had to hand on the night. At some time during the following weeks, however, it became clear that what was perceived to be a liquidity problem had been a solvency problem all along. As such, the legislative process in Dáil Éireann did not debate the root cause of the problem. The commission must consider this issue.

The Minister will recall the back-to-back loans between Irish Life & Permanent and Anglo Irish Bank. The purpose of those loans was to make the solvency position of Anglo Irish Bank look better. There was a deliberate falsification of a position. It was nearly Christmas before this information appeared, but——

It was in the spring.

Did the problem occur in November?

No, it occurred immediately following the guarantee, in late September or early October.

What I am trying to establish is that the problem occurred post-guarantee. What has been established as fact is that the senior people in the Central Bank and the regulator's office knew about it. How can we sign off on an inquiry's terms of reference when the regulators and Central Bank knew about an issue unknown to the legislators when they processed various legislation?

The situation worsens. As I understand it, Coopers & Lybrand spotted the problem and informed officials at the Department of Finance. I accept the Minister's position that he was never informed, but his officials knew. In effect, the solvency problem of Anglo Irish Bank was disguised by subterfuge, as the Central Bank, the regulator, Coopers & Lybrand and departmental officials knew about it. Now we are being told that it is not a matter into which we need to inquire because everything was debated during a legislative proceeding in the Dáil. This is blatantly incorrect.

This issue has had serious policy consequences. If the Minister knew on the night of 28-29 September that Anglo Irish Bank had such a solvency problem, he would not have extended the guarantee to cover all of its liabilities and subordinated debt. I doubt he would have covered its primary debt. Anglo Irish Bank was a private institution and was only nationalised much later. The State had no obligation to it. If it went down the tubes, having the creditors run it to recover as much from it as they could would have been one way to solve the problem. People claimed it was systemic to our financial system, but that point is arguable. On 29 and 30 September, the Minister did not know a solvency problem was coming down the road at him. He certainly did not know it would cost taxpayers €22 billion and rising. When he subsequently made the decision to nationalise Anglo Irish Bank, he obviously knew of a solvency problem. The Dáil was brought into his confidence and the circumstances were laid out, but I am certain that he did not know the extent of the problem, which was hidden from him. A part of that owed to the back-to-back loans device. The night Anglo Irish Bank was nationalised, the Minister did not know he would eventually be announcing that the taxpayer would need to divvy up for somewhere between €22 billion and €32 billion to fill the hole.

I apologise for interrupting, as the Deputy is being constructive. The back-to-back loan issue was within my knowledge when the nationalisation occurred.

I accept that, but the Minister did not know the extent of what he was taking on in terms of taxpayer liability when the rescue became necessary.

This inquiry will not have credibility if it stops at 28 or 29 September 2008. As Deputy Burton stated, it must go as far as some date towards Christmas. She has picked a date in mid-January, but 31 December might be enough. Either way, it must be later than the nationalisation of Anglo Irish Bank, which was pre-Christmas. Will the Minister take my suggestion on board and table a suitable amendment?

The second issue that arises from Deputy Burton's arguments is whether the Department of Finance and the political process should be part of the inquiry. The Department needs to be inquired into because there is some evidence to support the argument that it is not fit for purpose, given the times of crisis through which we have gone. It may not be fit for purpose if untoward events recur.

The two reports that have come to hand, certainly in respect of the Minister's predecessor in the Department, have been blunt about stating there was a political responsibility for macroeconomic and taxation policy. While one could consider as far back as 2002, political responsibility from 2004 onwards has been identified. I would need to reflect further on whether this matter must be revisited. Perhaps it must.

Regarding the second inquiry that the committee will conduct, the Minister seems to be stating that, where the facts have been established, the committee should contemplate what policy responses are necessary to ensure that these facts do not recur and that a better situation emerges subsequently. This seems to be the core of the Minister's second process in which the committee has a role to be discussed further.

The third inquiry is an external inquiry into the Department of Finance to determine whether it is fit for purpose. The Minister is presenting this as the Department and him having absolute control over it, but the committee should have a say. Every citizen is affected by the Department's decisions. The inquiry should not be totally within the Department's remit.

Regarding the cross-over between the role of the committee and the inquiry into the Department, I would like something to be included in the committee's terms of reference to ensure that public servants called before us to assist us in making recommendations on policy to avoid a recurrence of events would not be in a position to raise their hands and claim that, in the best interests of the Department of Finance, they will only answer to the Merrion Street inquiry and will not go through the process a second time for the benefit of the committee. We need public servants who were party to these decisions to tell us what occurred, what advice they gave and whether they were ever overruled. We need the documents on the table. We do not want anyone telling us that he or she cannot do this because of another inquiry in Merrion Street that is being run by eminent people from Brussels, Berlin or Frankfurt.

