Dáil Éireann debate -
Tuesday, 9 May 2017

Vol. 949 No. 3

Proposed Sale of AIB Shares: Motion [Private Members]

Deputy Brendan Howlin

I move:

That Dáil Éireann:

is confident that capital investment can provide both social benefits as well as economic growth, rather than presenting a false choice in relation to such investment;

together with the International Monetary Fund, the Irish Congress of Trade Unions and the Irish Business and Employers Confederation believes that, in order to tackle infrastructural bottlenecks, make up for historical underinvestment, deal with the rapid growth within the domestic economy, deal with a growing and ageing population, as well as tackle the particular challenges posed by Brexit, much greater capital investment is required than the €2.65 billion envisaged in the Capital Plan;

notes that the Irish national debt-to-Gross Domestic Product (GDP) ratio continues to fall at a rapid pace, due to economic growth and continued achievement of budgetary targets, the costs of servicing the national debt have consistently been declining and the banking system poses no systemic threat to the economy;

is concerned that the Government’s debt-to-GDP target of 45 per cent, significantly below the Stability and Growth Pact target of 60 per cent, and its commitment to establishing a €1 billion per year rainy-day fund from 2019 are unnecessary obstacles to tackling our significant public investment deficit;

further notes that the State’s long established rainy-day fund, the Irish Strategic Investment Fund, has a discretionary portfolio of €8.1 billion and a directed portfolio valued at €12.6 billion, consisting of State shareholdings in Allied Irish Banks (AIB) and Bank of Ireland that were paid for out of the National Pension Reserve Fund;

believes that the directed portfolio, as it grows, should be made available for commercial investment in projects of national significance and commercial potential in the public sector and asserts, in particular, that the proceeds of a sale of bank shares should be used for additional capital investment;

further asserts that the European Union (EU) Stability and Growth Pact and fiscal rules currently prevent appropriate levels of investment and should be amended in order to facilitate a much needed increase in capital spending;

notes, with approval, efforts currently underway to achieve these reforms and calls on Irish political parties to advance this agenda through their EU political groups and also on the Government to vigorously pursue the issue at the European Council;

in the circumstances believes that, in advance of such changes to the fiscal rules, the sale of shareholdings in AIB and Bank of Ireland should not proceed; and

calls on the Government to postpone the sale of AIB shares until the fiscal rules are changed to permit enhanced capital spending, rather than remit the moneys to the Exchequer simply to pay down debt.

This motion is not just about economics or about cautious fiscal plans and prudent public spending, this motion is also about basic morality. It is about an economic collapse, brought about by our profligate, property-speculating banks, and it is about the enormous price people paid to rescue the banks and to rescue the economy.

The previous Government, with much difficulty, managed just about to reverse the economic engines and to rescue the economy. When we went into government, we took charge of a country whose economic foundations were under threat, where public services could not be guaranteed, unemployment was rocketing, the numbers working and paying tax were continuing to fall and the banks were continuing to drain the public finances. I acknowledge the work done by Deputy Michael Noonan as Minister for Finance in managing the banking crisis. We replaced the hated Anglo Irish Bank promissory notes and achieved Exchequer savings of €3 billion in payments each year. By cutting the interest rates on our programme loans and stretching out their maturities, we saved the State €30 billion. We burned junior bondholders to the tune of €15 billion and we set the State on a course to recover almost entirely the cost of our investment in the pillar banks, which would halve the overall cost of the bank rescue, none of which is to say that we should or even could do any of that again.

Those were truly desperate times and we imposed desperate remedies. Inevitably, a lot of very hard decisions had to be made, with very hard consequences. Burdens were shouldered and people suffered in their incomes and their quality of life but always in the hope and expectation that conditions would improve, debt would be brought back under control, that our financial institutions would recover, that economic activity would pick up, that unemployment would be brought down again to acceptable norms and that people who had endured so much in times of hardship would get dividends on the back of recovery.

