The government should seek support at EU level for a relaxation of the fiscal rules to allow the proceeds from the sale of its stake in AIB to be used for capital investment purposes, according to the Fianna Fáil Spokesperson on Finance Michael McGrath.
Deputy McGrath was speaking ahead of a Dáil debate tonight on a Labour Party motion on the issue.
“In their motion, the Labour Party has called for the planned sale of a stake in AIB to be stopped until such time as the fiscal rules are changed to allow greater spending on capital investment. Fianna Fáil does not agree with this position.
“While we do believe that the proceeds from the sale would be better used for investment purposes rather than debt reduction given the needs of the economy at this time, we do not believe the sale should be aborted for this reason. Instead, it is our view that the Government should seek support at EU level for a relaxation of the fiscal rules to allow these proceeds to be used to boost capital investment in the economy.
“I recently wrote on behalf of Fianna Fáil to EU Commission President Jean-Claude Juncker making the case that Ireland should be allowed scope for extra investment spending in the economy with the proceeds from the planned AIB IPO.
“While reducing the nominal value of our national debt is an objective we share with the Government, it is our view that capital spending levels have been reduced too much and these proceeds would be better employed at this time by investing in areas such as public transport, road building, broadband and house building.
“We also believe it is time the government carried out an independent assessment of the appropriateness of the domestic rule which limits annual expenditure on Public Private Partnerships (PPPs) to 10% of the total annual spending on capital investment.
“We have called for this independent assessment in our amendment to the motion. At the Oireachtas Finance Committee last week, we heard evidence from the Vice President of the European Investment Bank Andrew McDowell that the bank would be willing to do far more with Ireland in the area of PPPs.
“If the market conditions are right, we believe the government should proceed with the sale of up to 25% of AIB. A successful sale would be a positive development for AIB and our economy, and the State would continue to be the majority shareholder in the bank. We also believe the Government should make the case to the EU that any such proceeds be available to Ireland to increase badly needed investment in the economy,” concluded McGrath.