Banking Inquiry: Parlon says CIF must accept responsibility

Tom Parlon, who has been director general of the Construction Industry Federation (CIF) since 2007, said the scale of the industry was wrong.

Giving evidence at the Oireachtas Banking inquiry, he said as leaders of that industry the CIF must now accept responsibility.

Mr Parlon said: “We are sorry this happened, we want to learn from lessons of economic crash.

“We are acutely aware tens of thousands of people lost their jobs and we want to ensure this never happens again.”

Mr Parlon said the actions by the CIF were formed by the views of members but also by the message that there would be a soft landing.

He said: “We have to take responsibility. Time has shown that situation was wrong.”

Mr Parlon said the CIF never wants to see a situation like that emerge again and must reach sustainable levels again.

Mr Parlon said there was a great deal of worry when NAMA was set up. He said members raised serious concerns that they would suffer worse than the distressed situation it was already in. The DG said CIF now realises NAMA has fulfilled its remit and has done good work.

Liam Kelleher, who was director general of the Construction Industry Federation until 2007, said the level of construction reached "unsustainable levels" during the boom years.

Mr Kelleher said: “This meant that too many houses were being built and too much of the economic activity was dependent on the sector.

“Through the downturn the sector suffered to a far greater extent than practically any other industry.

“The result was that the construction activity fell to a disproportionately low level. This has also had a significantly negative impact on the economy.

“The Irish economy needs a sustainable construction sector which is operating at approximately 12 per cent of GNP. That will not only be good for the industry but it is also in the interests of the wider economy.”

Mr Kelleher said the extent of lending to property developments and consortiums was “unsustainable”.

He said the full scale of that only emerged with the establishment of the National Asset Management Agency (Nama).

The former director general apologised for his role in the crash.

Mr Kelleher said he believed in the soft landing and regrets not listening to people shouting stop.

He said: “We made mistakes, I made mistakes and for that I am sorry.”

Mr Kelleher said the CIF takes responsibility for being a player in the economic crash.

He said he was under pressure to increase supply from a broad range of political spectrum including all parties.

Fine Gael TD Eoghan Murphy asked if the CIF had ever donated to any party or whether they had given gifts to any party. Mr Parlon said members may have but the body had not.

“We have no match tickets, no hospitality, no bottle of wine.”

The Director General said there needed to be a distinction between builders and developers. He said the CIF mainly deals with builders but had some developers as members.

The inquiry was told parties sought donations from them because running an election was a very expensive business. Mr Kelleher denied any of its proposals had affected Government decisions.

He said: “No way, we would make our budget submission. We put forward what we felt tax areas and tax issues that were important to members. “We fought to fit in what we knew was Government priorities.”

The former director general said every organisation files pre-budget submissions and the Ministers weigh up all options. He said: “Its called democracy.” Mr Kelleher said it wasn’t all a “rollercoaster ride upwards.”

Mr Parlon said Nama is as good as it could have been but admitted the CIF was nervous about its establishment.

He said there used to be speculation that Nama was a bailout for developers but that had been proven to be wrong. The Director General said the agency has been fair with people but has been very tough too. He said people who were once major operators in the industry are now working for salaries.

Mr Parlon said: “The construction industry was in crisis mode (in 2009 when Nama was established). The bank was not lending, houses were not being built. Nobody was getting or looking for a mortgage.

“The sentiment had changed. Nobody wanted to buy a house. It was a worrying time for the industry. It was a nervous day.” Mr Parlon said it took a long time for the CIF to appreciate the work of Nama.