As the only people who did not get into the difficulty into which everyone else got, a Canadian would be a good choice. Does the Minister understand my point? We want to ensure that, if this committee has a role in formulating policy to avoid a recurrence, we have the full policy information from the officials at the Department of Finance and that there is no gainsaying us when we look for it. This is my initial contribution.

I remember similar debates when the Government proposed a multifaceted approach to inquiries in the first instance, the division of two reports and the role of the finance committee. At the time, it was argued that the reports would not be open, would not investigate particular areas and would not reach firm conclusions and that the conclusions would not be admitted to or acted upon. Many of those criticisms have been shown to be incorrect. The reports before us are clear documents and blunt in their recommendations and analysis. Where does the Minister think this will go subsequently? The Minister referred to the formation of the commission of inquiry and his desire for a good deal of international participation. Has the Minister given this further thought with regard to personnel and the structure? Regarding investigations into the systems in the Department of Finance, which I suggested at the last meeting, does the Minister see that coming back to this committee for subsequent analysis? That will help the process. We need to know the Department is fit for purpose, as Deputy Noonan has pointed out, and whether it was capable of being involved in the decisions made recently and the difficult decisions that lie ahead.

The role of this committee has been defined in policy terms. I refer to the extent to which the Minister is confident there will be full participation by those involved in the policy process. The Minister said he is willing to participate in that process, as has the Taoiseach. Is it likely anyone involved in the policy process over the past 18 months will not co-operate? Does this cause a difficulty with how matters will run subsequently?

My understanding of the commission of inquiry is that the decisions on Anglo Irish Bank and Irish Nationwide are part of the terms of reference. Everything that relates to Anglo Irish Bank and Irish Nationwide should be part of the investigation process. A similar criticism was made at the time of the bank guarantee decision by the Government and the Oireachtas. Both Professor Honohan and Mr. Regling and Mr. Watson referred to this even though it was claimed the terms of reference asked them not to make such reference. On those grounds, I ask the Minister to refute the criticism made about the original approach to these reports and the investigation process and to give confidence to the investigation process from here in addressing the remaining concerns.

I will try to help members of the committee as far as I can. On a constructive note, I will try to identify the areas of agreement. I agree with Deputies Noonan and Burton that the role of the accountancy profession is an important one and was highlighted by Professor Honohan in his report. It should fall within the terms of reference. I take Deputy Burton's point that she is concerned about the terms of reference as formulated. I will have the matter examined prior to any decision by the Government. It is an important issue and there can be agreement on it.

I agree with the point made by Deputy Noonan on the time limit, which was well put, in so far as the banks are concerned. I agree there was substantial interaction between the regulator and the banking system subsequent to the guarantee of 29 September. It was debated in the Dáil in early October. That raises an important issue and I will examine the terms of reference to ensure the investigation into the guaranteed institutions continues to a date later than the guarantee. It is not desirable to bring it up to date and the question arises of what date one picks. Deputy Burton wants political matters examined as well but leaving that aside for one moment——

The reason for the date of 15 January——

I know the reason——

——is that it was broadly when the announcement was made in respect of the nationalisation of Anglo Irish Bank. What had happened had happened and there was full knowledge of the complexities that unravelled and had come into the public and private domain of various agencies. That was followed by the nationalisation of Anglo Irish Bank.

The area of disagreement is the extent to which the Department should be part of any commission of inquiry. That is a possible date one could use for how far the banking inquiry should proceed. I am open to suggestion on that. I can agree with that and the points are validly made. I will bring all points before the Government for its attention. I disagree with the argument as formulated on the question of the Department. The Department and the Minister are not two distinct entities but one. That has always been the position. Regarding the extent to which the Department and the Minister should be part of the commission inquiry, I am responsible to Dáil Éireann for the Department and I have discharged that responsibility at all stages. There is nothing established to date to suggest any of the decisions taken in respect of the management of the crisis requires a commission of inquiry. For that reason, I reject Deputy Burton's suggestion.

On a broader note, the report did not suggest the Minister or the Department more generally should be investigated. Regarding crisis management, this committee had the benefit of hearing Mr. Regling, Mr. Watson and Professor Honohan. This committee played an important part in ensuring the reports were of as high quality as members have acknowledged. Their involvement in that process was invaluable. They viewed the crisis management as excellent. The manner in which crisis management was carried out from a political point of view has not been called into question to such an extent that it cannot be dealt with through the system of political accountability.

Regarding the guarantee, a parallel request has been made for the documents relating to the guarantee by the Committee of Public Accounts. I am more than happy to make the documents available to that committee and to answer questions on the subject, as I did at this committee in February 2009. At the time the committee expressed general satisfaction about the answers I gave. Questions will always be legitimately raised and they are there to be answered. That is the nature of the political process.

