When he won the battle for the leadership of Fine Gael, Enda Kenny named his defeated leadership rival Richard Bruton finance spokesman and Deputy Leader of the party. It is a role in which Bruton has excelled. Indeed there are those who believe that, over the past 12 months, as the country plunged into ever-deeper financial turmoil, the younger brother of the former Fine Gael leader and ex-Taoiseach John Bruton has thoroughly eclipsed the party leader.

Unlike his opposite number, Brian Lenihan, Bruton has the advantage of having studied economics. A graduate from UCD, he went on to study at Oxford, where he wrote his MPhil thesis on the subject – of all issues – of Irish public debt. As his party's finance spokesman, Bruton, more than any other politician on the opposition benches, should have concrete alternative solutions to the tactics the government have been applying to drag Ireland out of this recession.
So how would the alternative Minister for Finance handle the worst financial crisis Ireland has had to endure since the foundation of the State?

Jason O’Toole: With regard to the Irish economy, how did it all go pear-shaped?
Richard Bruton: The fatal flaw was that they forgot what it takes to survive in a small, open economy – that, long-term, a country like Ireland survives by being able to trade abroad, not by selling houses to one another at vastly inflated prices. The government got sucked up into the euphoria about property, as if it was a long-term prospect. The regulators failed to check the gross excesses in the banking system. And – like many other property bubbles – it has burst and the damage done to ordinary families is huge.
You mention the gross excesses of the banking system...
We have multiple problems, but at the core it was an old-fashioned property bubble, funded by the banking system, which destroyed our competitiveness. Property became so expensive that costs in every other area were driven up. We have been losing exporting market share for five years in a row. The government were warned but did nothing about it. We are bottom of the league in strategic infrastructure – ports, electricity, energy, telecommunications, in costs of delivery of these key infrastructures.
Who should the finger of blame be pointed at?
The government is in the dock. The regulators are in the dock. But of course – most of all – the bankers who effectively ran away with themselves. They all are guilty.
The government is arguing that the economic turmoil here is simply part of a global economic downturn that couldn’t be foreseen.
That has been completely dismissed as incredible. The IMF found that 90% of our public finances problems are due to failed domestic policies.
So, you reject the argument that this is all part of a global downturn?
At most, about 30% of our problems have come from overseas. The notion that we were running sustainable policies – and that we were only caught unawares by this tsunami that came from overseas – is completely bogus.
What about the view that the Government is right to focus on cutbacks and raising taxes?
The problem now is that they are seeing it as a narrow public finance issue, where the reality is that this is a much deeper problem. The thing that has always been done to solve the public finances by protecting the bureaucracy – cutting the capital budgets and cutting entitlements at the front line. Now, if that’s what happens, we will kill the capacity for economic recovery. You can’t tax your way out of this and you can’t make people who are vulnerable and depend on public services carry the can.
Are you saying that the public service should play their part in carrying that can?
This crisis should force government to look at how we manage our public service. All of us in the public service have to change the way we work. Equally, it forces us – with the private sector on its knees and confidence shot through – to look at how the public sector can take a lead in making investments in areas like electricity networks and telecommunication networks that we will need for recovery. It’s vital that we think outside the box and see how the public sector – like in the Lemass era – can actually be the dynamic force for making some of these investments.
How would it make the investments?
We will need infrastructure to be competitive coming out of this crisis. The exchequer isn’t able to fund it in the short term. So, we would bring private money into a holding company, which would have some public equity and use that money to fund investment in infrastructure for energy, for telecommunications, for water. At the moment, pension funds have no outlets that give you a sound economic return. These investments have a sound economic return and would be attractive to pension funds and we believe the State is the essential catalyst to make this happen. The public sector – a dynamic public sector, a smart State – is going to be the key to getting us out of this.
Should public service pay be cut?
Yes is the short answer. We have indicated that you could freeze all increments immediately as a way of preventing upward drift in the public service pay level. We’ve also indicated that we need a reverse bench-marking process. Public sector really got out of line with the private sector. Every report from the ESRI to the CSO has shown margins of between 20% and 40% in the last two years and it’s got worse since the collapse of the private sector.
