Last Thursday the Taoiseach made a long speech in which he admitted for the first time that Ireland's economic crisis was due not just to the international recession but to failures of his Fianna Fáil Government. When one wades through the grammatical constructs he used to distance himself from all of that, he appears to be saying that somebody somewhere should have done something earlier but that he himself was not to blame because nobody told him what was happening and what was coming down the track. He specifically mentioned that independent commentators had not alerted him to the problem.

I have been going back over the record and I find that in August 2003 the IMF warned that Irish house prices were overvalued and that there were risks to the financial sector from investor-owned housing and the commercial property market. In September 2004 the IMF again warned of the potential for what it called a "disorderly correction". Many of us probably did not know at the time what that was but we certainly do now. The IMF spelled out that 50% of the banks' loan portfolio was concentrated in property, that the correction would lead to a protracted period of slow private consumption and investment, that the construction sector would suffer sizeable output and employment losses and that there would be a protracted slowdown in consumption growth. In November 2005 the OECD said that Irish house prices were overvalued by 15% and that there was a speculative element to property prices. In December 2006 Professor Morgan Kelly, in an article in The Irish Times, predicted what would happen and drew attention to events in Finland and the Netherlands. In March 2007 Davy Stockbrokers drew attention to the fact that house prices in Dublin were 100 times the rents being earned and that only boundless optimism would sustain that. In April 2007 RTE’s “Prime Time” special report, entitled “Future Shock”, warned of the danger of a property price collapse.

Does the Deputy have a question?

If the Taoiseach did not hear all of that, his predecessor, Deputy Bertie Ahern, did because he described it as "people sitting on the sidelines cribbing and moaning". He referred to a lost opportunity and said he did not know why the people engaged in that do not commit suicide. Does the Taoiseach accept that the problem was not that he did not get the advice but that he did not act on it?

First, I do not accept the Deputy's misrepresentation of the speech I set out last Thursday. Second, I was simply pointing out that the causes of our problem relate both to the international crisis and to the vulnerabilities identified in the Irish economy. Third,despite Opposition contentions to the contrary suggesting that we did nothing about the situation or were indifferent to it, I set out in clear detail and in full factual terms what we did about it.

The Government was concerned only with winning the election.

The Taoiseach must be allowed to continue without interruption.

Fourth, I set out what lessons were to be learned based on what we now know. I refer Members to the full speech and ask that they not accept the characterisation Deputy Gilmore places on it.

One of the points I made was that the balance of evidence suggested that the vulnerabilities in the economy could affect the soft landing for the construction industry. I made the point that I was the first Minister for Finance in the past 20 years to do something in regard to property tax based incentives. Those incentives were introduced by predecessors including some from Deputy Gilmore's party.

Members must allow the Taoiseach to respond without interruption.

I am sure they were based on the best judgments and advice then available. I did not oppose them at the time. In hindsight one can look back on many issues. What I said candidly was that looking at it now, knowing what subsequently happened, one will see that the elimination of property-based incentives could have happened sooner. In hindsight that would be the way in which one would try to slow down the rate of growth.

The Taoiseach waited five years to act.

What about foresight?

The suggestion that this Government or previous Fianna Fáil-led Administrations were indifferent to the problem is not correct. I also made the point that in the run-up to the last election there were Opposition Members suggesting that we needed to reduce stamp duty further, which would have led to even greater increases in property prices.

I have called Deputy Gilmore, he should be allowed to speak without interruption.

It is bad enough that the Taoiseach, both in his capacity as Taoiseach and in his former capacity as Minister for Finance, and his Fianna Fáil Government have ruined the Irish economy, but it is adding insult to injury for him to claim he had nothing to do with it, it was all somebody else's fault, he was not advised correctly, somebody else made certain proposals and so on. The fact of the matter is that his party is in government for the last 13 years——

Thank God for that.