The more general point is made that if we do not examine the crisis management issues in a commission of inquiry, such as the guarantee or the nationalisation of Anglo Irish Bank, on which Professor Honohan has carried out a comprehensive inquiry, there should be more general inquiry into the whole fiscal stance taken by the State over a long period of time. This presents the same difficulty seen by Mr. Regling and Mr. Watson. It involves an inquiry into matters that are really more in the nature of the political rather than a legal or forensic debate. They are not easily susceptible to factual resolution and do not lend themselves to the kind of approach a commission of inquiry can give.

Regarding the terms of reference, the Government should accept the terms of reference as formulated by Mr. Watson and Mr. Regling, supplemented by a reference to accountancy, supplemented by a reference to communications between the Department of Finance and the regulatory system. That commission of inquiry report will deal with what the authors of the scoping report have identified as the major culprit in our economic crisis. In their view the major culprit was the banks, not the Government. The public is entitled to a comprehensive investigation into the banks, their management, their boards, the supervisory and regulatory systems and those systems in so far as they had contact with the Department or the Minister for Finance. That can be dealt with by a commission of inquiry.

I must take issue with Deputy Burton. I do not accept that some device short of a commission of inquiry can do so. I wish there was and I understand the motivation for the proposal by Deputy Burton.

The proposal that Professor Honohan has put forward.

I apologise — the proposal that Professor Honohan and Deputy Burton have put forward.

With the best will in the world, unless legal sanction is available to whoever presides at a commission of inquiry I do not believe the necessary co-operation will be forthcoming. That is the difficulty faced by any Government looking at establishing an inquiry of that type. If the banking system was the primary culprit I do not think the Government should go to it on the basis of asking it as a favour to tell it something. The Government should tell the banking system it needs to know what went wrong as it is being left with a substantial liability. The liability is not as substantial as is being represented even in today's discussion because a substantial upswing in Allied Irish Bank and Bank of Ireland has been secured for the taxpayer.

With regard to the NAMA issue raised by Deputy Burton, the report has not yet been published. However, the figure of a loss of several hundred million as a potential outcome was very much at the extreme end of the scenarios painted in the preparation of that report. It was not the central case.

With regard to the terms of reference, I will draw the concerns Deputies raised to the attention of the Government prior to any matter being tabled in Dáil Éireann. I take the points on the dates and on the accountancy question. However, I do not believe an inquiry that will involve the political system for the past ten years is one that would end in six months. Any political matters that have arisen with regard to the crisis management can be dealt with in the House and by this committee. I take Deputy Noonan's point that there have been times during the crisis when the amount of information available even to the Minister has not been sufficient to bear the weight of the argument in light of subsequent events. That accepted, the House and its committees still have the capacity to ask the crucial questions and I and any other relevant Minister must be in a position to answer those questions in the House. I do not believe we have reached the point where matters of this type should be contracted to a commission of investigation.

I hope what I have stated is of assistance and that I have not omitted anything, other than perhaps to reply to all of the populous points that have been made. I have tried to focus on the terms of reference.

I welcome the Minister's undertaking that he will look again at two areas which are of huge importance. One of these is the wording of the terms of reference with regard to the auditors and their responsibilities and how they conducted their business. It is crucial that this is included. On previous occasions, I have given the example of an exporting or importing company which might have a particularly good or bad year because of sterling going up or down. Often, one sees a comment in an auditor's report explaining this as the reason a company did well or not. There were no such comments on the banks and it is clear that Anglo Irish Bank was sailing close to the wind for a long time without any hindrance or comment from the auditors. It should take cognisance of that fundamental weakness in the reporting systems of the auditors, which are self-regulating organisations and that is completely unacceptable. An outing in such an inquiry would help change this.

The other matter is with regard to the timing. It is absolutely critical that the period under inquiry continues until 15 January 2009, when the nationalisation of Anglo Irish Bank was announced, because critical policy decisions were being made up to that point. It is absolutely imperative that the additional period of time is added to the scope of the inquiry.

The Minister has covered many of the areas on which I was going to ask questions. I do not want to spend much time looking back at the past unless there is an objective in it, and the objective is to ensure it does not happen again. It is very interesting that at present, the Dodd-Frank bill is going through the United States Senate. It is aimed at achieving almost the same outcomes. One of the outcomes it is trying to achieve is to deal with the belief that investors have that banks can be too big to fail. There is a danger that this "too big to fail", TBTF, belief might happen here if we do not set an objective for ourselves that this inquiry looks into what happened in the past to ensure the same thing does not happen again. A big objective should be to ensure that future investors or creditors do not have the assumption that banking in Ireland is too big to fail and that we will bail out other banks. I would like to see an objective to look not only at the past but also at the future.