Our enforced investment of money we had to borrow to invest in our two pillar banks now looks set to provide the people of Ireland with a return. To borrow a crude slogan, which is more than justified in the circumstances: "It's payback time". It is not a payback in the terms that so much appeals to Fine Gael, namely, a handful of euro in every pocket, too widely dispersed to be significant and too soon dissipated, but a payback of spending on the infrastructure of our country. If Donald Trump was right about one thing in his campaign - God knows he said enough that he must have been right about something - then he was right to stress that a principal duty of government is to maintain, repair and improve a country's infrastructure. The people need roads, bridges, broadband, schools, theatres and performance spaces, not to mention houses and hospitals. They look to government, from public resources, to build those things. The Government has the resources but it does not want to do the building. Thank God, the country is now well on the road to economic recovery. The recovery created as many jobs in the past four years as were created between gaining independence and 1996. That is an extraordinary fact. However, what we are facing now are emerging infrastructural bottlenecks in transport, housing, hospitals and schools.

We are told the initial public offering of AIB shares could happen as soon as the end of the month. What we in the Labour Party are saying is that we should delay this sale until the total proceeds can be committed to address the infrastructural needs of the country. Currently, under European Union fiscal rules and system of accounts, the proceeds would not count as general Government revenue, and could not be used for any purpose other than to pay down debt. The Ireland Strategic Investment Fund, ISIF, holds a discretionary portfolio of €8.1 billion and a directed portfolio valued at €12.6 billion. The directed portfolio consists of €11.3 billion worth of shares in AIB and €1.1 billion worth of shares, amounting to 14%, in Bank of Ireland. A total of approximately €16 billion came from the old National Pensions Reserve Fund and €4.8 billion came directly from the Exchequer. The State has already received a total of €3.453 billion from the sale of its investments in AIB to date, and a further €920 million has been received in income from its AIB investment. A further dividend of €250 million will also be paid to the State during the course of this year. If we sell now, in effect, the proceeds of holdings in the strategic investment fund would be used simply and solely to pay down debt. That is based on the current fiscal rules and the requirements of the agreements within the European structural framework.

In reply to a recent parliamentary question, the Minister for Finance estimated that the sale now of 25% of AIB would reduce the national debt by 1% of GDP. We strongly believe that would be a wasted opportunity and truly a waste of significant and vital money. Any proceeds from a sale of AIB shares should be directed to the purposes for which we set up the strategic investment fund, which as the Minister for Finance will recall, was a Labour Party proposal for investment in the Irish economy. There is no pressure on us to sell the shares right now. Everyone here knows that it is not the size of the national debt in absolute terms that is important, it is the size of the debt relative to the size of the economy as a whole that matters. If one owes €50 and one's income is €1,000 the debt is small but if one owes €50 and one's debt is €60 then the debt is significant. It is not the size of the debt that is important; what is important is the size of the income that matches it.

The policy of selling off our bank shares as soon as we could was negotiated and discussed in the previous Administration. It was a policy that originated in the urgent need at that time to reduce the national debt. Members may recall that our debt peaked at 120% of GDP but because of the recovery that situation has changed dramatically. The Irish national debt-to-GDP ratio continues to fall at a rapid pace due to economic growth and continued achievement of budgetary targets, thankfully, over many years. The cost of servicing the national debt has consistently been declining as well.

As I mentioned, diverting everything we get from selling a quarter of the shareholding we have in AIB would only reduce our debt by 1% or so. The social good we could deliver if we invested that money in public infrastructure would be much more significant than reducing the national debt by such a marginal if not downright irrelevant amount in economic terms. For many months now, I have been making the case for changes to the Stability and Growth Pact in order to allow for greater investment in public infrastructure. The Government has resisted the idea. It has failed to make any sort of case at a European level. I made the case again directly to the Taoiseach during the Brexit discussion we had earlier and I think he is beginning to agree that this is the way to go.

The result, to date, is that we are caught in a bind now that is largely of the Government's own making. Until we get the rules amended none of the proceeds from the sale of AIB can be invested in the things we so vitally need, such as houses, hospitals, schools and all the other infrastructural deficits that everybody in this House could list with great clarity.

