DELAY SALE OF AIB SHARES UNTIL FUNDS CAN BE USED FOR CAPITAL SPENDING

Issued 9 May 2017

Government plans to sell AIB shares should be put on hold, until the funds raised can be used to invest in vital State infrastructure.

That’s according to the Labour Party, which is introducing a motion to postpone the sale until the fiscal rules are changed to allow for increased capital spending, rather than to pay down debt.

Speaking ahead of the Private Members debate on the motion this evening, Labour Party leader Brendan Howlin said:

“What we have here is a real opportunity to tackle the infrastructural bottlenecks that are emerging across the country in areas such as transport and housing, to hospitals and schools.

“We know from recent media reports that an initial public offering of AIB shares could happen as soon as the end of the month. We want to delay this sale until the fiscal rules are changed to permit enhanced capital spending.

“The extra €2.65bn that the Minister for Public Expenditure is proposing for the capital plan as part of his mid-term review simply does not go far enough, and will not make up for the under investment we have seen in infrastructure in recent years. Nor will it be enough to deal with the rapid growth in our economy, or the challenges posed by Brexit.

“However using the proceeds from the sale of any portion of AIB for capital spending could boost the amount available for investment by around €3bn.

“We are also calling on the Minister for Finance to scrap his proposed ‘rainy-day fund’ and use this funding to also invest in vital infrastructure. Then, instead of having just €2.65bn to invest in schools and homes and transport, the Government would have over €8.5bn to spend over the next few years, without any negative risks to our economy,” concluded Deputy Howlin.

Labour Finance Spokesperson, Deputy Joan Burton commented:

“Minister Noonan’s plan to press ahead with the sale of 25 per cent of our shares in AIB is just pure folly at this time.

“The original policy of selling of our holding in AIB was based on a need to reduce our debt. But that situation has changed dramatically – Ireland’s net debt has already fallen and will continue to do so as the economy performs well.

“Diverting everything we get from selling a quarter of AIB would only reduce our debt by around one per cent of GDP. But the social good it could yield if invested in public infrastructure would be much greater.

“Everyone recognises that Ireland is in dire need of additional spending on housing, hospitals, schools and public transport.

“The social case for greater investment in housing and hospitals is clear- as is the economic case for investment in transport and communications infrastructure, particularly with Brexit on the horizon.”