I welcome the Minister. Am I led to believe the Minister will consider extending the period of time to be examined by the commission of inquiry? The Anglo Irish Bank instance stands out because the back-to-back loans occurred prior to 30 September. Its initial figures published in December were based on 30 September accounts.

It may have been 30 September.

A portion went through——

It was after 29 September——

Some of it was prior to 28 September, on 26 September approximately. The key point is that there was a run on deposits in Anglo Irish Bank and when the accounts were published it gave the impression that it had deposits by routing its own money through Irish Life and Permanent, through an insurance company, so it would come back as customer deposits. In the accounts, it was shown as customer deposits and as bank moneys going out.

It would be very important for the credibility of the commission of inquiry to push out the date until 15 January 2009, which is when Anglo Irish Bank was nationalised. When the accounts were published in mid-December they gave the impression that there was no liquidity problem as such, as bad as it was with Anglo Irish Bank. Another factor was that there had been a run on deposits, primarily because people had concerns about solvency. They were intertwined and it would be important for the credibility of the investigation that the Minister allows it continue to the critical date of the nationalisation of Anglo Irish Bank.

Approximately €3.45 billion was moved just prior to the guarantee, on 26 September, and immediately after the guarantee was introduced, another €4 billion was moved as it returned after 24 or 48 hours. Will the Minister take this on board and comment on the credibility of the investigation? Will he extend the deadline date to 15 January 2009 at the earliest? That is the critical cut-off date with regard to Anglo Irish Bank, into which we have put €22 billion. We know the taxpayer will get no return from that. We need to have clarity on this point and I have no doubt even from the Minster's own perspective that it would shed light on that critical period.

I thank the Minister for his response to the amendments tabled by the Labour Party. It would be very helpful to look again at the terms of reference for the auditors. There is an old debate in auditing on watchdog versus bloodhound and I am not sure the Minister wants a commission of inquiry going down that trail. The Minister must bear in mind that at a recent commission of inquiry by Mr. Shipsey, SC, although High Court and Supreme Court judgments were subject to that inquiry he appears to have asked the parties to the inquiry whether it was their view that they were engaged in a particular action. It was their honest view that they were not and therefore the distinguished senior counsel accepted their viewpoint.

Returning to Senator Quinn's point, we must be realistic about what we expect from this in terms of getting a credible outcome for people in Ireland who are taking the burden of this debt on their shoulders. If we are not, it would really be an outrage for us to go through this further cost and time, as it will not be done in six months given that the summer holidays intervene before it can start properly. There must be a credible outcome that is acceptable and offers us hope of a better place.

With regard to credibility of outcome and thoroughness of the commission of inquiry, the date is an issue. I am pleased that the Minister will consider an extension for this and picked 15 January for the reasons outlined. That was the point at which the Government stated it was positively nationalising Anglo Irish Bank. I know the technical reason was that wrongdoing had emerged in the bank but the real reason was that the bank was bust and has become even more bust since.

In the report by Mr. Regling and Mr. Watson, although the Department of Finance did not come within the terms of reference, it plays a very important role in the findings, as does the Minister for Finance in two respects. The report indicated that one of the major reasons for the bust in the Irish banks was the property-based tax breaks and how they blew the homegrown bubble, resulting in the crisis. It seems extraordinary that with inquiries into the Central Bank, the regulator and auditors, one of the areas identified by the Regling-Watson report as critical would not be the subject of the commission of inquiry.

The Minister stated that this is political. The long tradition in the Irish public service, unlike in Scandinavia and other areas, is that the Civil Service, including the Department of Finance and other Departments, is not political. The Minister for Finance is a political officeholder but the Department should not be political. The report identified the Department with regard to tax breaks as being critical to the home-made bust. The report from Mr. Regling and Mr. Watson, along with the report from Professor Honohan in particular, refer to the regulator.

The regulator might say that there was a wish to introduce compliance codes for the directors and signing off of the annual report and accounts. As set out in chapter 4 of the Honohan report, the Department and the Minister for Finance intervened on two occasions, indicating the concern that proceeding with the compliance statements by directors would inhibit the Irish market and development of financial services. That was a policy recommendation to the regulator by the Department of Finance which meant directors in banking companies were not required to sign statements.

It would probably not have saved us a banking crash but it was very important in indicating who called the shots in the development of regulation. The Department in many ways was the author of light touch industry regulation. Considering the issues in the United States, where they are going back to legislation like the Glass-Steagall Act, the idea is that regulation comes from outside to such institutions rather than having institutions regulating themselves. Light touch regulation will be on trial in this commission because the question will be what kind of regulation is sufficient to keep us with a sound banking sector with quality employment. That is an issue for the future.

I can understand why the Minister has difficulties with the political failures that led to the banking crisis. It is wrong to argue that all the other institutions but not the apolitical Department of Finance should be included in the consideration of the terms of reference. I would make a similar argument regarding political responsibilities but I hope the Minister will reconsider the issue.