The financial advisors working on the sale will stand to gain at least €40 million and the Irish people will see no tangible benefit at all. It is the sheer waste involved in diverting our assets to such a pointless exercise that makes me despair of the fiscal ideology that currently prevails in Government thinking. I ask people I worked with closely to think long and hard about this. If they do not want to take my word for it, they should ask the International Monetary Fund, which is hardly a bastion of socialist thinking. They should also ask ICTU which is arguing for the same thing, or IBEC which would normally agree with Fine Gael's viewpoint.

A further €2.66 billion is due to be allocated in the mid-term review of the capital investment plan. Capital spending this year will equal just 1.6% of GDP. By any international comparison that is a very low level of investment for a growing economy. We have a growing and ageing population unlike many of our sister countries within the European bloc. We are also faced with the existential threat of Brexit. These things require us to prepare ourselves to address structural deficits that have been built up over the years and to provide whatever resources we can put our hands on for the infrastructure our people need.

Investment will, admittedly, increase modestly to 2.2% of GDP by 2021. However, 2.2% is well below the normal OECD investment ratio. We believe strongly that much greater capital investment is now required. As I have indicated, that belief is not confined simply to the left. There is now a nearly universal consensus that capital investment in Ireland must be increased to tackle the difficulties that all of us can recite. There is not a single individual in this House who could not, even within the confines of his or her own constituency, identify the need for schools, roads, public transport, health infrastructure, hospital extensions, primary care centres and so much more. That would not only make an enormous impact on the social well-being of our people, but would also underpin economic growth and the country's capacity to work.

We must deal with infrastructural bottlenecks, historical under-investment, rapid growth in the domestic economy, and a growing and ageing population, not to mention the unique challenge of Brexit. We need to invest in our ports because the UK landbridge may well be under threat. We must ensure well in advance of any potential hard Brexit that our ports have sufficient marshalling space. We must have direct ferry links to Europe and the capacity to deal with container traffic that will be generated to bring our goods directly from this island economy to mainland Europe. We need the capacity and the money to do these things.

However, the austerity fetish that prevails in current Government thinking-----

Deputy David Cullinane

And past.

Deputy Brendan Howlin

-----does not agree to this. We cannot spend money we did not have. I am arguing for spending money we do have. I know the Sinn Féin position in 2011 was to tell the troika to get lost and take their money with them, which would have collapsed the economy then. Prudent management has got us to a position now where we can equally invest in the requirements of our economy going forward. That is the truth of it. This is sensible economics, not madcap economics.

Just because we had to do hard things in the past does not mean that is a permanent feature of our future. We would go further in the opposite direction. We would take €1 billion extra every year - as promised by Fine Gael and supported in an email I have received from the leader of Fianna Fáil - for the creation of this notional rainy day fund. From 2019 they will take an additional €1 billion out of the economy to put it in this ar eagla na heagla account, whereas we need money now. It is a fund that was argued for in the last election by no one else but Fine Gael, but is now being supported by Fianna Fáil.

We need to scrap the proposal for a rainy day fund and instead use that additional €3 billion - that is, €1 billion each year for 2019, 2020 and 2021 - to add to the €3 billion potentially available to us from the sale of AIB shares. We could therefore have an actual investment fund not of €2.6 billion but of €8.66 billion between now and 2021. That would make a significant difference. It would be an uplift for every part of our country.

We need to call a halt to the other feature of what I regard as the Government's folly in planning to impose a 45% debt ratio target on top of the rainy day fund. Under the strict fiscal rules, the debt ratio target is 60% of GDP. However, because we are close to achieving that, against all the odds when we were double that a few short years ago, the current Government, in what can only be described as an austerity fetish move, is now going to reduce the target to 45% of GDP. That is unnecessary and will do nothing but suck the money we need to built infrastructure out of the economy at the worst possible time.

We need to use the proceeds from the sale of any portion of AIB to further boost the amount of money available for investment, rather than simply to pay down debt. We need to front load the investment as much as possible, rather than reverting to pro-cyclical investment strategies. Above all, we need to see capital investment as providing real social benefits as well as economic growth, rather than creating a false choice for such investment.