Are reforms of public service pensions necessary?
The actuarial value of pensions at the top end of the scale – assistant secretaries, judges, ministers – if you were to buy them in the private sector, you would probably be paying 60% contribution on top of your income. They are simply unsustainable. There is going to have to be reform in the whole pension system.
What reforms?
I think you have to establish a principle that the State shouldn’t be contributing in any way, shape or form, towards a pension greater than some figure – say, the average industrial wage. So we should cap the level at which tax resources are supporting pensions. If you want to build up a higher pension than that, you do it yourself. You won’t be getting tax relief or you won’t be getting subsidy. Obviously that’s a long-term policy – and you’d have to work out how you would organise the transition. But I think the principle that the taxpayer doesn’t have an interest in subsidising pensions beyond a certain figure is a reasonable one, whether it’s the public sector or the private sector.
Why should taxpayers be the ones who have to bail the banks out?
The first thing to remember is, the owners of the banks have effectively been almost wiped out. Shares, which is the ownership of the banks, were down to almost 5% of their original value. So it’s not a question of bailing out the shareholders. They have been absolutely destroyed, and may lose even what’s left. The issue is that a banking system is like oil in an engine and – if you allow the oil to drain away in the collapse of a banking system – the engine just seizes up. Unfortunately, the Irish taxpayer has to ensure that the engine continues to have oil running through it. But that is not to say that we should be soft on those who made these crazy investments.
So, who should be coughing up?
We shouldn’t be asking the taxpayer to take all the pain. The pain has to be taken by professional investors who knowingly went in – these would be bondholders as well as shareholders. We have to be clear that taxpayers’ money should only be used to kick-start good bank activity, not to tidy up the mess.
How can the professional investors be made to share the pain?
There are bondholders who, on paper, would still recoup the value of their bonds. At the moment, those bonds are trading at only 10, 20, 30% of their face value. What we’re saying is that the banks, if they want to avoid nationalisation, have to try and come to terms with those investors and get those investors to share some of the pain.
Using what mechanism?
To give you one example, the EU Commission in approving aid for Anglo-Irish Bank insisted the Government would not pay any coupon to people who hold senior debt in Anglo-Irish. So the EU have actually instructed the Government to inflict pain on a group of investors in Anglo-Irish, which the Government weren’t going to do themselves. And the Government seem to react somewhat hysterically when we say this principle can be applied more generally – but it can.
Was setting up NAMA the correct approach?
With NAMA, the Government is effectively putting the taxpayers’ arms around the banks and saying, ‘Well lads, we’ll take off your shoulders all those bad loans you gave out. We are going to keep you in business. And the taxpayer is going to shoulder the problem’. The taxpayers are absolutely incandescent with rage about this, and about the way people in the banking system have walked away unscathed.
Surely the regulators were seriously at fault?
Appalling mistakes were made by the regulators. The stability reports of the Central Bank said, the credit is growing too fast, that there is too much reliance on single sector banking – in other words, banking for the development sector – and not a proper enterprise. They said we were too reliant on short-term money coming in from international money markets. So, they identified all the symptoms, but they didn’t act on it. I don’t think the government is facing up to that – they are pretending that the Central Bank wasn’t at the core of failure and that there was some relationship structural problem between the Central Bank and the Regulator. That’s crazy – they were on the same corridor! They shared the same board.
So what’s the solution?
You need to see fresh leadership. I think you need to see fresh leadership in the Central Bank, you need to see fresh leadership in the [Financial] Regulator. There were massive failures in the Regulator and the Central Bank and they can’t go with no consequences for those failures. The consequence has to be a total clean sweep at the top of those organisations.
Why didn’t they act?