I welcome the Minister. I understand the points made about extending the date for the inquiry but it is important that it remains focused on banks and people within the banking sector. If the date is extended we should note that the report from Mr. Regling and Mr. Watson indicated the crisis management was very good and has been covered. I am not sure we should go off on tangents.

It is very popular to say that the inquiry is not covering enough of the period or doing enough; that is the job of the Opposition and it will continue to do it. The focus should be on ensuring that the banking inquiry is kept focused so we are not covering areas already dealt with and acknowledged by the Regling-Watson report. Senator Quinn's comments ring true as there should be an ultimate objective to ensure we will not be overly reliant on one bank again.

The fundamental issue in this commission will be the banks and we must be very careful not to let them off the hook in any way. We should not make the inquiry all-embracing by throwing in many different elements; that will take the focus off the banks in general and the two banks of primary interest in particular. That is the real issue when it is coupled with the role of auditors and supervision. I do not pretend to be an expert on the wording of the clause on the auditors but Deputy Burton appears to have an expertise in the area.

It is the auditing. Deputy Burton seems to want to expand the inquiry in every other way but when it comes to the auditors she seems to want to keep it neat.

It should be focused.

We could do with having it very focused overall. The Minister's outline is the way to go. We must centre the issue on the banks and the committee can deal with policy or politics.

I take it we will return to the Department's own review and the policy review. Senator Boyle raised issues about them and I did not reply to him because I did not feel it arose at this stage.

We will move to that after completing this section.

I did not mean any lack of respect. He raised the question of who would preside at such an inquiry and international participation is important, given that we have already had a satisfactory report from Mr. Regling and Mr. Watson. We should build on such efforts.

I will come back to the issue of the date. I agree with Deputies Andrews and Noel Ahern in that the primary focus of the commission of inquiry is the banks rather than the crisis management. The case has been well made today that in so far as the banks issue has a cut-off point, it should be later than 30 September. None of the banks had directors appointed by the Minister, after the consultation with the Opposition, to safeguard the public position until well after 30 September. That point is relevant to Irish Nationwide, a consideration raised by Deputy Burton at an earlier stage of the discussion. I could not say with total confidence, until there were directors who had been appointed by me on the board, that I was in 100% command of the position. That happened much later that autumn, and they had to familiarise themselves with the position of the society. It was only at that stage that I received separate confirmation of the elements of what some in the society were telling me. In that sense, there clearly must be a later cut-off date, even for an inquiry into the banks.

In the case of Anglo Irish Bank, the appointments of Mr. Daly and Mr. Dukes took place at around the same time the actual crisis erupted in the institution, in December. I do not have a difficulty with the date suggested in January, but a date will clearly need to be fixed. It might well be that the right date is the point at which the bank went into public ownership because, it seems to me, that provides a clear definition. Whether that is the appropriate date for AIB and Bank of Ireland is another question, but I will look into it.

It seems there is one point we have overlooked in the discussion — that is, Professor Honohan's assertion that the main problems were created long before the night of the guarantee. That is the real difficulty. The main problem stemmed from reckless lending, and that is where the focus of the inquiry must be — how it happened, why bank managements were engaged in it, why the boards did not make managements accountable for it, how the supervisory and accounting systems accommodated themselves to it, and, ultimately, whether my own Department, ministerially or departmentally, was in communication with the regulatory system. Deputy Burton made a political play in opening the discussion on the terms of reference by referring to political responsibility, but the Central Bank and the regulatory system were independent. It was our decision, as an Oireachtas, to make them independent, and anyone who suggested the Minister should have any say over these bodies would have been ridiculed. However, as the Deputy pointed out, there is a degree of communication, and that is within the terms of reference.

Senator Quinn's point was that there must be a conclusion to this. Regling and Watson have done a good job, as has Professor Honohan, and we must build on that. The point Regling and Watson make is that the public really do want closure on the issue of banks. They may want closure on political issues as well — that is a discussion we will have in a few moments — but as far as the banks are concerned, the public are entitled to that information. What happened cannot be left in the realm of conjecture. There has been a consistent suggestion — I notice it was echoed by Deputy Noonan this morning in one publication — that heads should roll and that persons in the banks should take responsibility. We actually do not know who should take responsibility until we have done a comprehensive examination of who exactly——

Whoever they are, they should go. It is not a question of culpability. It was on their watch.

That issue can be considered as well. That is part of it, I agree. It is not an unfair assessment. All of that can be thrown into relief by a short, focused commission of inquiry giving us the essential facts.

The question of tax breaks was raised by Deputy Burton. Consultants were appointed to consider which tax breaks should be preserved and which should not, and there were discussions on every Finance Bill. I fail to see what a commission of inquiry could establish on this. It would also considerably lengthen the period of the commission that is to be established.