If the Dáil and the Government accept the proposals, then instead of having €2.66 billion to invest we would have €8.6 billion to invest over the next few years. In summary, the pension fund, now the lSlF, is our rainy day fund. We created it as such and it is there. There is €8 billion in its directed portfolio and another €12 billion in a non-directed portfolio. That money is available to the State in the event of a crisis. The notion of putting another €1 billion a year as some sort of additional safeguard is false when we need the money now.

We believe that as the directed portfolio grows it should be made available for commercial investment in projects of national significance and commercial potential for our economy. We insist that the Stability and Growth Pact and the fiscal rules must be reformed and we are working to do that at European level. I have made this case to my colleagues in the Party of European Socialists and it has been accepted. They have established a working group to do that. I have asked all party leaders in this House to advance the same agenda within their own European political groups. I have asked the Taoiseach to do so with his EPP group this weekend.

In advance of all the necessary changes to the fiscal rules, there should be no thought right now of selling shares to simply retire debt. That is the least productive thing that can be thought of to do with €3 billion. It would take 1% off a debt that is falling anyway, which is fiscally meaningless. Instead that potential could be used to address the bottlenecks in which the country so desperately needs investment.

Minister for Finance (Deputy Michael Noonan)

I move amendment No. 5:

To delete all words after “Dáil Éireann” and substitute the following:

“affirms its support for the Programme for a Partnership Government’s commitment to provide for a sale of our banking investments where conditions permit;

recognises the sustainable increases in infrastructure spending being achieved under the Capital Plan, ‘Building on Recovery’, including the additional funding of €5.14 billion committed by Government since the original plan was published in 2015;

welcomes the Government’s intention to produce a new 10 year capital plan by the end of 2017, setting out the Government’s key investment priorities over the coming decade;

commends the Government’s continued achievement of budgetary targets and sustainable economic growth, and notes that a range of policy measures have been undertaken over recent years to address the budgetary implications of population ageing;

recognises that these Government policies have played a role in the continued low debt servicing costs which are also driven by the European Central Bank’s ongoing non-standard monetary policy measures, and therefore should not be assumed to be permanent;

supports the sensible objective of the Stability and Growth Pact to drive budgetary discipline and sustainable public finances in the European Union and the Euro Area, and recognises the important changes that Ireland has already secured in relation to the operation of the fiscal rules in relation to the expenditure benchmark;

further affirms that the Government is committed to compliance with the fiscal rules which are designed to avoid the mistakes of the past and ensure that increases in public expenditure are sustainably financed and not funded on the back of cyclical or windfall revenues, and

recognises that the fiscal rules are enshrined in Irish law in the Fiscal Responsibility Act 2012, which implemented the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union that Ireland acceded to in 2012, following the decision of the Irish people in the referendum held on 31st May, 2012;

further supports the Government’s policy to exit our banking investments in a measured and careful manner, returning them to private ownership over time and in a manner that maximises value for the taxpayer;

further recognises that public indebtedness has risen significantly as a result of this support and it is entirely appropriate to utilise any proceeds from the sale of our remaining investments, to reduce this debt burden and the associated ongoing debt servicing costs; and

notes the significant progress made by the Government in recovering taxpayer support to Allied Irish Banks (AIB) to date and that future capital investment decisions are entirely unrelated to the achievement of the Government banking policy and should not influence those objectives.”

I wish to thank the Deputies for the motion proposed. It addresses a number of important and distinct policy areas. While I, and I am sure many of the Members in this House, can largely agree with the sentiments of the motion proposed, in one critical respect it is flawed and for this reason I have tabled the counter-motion which I have just proposed. The motion as proposed by the Deputy attempts to constrain the progress of the Government's banking policy, and efforts being made to further aid the normalisation of the banking sector, by tying them artificially to expenditure constraints imposed by the European Union Stability and Growth Pact. I urge this House not to conflate two separate and discrete policy areas. An understandable desire for higher levels of capital investment is not a reasonable justification for delaying this Government's policy to bring down public debt and contain contingent liabilities while moving to a more normalised banking environment that will help to foster greater competition in the banking sector.

