Banking Inquiry: Construction body plays down influence

Donations by members of the Construction Industry Federation (CIF) to political parties did not influence government decisions, the bank inquiry was told yesterday.

Federation director general Tom Parlon and his predecessor Liam Kelleher appeared before the committee and both men apologised for the role of the CIF in the economic downturn, and admitted they believed it was going to be a soft landing.

Fine Gael TD Eoghan Murphy and Labour Senator Susan O'Keeffe asked about the closeness between builders and developers with Fianna Fáil.

Mr Kelleher said the CIF could not be held responsible for the political affiliation of any member.

“All parties were treated equally. Some members were close to Fianna Fáil. Some were close to Fine Gael. I can only speak for the federation not any member’s political affiliation.”

Mr Murphy asked if the body had ever donated or given gifts to any party. Mr Parlon said individual members may have but the body had not: “We have no match tickets, no hospitality, no bottle of wine.”

Proposals

Mr Kelleher denied any of its proposals had affected Government decisions.

The committee was told construction levels had reached “unsustainable levels” during the boom years. Mr Kelleher, director general from 1994 to 2007, said too many houses were built and the economy became reliant on that sector. He said in 2007 construction activity peaked at 23 per cent of GDP when the healthy level was 12 per cent.

“Through the downturn the sector suffered to a far greater extent than practically any other industry,” Mr Kelleher said.

He 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.

Mr Parlon, director general since 2007, said there was serious concern about Nama’s establishment at the time. “The construction industry was in crisis mode ... 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 time.”

Mr Parlon said CIF now realises Nama has fulfilled its remit and has done good work. He said there used to be speculation that Nama was a bailout for developers but that had been proven to be wrong.

Apologised

Mr Parlon and Mr Kelleher both apologised for the CIF’s role in the economic downturn.

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

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