I thank members for their suggestions and the Minister for considering the comments that were made. We will move on to——

Could I ask the Minister one more question?

Has he decided the format of the commission? Will there be one member or a number of members? In addition, he referred to people being appointed internationally. In previous discussions we spoke about the possibility of somebody from Canada. It would be helpful to hear any further thoughts the Minister has had, particularly with regard to the composition of the commission and where the commissioners might come from.

Under the——

The conclusion of this section——

I do have a note on this. Under the Commissions of Investigation Act 2004 the commission may have either a full member or a number of members and a chairman. I have in mind that the commission should comprise a single member with an appropriate relevant international expertise in financial regulation or matters. To avoid any possible conflict, this expert will not be Irish but will possess expertise in the European framework for financial and banking matters. As I propose to look abroad for the commission member, he or she will not necessarily be appointed from within the Irish legal system, from either the Judiciary or elsewhere.

It is not necessary under the 2004 Act that the membership of the commission be identified prior to Oireachtas approval of a draft Government order, but I do hope to be in a position to announce the name of the full member in the coming days.

I thank the Minister.

In the Minister's letter of June he told the committee that the Government had decided to refer both reports to the Oireachtas Joint Committee on Finance and the Public Service for consideration of issues that should be covered by the terms of reference of the commission of investigation, which he has just done. In addition, he stated that the committee should examine the key policy lessons with regard to macro-economic management as set out in the Regling report; these are threefold. Perhaps the Minister would like to say some words on the consideration of policy issues.

I do not know — it is a matter for the Chairman and the committee — whether they wish to take this in conjunction with the discussion on the Department of Finance or whether they would prefer to separate them.

I suggest that the committee itself can discuss the brief given by the Minister, but we should hear the Minister's proposals with regard to the Department of Finance. This would save time.

Will I deal with both or with one? They are related.

They are inter-related.

Then I will take them as one item. I just wanted the Chairman's guidance on this because it seemed we would be repeating ourselves if we took them separately.

The second issue relates to the further consideration of policy issues and also the question of the review of the Department of Finance. The policy issues can be divided into two groups: those relating to macro-economic management and fiscal and budgetary policy, and those relating to financial stability and prudential and supervisory matters. Clearly, the issue of budgetary and fiscal policy is within the remit of the Minister for Finance, while the latter category of matters is within the remit of the Central Bank and the Financial Regulator. I am suggesting a formal motion referring the policy issues to this committee be tabled in both Houses later this week. This should encompass the matters highlighted in the Regling and Watson report.

We went over this ground in private session so I will not read out all the matters, but they are in the report. I refer to the role of macro-economic management and surveillance in securing the long-term sustainability of our economic performance and responding on a timely basis to risks and imbalances that can build up; the role of fiscal policy in securing an appropriate alignment to the national business cycle with monetary conditions and the economy; the requirement for the design and conduct of budgetary and taxation policies to take account of the cyclical nature of particular revenues as well as their temporary nature; and the case for the establishment of new institutional structures to provide an independent validation of economic and fiscal projections.

Our discussion last Tuesday week illuminated a number of issues relevant to the scope of the review. In general terms, the committee seemed agreeable to the main elements of the overall proposed scope on this issue. I am amenable to amending the proposed scope to enable the committee to consider emerging EU proposals with regard to fiscal and economic governance discussed at that meeting. I am also happy to consider the recommendation that the committee be given until the end of October 2010 to report to the Dáil and Seanad. I see there is a misprint in the copy of my speech that was circulated, because the date we discussed the last day was October.

With regard to the issues within the remit of the regulatory system, the committee will be aware that the Central Bank published a report on 21 June setting out its proposed approach to the future regulation of the banking sector. Again, the committee can discuss this with the Governor of the Central Bank or the Financial Regulator, Mr. Elderfield.

I pay tribute to the Department of Finance on its management of the crisis we have faced. The Department, naturally and understandably, as a Department and distinct from the Minister, has been subject to a degree of public criticism. However, since the emergence of this crisis, I have found the Department and its officers have worked extraordinarily long hours and have presented arguments with extraordinary clarity to me throughout the crisis, for and against different proposals. I pay tribute to my officers for that.

I also wish to deal with another misapprehension which has entered the public debate on this subject, namely, that in some sense I imposed upon the Department a request for a review of the Department. Deputies and Senators will be pleased to learn that the suggestion that the Department should have an external review originated within the Department. It is not seeking to immunise itself from public criticism but thought it would be in the best interests of the Department to conduct such a review, a view with which I concurred. It is not the case that the Department is being dragged into this review; quite the contrary. The Department is anxious for such a review to take place.