Because they were part of a cosy circle – including the government – that was saying all this was based on solid foundations and that there would be a soft landing. Anyone who was critical of that was deemed suicidal – or told they should commit suicide, which was what the former Taoiseach said of them! There was a determination not to listen to objective criticism, and to imagine that some of these supermen bankers who were working magic – turning clay into gold – were at the heart of a sound economy. The system is too close to the political leadership. And it was too close to the bankers that they were regulating.
Do you think there should be prosecutions?
There should, of course, but the standards of proof in the criminal courts are extremely high. I think most people will be very disappointed that the Director of Corporate Enforcement has been working on what were abuses for more than nine months and yet there still isn’t any charges laid. The demand for people to be arraigned is huge, but whether the Director of Corporate Enforcement can mount a successful prosecution remains to be seen. I think people are furious, and I’m furious too. But no doubt some of these actions had legal advisors on board at the time that they were taken, and traces will have been covered.
Do you think the worst is behind us?
I find it hard to believe. This year has been the most precipitous fall that any economy has recorded since the Great Depression. I don’t think it’s going to be matched by a sudden bounce-back. I think we are going to see further falls next year.
How can we get out of this financial black hole?
It involves getting back to basics. We have to become competitive again. We have to focus on strengths that are endurable. It requires remodelling the whole economy – re-inventing the public service to recover from the excesses that went on.
As Minister for Finance, what changes would you make?
The fundamental change is to create a smart State. That’s the uniting principle. The State has to be smart about delivering public services. And that means completely changing the way we spend public money, so that it’s agencies who bid for money on the basis of what they deliver. We, who are privileged enough to be working in the public service, have to, like the private sector, deliver to the highest quality, best practice, excellence. And to get to that point requires the public sector to come of age and shed all this baggage from the past, and say, ‘Look, we have talented people who are trapped in a system that’s failing them. Let’s release that talent, let’s correct the system and let’s deliver high standards’.
What do you mean, that agencies would bid for money?
Historically, the way our estimates are put together is that whatever budget you get you will get again – and you will continue doing last year’s work as if that was the most perfect set of activities being delivered in the most efficient manner and delivering everything we need. I mean that’s a ludicrous assumption. You have to invent a new system. Spending within departments would involve saying: ‘I am looking for X-million euro next year to do the following – plant so many trees’ or whatever it is that they’re going to do. And they contract to do that and if, at the end of the day, they haven’t delivered, it has budgetary consequences.
Would you cut the dole?
That’s the most basic payment of all. The dole is paid to people on the basis of a very strict means test and it’s actually the low rate. It’s the last thing you’d be looking at.
Would you cut the minimum wage?
The overall wage structure has become too high over the last couple of years. We do need to make very severe adjustments in both public spending and in our cost levels – but the first suggestion up for consideration shouldn’t be hitting the poorest people.
People are focusing all the blame on Brian Cowen, but it didn’t start with him did it?
This started with McCreevy’s buccaneering approach to public finances. He spent money like water in the run-up to elections – it was party time. That sowed the seeds. McCreevy was cute enough to slam on the brakes after the election. Cowen’s big problem was that, not only did he pump up the public spending in the boom, but when the election was over, he didn’t have the cuteness to do anything different, and he kept spending in the 2008 budget. It’s appalling that one-third of the damage was done in that budget. He was Minister for Finance in the crucial years where decisions had to be made to rein things in, and he couldn’t bring himself to make decisions. There’s a tendency in Brian Cowen to prevaricate.
What’s your view of Bertie Ahern’s legacy?
Bertie would have a lot of responsibility for the damage that was done in the culture of the public service – where problems were bought-out instead of being confronted; where benchmarking was paid out without reform; where decentralisation was introduced without any strategic thinking. That had a huge demoralising effect.
Do you think that the Mahon Tribunal has damaged Bertie Ahern’s legacy?
I don’t think it’ll be the Mahon Tribunal, it’ll be the excesses that were allowed on his watch. People won’t understand what came out of the Mahon Tribunal. I find it difficult to understand it myself. And, you know, people who believe in Bertie will give him a fool’s pardon, and people who don’t, won’t. But everyone will feel the government lost the plot under his regime.
