The Secretary General of the Department of Finance has told the Public Accounts Committee
that the department's forecasting in 2008 was 'dreadful', but he argued that everyone else's was too.
Kevin Cardiff also told the committee that the recession would bottom out in the middle of this year and there would be an upturn in the second half of 2010. He said consumer sentiment was strengthening.
The PAC was considering the accounts of the department for the year 2008.
Mr Cardiff admitted that the department did not see the huge change coming in 2008. Fianna Fáil's Sean Fleming asked if some inkling of the problems was beginning to become evident in mid-2008.
Mr Cardiff said that, even around summer and beginning of September 2008, the full scale of the disaster was not evident to the department. He wondered whether the system of forecasting needed to be changed, since forecasters could not see such a turnaround in the country's economy.
He told the PAC that the early draft legislation for the bank guarantees and recapitalisation had included several options, including nationalisation of banks and building societies, an option he said was discussed in detail at the end of September 2008.
Mr Cardiff said he did not believe the Department of Finance had, in-house, the necessary expertise to deal with such severe financial crises.
But he said it received advice from a number of other bodies, including the NTMA, Merrill Lynch, the Central Bank and the Financial Regulator.
Fine Gael TD Jim O'Keeffe said he was concerned that there should be a department person capable of then assessing and analysing the advice given, especially when it came from private companies with their own agenda. Mr Cardiff said the department now had a banking analyst and a specialised legal person, but conceded that the 'generalist' nature of its services and expertise could be a handicap.