——and he must take responsibility for what has happened. It is doing a grave injustice to all those people who have suffered severely as a result of what he has done to offer the type of self-justification in which he engaged last Thursday. The record will show that over the years, the Labour Party in particular identified various actions that should have been taken but were not.

What about the proposal to abolish stamp duty?

The proposal to abolish stamp duty came from the Government side of the House, from the former Minister for Justice, Equality and Law Reform, Mr. Michael McDowell.

Deputy Gilmore must be allowed to speak without interruption.

It is a serious rewriting of history to suggest it came from elsewhere.

The truth of the matter is that the Taoiseach got warnings about what was happening in the property market and he got warnings about the consequences of light regulation. As far back as 2005The New York Times was describing the Irish financial sector as the Wild West of the financial world and pointing out that the Government was trumpeting the light regulation that was in place. We now know where that has ended up.

Does the Deputy have a question for the Taoiseach?

The bottom line is that the Taoiseach did not listen to the warnings, did not do enough and did not take action. Last Thursday he described what has happened as a "stunning failure of corporate governance". It was a stunning failure — a stunning failure of government and by the Taoiseach in particular because it was he, as Minister for Finance, who was in charge during all of that period.

Hear, hear.

Again the Deputy seeks to synopsise and misrepresent what I had to say last Thursday. I at no stage suggested that this is a matter of the Government not taking its responsibilities. I have always taken my responsibilities; I take them fully and absolutely. Every action I took was on the basis of a decision taken rationally at the time based on advices received and my own judgment.

In regard to the Deputy's suggestion that the balance of evidence was in favour of taking other proposals, the balance of evidence was along the lines I outlined in my speech. We took account of the IMF, OECD, stockbrokers and other forecasting firms internationally and domestically that were setting out their views. The Department of Finance, as former Ministers for Finance will know, will take cognisance of all of these forecasts and come to its own conclusions on what it sees as prospective economic and employment growth and the vulnerability and downsides.

It came to the wrong conclusions.

I refer Deputies to my budget speeches, all of which also set out the downsides. What is clear is that the Department of Finance took forecasting on the conservative side of the equation, rather than taking the most optimistic forecasts available. It has taken this approach under various Ministers of all political ilk and persuasions. The record will show that is the case.

It is all right to suggest, as Deputy Gilmore does, that all of this was foreseeable but it is not correct to suggest that the mid-term prospects for the Irish economy would see us facing the situation we faced in the past two years. There is no doubt that a small, open economy such as Ireland has been greatly and more adversely affected than most, just as other small, open economies such as Singapore and Korea have been affected in terms of a reduction in economic growth. This is because the world downturn has such an impact on countries such as Ireland which produce mostly for export.

The position is simply this. The Deputy mentioned stamp duty. The fact is that his party's position in 2007 was that stamp duty should not be payable on the full amount and the threshold should be extended to €317,500. Stamp duty would only be paid on the amount above this threshold. The Labour Party's position——

As Minister for Finance, the Taoiseach exempted developers from stamp duty.

——would have meant a substantial reduction——

The glass bottle site was one example.

Deputy Burton must not interrupt the Taoiseach.

Shouting me down does not change the position.

What about contracts for difference and Seán Quinn? The Taoiseach fixed that as well.

The proposal from the Labour Party was to change the basis on which stamp duty was computed. One would not pay the full rate. Instead, one would only pay the higher rates in respect of those parts of the property that were within the higher bands. The position was that one would pay the full amount on a property costing €400,000. The Labour Party brought forward a proposal which would have exempted the first €317,500. One would then have paid extra rates as one went through the bands, resulting in a reduction in stamp duty take. This was a surprising proposal from a socialist party which talks about increasing taxes on capital rather than labour.

Developers did not want to pay stamp duty and the Taoiseach fixed it for them.

I ask Deputy Burton not to interrupt, please.

It would also have increased property prices because more disposable income would have been available for the property price and the State would have taken less in the transaction. Those are the facts of the matter. They speak for themselves.