I wanted to deal with those matters in the first instance, before I come to the terms of reference for the review of the Department. A third point, before I deal with the details, is that I believe it would be of value for this committee to discuss the review with the Department rather as it discussed the Regling and Watson report with Messrs. Regling and Watson before they embarked on their work and then re-engage at the conclusion of the review.

The position in regard to the review is that although the Department originated the idea, naturally the matter rests with the Minister. I have decided, following consultation with the Secretary General of the Department, that an independent review group will undertake a comprehensive evaluation of the systems, structures and processes of the Department relating to those elements of budgetary, economic, financial and public service management that are relevant to its role. It is envisaged that the review will assess the Department's performance in the past ten years. I am anxious to ensure for the future that the Department can give the best achievable advice, better assess risks and opportunities in the fiscal, economic and financial system and, in regard to the public service, can manage its own operations with high levels of effectiveness and efficiency. My intention is that the review will be carried out expeditiously by individuals who have informed expertise on the role and operation of finance ministries internationally. No persons have been selected as yet to carry out the review but options are being considered. This review will be a very useful tool in redesigning the Department of Finance for the future.

In regard to the first overview by the committee, the critical issues are the time lines involved. I welcome the Minister saying the time reference will be pushed back to later in the year because, to be perfectly honest, I do not see how the committee will be able to undertake much work until early September. The committee will need some resources too and that various Opposition party members of the committee will need resources if we are to be in a position to identify the kinds of questions we must ask. If I recall properly, at the last meeting the Minister very kindly offered to make available to the committee documents that normally would not be available. These included minutes of meetings, advices and so on that the Department had submitted. I suggest to the Minister that we should see this documentation, some of which has been made available to the media by the Secretary General since we had our discussion, not necessarily through the mechanism of a freedom of information request.

What documents are these?

There were references to various reports. For example, Merrill Lynch was reported as not having been in favour of several elements of the guarantee because of the debt overhang to the Irish State. The Minister said he had no difficulty in making those reports available to the committee.

The other issue I raised was the various stress test reports by various firms of accountants which have never been published in full. The Minister will remember he got them, or one large one, in February 2009. The members of the committee need to have early access to that documentation, simply from a reading point of view, to inform us of how the system worked. I suggested the last day that there are two critical outcomes involved. The first is whether we, as a parliamentary committee, wish to recommend a council of economic advisers, as was proposed to the committee by Herr Regling when he presented his report. I suggested to the Minister at the last meeting that we need to get a report on how this works in a number of other countries and gave him several examples. The Minister desisted, or objected to examples drawn from outside the European Union and when I referred to the United Kingdom's Bank of England finance committee, it is fair to say that in the private session the Minister practically rose from his chair and said, "No, no, no", for reasons he did not elaborate upon. It is important that if we are to look at a council of economic advisers — and this committee is a good forum in which to do that — we must look at how such a system operates in different countries and what it does. We need a council of economic advisers who are not just "yes" men but will include what Professor Honohan described in his report as contrarians, people who spotted there were troubles in the banks but whose advice was not heeded.

Another issue is the EU taking oversight of our budgetary process and how we deal with that in the future. That would be a very important issue for the committee to examine because it is one of the outcomes upon which it would report. Again, there are proposals I would make in that regard. The other parties can speak for themselves but, as Labour Party spokesperson, I would like an oversight of how that works. I made proposals in regard to having a commissioner for the budget within the Dáil who would have a status similar to the Comptroller and Auditor General and would report, for example, to the finance committee in regard to budgetary and fiscal matters. Other parties have made other proposals.

If we are looking for outcomes from the Dáil inquiry, those are the two areas of outcome in which I am most interested. We will need a report and some support and resourcing, not only for the committee as a whole but on a party basis.

Apart from the fiscal council what is the other outcome area the Deputy intends?

There is the oversight the EU will introduce, under the new financial support structures. It is really important. There is a matter of democratic accountability in that it should not be a question of the EU going in private to the Department of Finance and to the Minister and laying down the law. The Parliament must be involved in the budgetary oversight process. Most parliaments are now doing that in one way or another. As long as two years ago I put forward proposals in regard to a commissioner for the budget and did so again recently. I shall send the Minister a copy of my speech on this. However, other proposals have emanated from this House too.

I have a couple of housekeeping points. Who will be on the independent review group the Minister is to appoint? How many will serve on it? Will they be international or Irish persons?

That matter was mentioned already.

I mean the Department of Finance review.

There is no independent——

I thought the Minister referred to establishing a review body.

Yes, on the commission.

No. I understood the Minister made reference to the effect that he was putting in a review.

That was on the commission.

I understood it was the Department of Finance. Is that correct?