If Fine Gael had won the election in 2007, you’d have had to clean up the disaster we’re now facing.
We would have been blamed for all of this. You could imagine the sort of rhetoric that would have been coming from Fianna Fáil benches. It was good that we didn’t have to do it, but at the time we were very disappointed. Most people would say that maybe our guardian angel was sitting there on our shoulders guiding us!
Does your brother John miss being involved in Irish political life?
I think so. He loves the camaraderie of politics. He loves having a pint after a meeting with a few cronies and discussing what’s going on. You don’t have that in Washington. Everyone is measured and they give only so much time to people, whereas John would like to have the few pints the odd time and have the expansive sort of lifestyle that you would have in the Irish political arena. But on the other hand, my God, who wouldn’t give their right arm to be there as an ambassador for the EU when Bush is handing over to Obama, and the changes that are happening? So, you know, he is well compensated for what he has left behind.
Do you think it was wrong for the party to oust your brother in 2001?
He was struggling in the polls, but I think it was a mistake. I think when it came to it at the next election, we would have had, with John, a Taoiseach who had been a success competing with another Taoiseach who presented himself as having being a success, and I think we would have had a reasonably credible contest. Instead, Fine Gael seemed to be just seen as irrelevant. On balance, it was a mistake.
I think he would have done better.
I think we would have done better too, but that’s another day’s work.
If the leadership was to come up, would you put your name forward?
I think anyone in politics would love to have a crack at leading a party, particularly a party like our own. I mean, there’s a fantastic tradition. I’d love to have won it in 2002 and I still, I think, have a contribution to make. But, you know, I’m absolutely committed to the team that Enda has built. And I see his strengths. I mean, they may not always be apparent to the public, but he is a tremendous team builder, and he does give people a lot of discretion, and he has built up strong people around him. And, you know, some leaders can’t do that. Some leaders hate strong people around them and want to be Il Duce. That’s not Enda’s style. In a crisis like this, a style of leadership that is more collegiate is the sort of leadership that the country needs. Enda has a lot of strengths that perhaps the public haven’t seen to their full flowering, but hopefully they will.
Political pundits argue that he’s not very charismatic.
Yeah, he can be a bit wooden in the Dáil. People say that his 30-second sound-bite is not crisp enough, and I think that’s probably fair comment. But 30-second sound-bites was never the test of a good leader – and I don’t think it should be now. But that’s not to say that he couldn’t polish up his 30-second sound-bites! There’s always room for doing that.
Enda Kenny recently gave back his ministerial pension. Are Fine Gael TDs are going to follow suit? Are you?
Enda has decided to do it. Our policy was to do it away with everyone, but as a matter of policy – not having some people getting pension, others not. It would still be our intention to introduce a policy that would disband the pension for everyone. But I don’t think we are advocating that Fine Gael be the only ones to implement this policy. The government have made a law; they say that what we wanted to do was legally impossible. I don’t know – I would have been inclined to do it and let someone challenge it in the courts.
You’re saying you’d be happy to face people down in court if necessary?
The government need to have the courage to make some decisions and – if they are legally frail – let someone challenge it in the courts.And if the government loses it, well, at least they fought the good fight to have policy as they wanted it. The government should say, ‘We’re not taking the attorney-general’s advice on this. We are going to implement it, and see what happens’.
Personally, I don’t think you should get a ministerial pension until you’ve retired.
I think it’s crazy.
You are getting a ministerial pension because you were on the cabinet for a short period...
I had a short period, yeah.
Did you feel under pressure after Kenny had given it up that you had better follow suit?
Well, no. I felt under pressure the first time when he gave his 5%, and I gave my 5%. But governments are there to lead and to make decisions and implement them. I don’t believe in this thing of relying on the goodwill of one group to say, ‘I won’t take my pay’.
So, will you follow in Kenny’s footsteps?