How long will it take? The review of the Department of Finance is linked to the review by the Joint Committee on Finance and the Public Service. It is important that Department officials would be at liberty to appear before the committee and deal with issues related to the advice they provided. We should have access to that advice and get some indication with regard to it. Policy decisions are for the Minister and the role of the officials is to provide advice. I note the Minister will appear before the committee. The Taoiseach was before the committee last week dealing with his departmental Vote. He has agreed to appear before the committee in respect of these matters as well, which is welcome. The three inquiries could yield great benefits with regard to reaching a conclusion as Senator Quinn has suggested. Issues arise in respect of the banks, the Department of Finance and decisions taken. Reference was made earlier to tax breaks and budgetary policy. The tax breaks had a significant impact on the residential sector in particular. There must be open and transparent inquiries and people must be willing to participate. I welcome the Minister's openness in these areas. Will he indicate how the Department of Finance inquiry will proceed?

I have pre-asked questions in the interests of brevity and the Minister may have them banked already. I refer to the committee's inquiry. I wish to put a question related to the co-operation of people involved at a policy level. The Minister pointed out his and the Taoiseach's commitment in this regard. A third category of person may have been involved in policy decisions, specifically referenced in the Regling Watson report, but who may not be in the Oireachtas or public life anymore. Is it possible that those involved in decisions at the start of this process could come before the committee to talk through the early elements of the policy referred to in the Regling Watson report?

I refer to the review of the Department of Finance and the role the committee can and should play subsequently. Does the Minister envisage a finished report returning to this committee? How should the committee assess this with regard to how the review of the Department is conducted or otherwise?

Some of my questions have been asked already so I will not be repetitive. I lend a word of advice to the Minister, if I may be permitted. Sometimes, when one requests information from various sections of the Civil Service, it sends eight or ten reports and an accompanying carton of documentation. I have always believed this approach is deliberately designed to snow one under. I do not believe any members of the committee would have any problem with the Minister or the Department snowing us under with an excess of documents so long as they are sent along.

As I have suggested to some of the Minister's officials at various meetings, were I in the Minister's position I would send for the Opposition spokespersons and invite them in more often. I would listen to two or three of their key proposals and, if possible, I would stretch myself to implement them if possible on the basis that this is what it is all about. There is a convention about this place which suggests a Minister should not accept amendments or take on ideas from the Opposition and that the Minister should not co-operate to a certain extent. That must finish and go and the sooner, the better. Perhaps we will return to that point at the recommendation stage.

There was always one party——

Northern Ireland is run by all-party Executive.

Greater change than that is needed.

There is one party which is always accused of stealing the views of other parties. Does the Minister wish to comment?

I will make comments on the direction of the discussion. Deputy Burton highlighted the point that Regling sets four great macro-economic subjects, including tax breaks, structural imbalances and the over-supply of credit. For the committee to yield value in the operation of the policy review, it must focus on a practical proposal. The fiscal or economic council is worthy of examination. The European support structures are important as well. I would be delighted to have the views of the committee on the Van Rompuy task force as the discussions proceed.

The reason I looked askance in private session at the United Kingdom model is because it seems to me there is a difference between the position of the United Kingdom and ourselves in devising these structures. From a diplomatic and international point of view, the United Kingdom maintains the position that it has a good deal more autonomy vis-à-vis the Commission and the European Union than we do. Therefore, in the psychology of the United Kingdom when one introduces an office of budget responsibility to that country it becomes a more powerful body than the European Commission. We are not in the same position and we already have extensive economic surveillance through the Commission by virtue of our euro membership.

With regard to resource allocation, I take it the Chair will raise the matter with me through the secretariat. It seems resource allocation will be needed at early stage, in other words, now, such that the necessary preliminary research can be done for any operations and to inform the discussion at a later stage.

Deputy O'Donnell raised questions about the finance review. I refer to the question of membership. I wish to make clear this has not been finalised yet. It will involve individuals with informed expertise on the role and operation of finance Ministers internationally. No persons have been selected as yet. With respect to the time limit, I envisage a conclusion by the end of the year. Senator Boyle raised the question of the functions of the committee with regard to the review. I am keen for the committee to engage with whoever has been requested to carry out the review at an early stage and at the conclusion of the review. The Deputy also raised the question of co-operation with the policy review. Broad themes have been identified and it is a matter for the committee with whom it wishes to discuss these themes in the context of its examination of them. That is a matter for the committee to decide. I believe as do many parties, not only that of Deputy Morgan, that his party has a very well-equipped research apparatus and, therefore, no matter how much information is given to his party, a detailed analysis is carried out.

I thank the Minister for his replies and for taking on board the suggestions from Deputies. We have an indicative timetable but we cannot go any further until we have the motion put before the Houses. I note from the Minister's speech that he intends to do so later this week. We will arrange a meeting for next week to agree a timetable for the work in future. Is that agreed? Agreed. I thank all members of the committee and the Minister and his officials for attending.

The joint committee adjourned at 5.50 p.m. sine die.
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