I would prefer to change the whole thing and have it apply to everyone. I don’t think I’ll be (pauses)... you know, I think next year’s budget will throw up (pauses) … I mean, I gave a voluntary cut of my own salary of 5% this year and, obviously, next year we will have to look again at the issue.
There is a view that the Greens have broken many of their election promises.
They did. If you lie down with dogs you get up with fleas. However, a lot of the problems that have brought our economy down did not happen on their watch. So blame for those cannot be laid at their door. But they enthusiastically came to the cause of defending indefensible positions. They became wrapped around Fianna Fáil in a way that has done them huge collateral damage. As the crossfire was happening, they tried to throw their bodies in front of Fianna Fáil Ministers, who were responsible, and they’re suffering the damage.
Do you think the Greens will last the full term?
I wouldn’t like to be putting a lot of money on it. They probably feel they’ll be hanged one way or the other. The leadership will probably be inclined to stay in and try to show that they can go the full term. Whether their grassroots baulk at that, I don’t know. There’s certainly the potential in a renegotiation of the Programme for Government that the grassroots of the Green Party and the leadership suffer some dislocation. And that this might provide a banana skin for the government.
Now that the PDs have wound-up, do you think it’s right that Mary Harney should remain on the Cabinet?
I have a lot of admiration for Mary Harney. She has made some bad decisions in relation to health policy. I didn’t agree with the sort of command-and-control creation of the HSE. I don’t agree with her belief that we need private sector medicine to solve our public sector problems in the health service. But as far as her membership of the Cabinet is concerned, I think she still is a Minister with capability. If you were to ask me to rank ministers for the axe in the present government, she wouldn’t be top of my list.
How about your opposite number, Brian Lenihan?
No, it wouldn’t be Brian Lenihan. It would be some of their other members I don’t believe have been contributing. But I suppose I shouldn’t stray outside my brief!
Do you believe that third-level fees should be reintroduced?
We have supported a system that education would be free at the point of entry so that there would be no barrier going in the gates of college, but that you would pay back through a form of levy, after you qualified. It would be a mistake to start making changes that discourage people from going as far as they could in the education system. Our model that avoids fees – but nonetheless generates contributions to support the cost of third level – is the way to go.
How much of a levy are you talking about?
You look at the cost of the course and instead of charging a fee, you say: over the course of a number of years, such and such an amount has been built up to deliver that degree and we will recoup 20% and 30% of that back.
So it would be much more expensive to study medicine than arts...
It would be more expensive to take courses that would cost more to lay on.
Surely that’s a form of educational apartheid, favouring the wealthy?
No, you’re getting an education that’s very expensive to provide. This is a system of trying to recoup. You’ll find that people who qualify with these very high qualifications after six years of college have the capacity to earn higher amounts, so I think it’s fair that people would make a return commensurate with the benefit that they got from their education. The gate to college is always open, you don’t have to put your hand in your pocket to go to enter education. But you will make a contribution. The subsidy is 70% of your education.
How do you switch off politics when you go home?
I largely leave it at the door. My wife wouldn’t be hugely into politics. I have lots of friends in politics, but I wouldn’t, you know, socialise with politicians by-and-large.
Would you frequent the Dáil bar?
Rarely. I like to cook; I like to play music; I like to run; I like to swim. I like to do things that are entirely different from politics. I try to keep my family life fairly distinct from political life, insofar as I can. My wife would feel the same. Obviously at election time, it’s all men to the pumps. But no, I wouldn’t be living, sleeping, eating, preoccupied with politics all the time.
On the subject of music, I hear you like Leonard Cohen.
I am a big fan of Jools Holland. I suppose that’s where I get a lot of my musical tastes... It’s how I keep in touch with modern, newer people who are coming through. If you’re ever free on a Friday night you should give your time to Jools Holland because he rarely has a bad band on. But I would be a really big fan of Cohen, yeah.
Do you have an iPod, or how do you usually listen to music?
I largely listen to my music either in the car, or if I am at home cooking I like music blaring, so it would be old-fashioned – I don’t go around with ear-plugs!