In short what I am saying is that it is not absence of money that is constraining capital investment, it is the legal constraints imposed by the Stability and Growth Pact and the fiscal rules. I can raise unlimited amounts of money on the market at very low cost through the NTMA. If it was permissible to invest that money, we would have no need to cash in AIB shares to provide us with investment funds for infrastructure. If it was desirable to do so, the money is available, and it is available very cheaply now as every Deputy in the House knows. It is a fallacy to conflate two separate and distinct areas of policy and make one contingent on the other, when no such contingency arises.

I would like to address a number of issues that are raised by the Deputy's motion. I will raise them in turn.

There is a broad consensus on the need for increased public investment. Indeed, I share this view. The Government's current capital plan sets a baseline from which we intend to increase investment in critical infrastructure into the future. As outlined in the 2017 Estimates, gross voted capital expenditure will increase to €4.5 billion in 2017. This represents an increase of almost €400 million in comparison with the 2016 outturn. By 2021 it is envisaged that gross voted capital expenditure will reach €7.3 billion, an increase of over 100% in comparison with its level in 2014. Based on my Department's GNP forecasts, Ireland's Exchequer public investment will reach 2.7% of GNP by 2021.

In addition, as outlined in the capital plan, the wider State sector, including our ports, airports, energy network, etc., plans to invest €14.5 billion in capital projects over the period from 2016 to 2021. This amounts to approximately €2.4 billion invested per year and brings total State-backed investment in 2017 to 3.1% of GNP, rising to 3.7% of GNP by 2021. These are reasonable comparators with what is happening in other OECD countries, particularly in Europe.

Increases in investment over the coming years will be prioritised on the basis of the outcome of the review of the capital plan currently under way. This evidence-based review will include an analysis of demand for future infrastructure needs and the capacity of the building industry to deliver increased output. It will culminate in the formulation of a ten-year plan addressing the key priorities identified by Government.

Deputies will remember that in the mid 2000s, when capital investment was advanced very strongly, it flowed into inflation and increased costs of tendered projects rather than leading to an increased volume of projects. There are limits to what can be spent on capital investment. We must be aware of the constraints of the building industry as well. That is a constraint on us.

The objective of the Stability and Growth Pact is sustainable public finances in the EU and the euro area. The European Commission takes the view that budgetary discipline means that there cannot be differentiation between different types of expenditure because all deficit-financed expenditure must be repaid by future taxes and granting special treatment to certain kinds of expenditure would create incentives for creative accounting.

Ireland has secured important changes in the operation of the fiscal rules, for example, by getting the reference rate for the expenditure benchmark updated every year instead of every three years which have been universally applied to all member states. We were also involved in smoothing out the treatment of capital investment so that only 25% of the fiscal space is now taken up by expenditure in the first year of investment. Other changes have also been made which have not yet applied to Ireland, but which may apply to us at different points in the business cycle.

We are committed to compliance with the fiscal rules which are designed to avoid the mistakes of the past and ensure that increases in public expenditure are sustainably financed and not funded on the back of cyclical or windfall revenues. I would also remind Members that the fiscal rules are enshrined in Irish law in the Fiscal Responsibility Act 2012, which implemented the treaty on stability, coordination and governance that Ireland acceded to following the decision of the Irish people in the referendum held on 31 May 2012. It would be incorrect to proceed on the basis that there is a set of rules which have been imposed unilaterally by the European authorities or the European Commission. These are enshrined in Irish law and they run from the referendum which was passed by the Irish people in May 2012. We must abide by that.

Clearly I can agree with the motion where it recognises the significant achievements made by the Government in reducing the headline debt-to-GDP ratio and bringing the public finances onto a more sustainable footing, which should not be understated. However, we are not in a position to rest on our laurels. Notwithstanding the progress that has been made over the past number of years, the absolute level of debt remains high at over €200 billion. It is over four times the level it was in 2007 and remains high relative to our EU peers, on a per capita basis.

Certainly if only a proportion of GDP is used as the measure, we are below the European average, but there are other ways of assessing the debt. One is the actual amount of debt on a per capita basis. If we measure it that way, we are at the upper reaches of European debt and we are still vulnerable to that mountain of debt that is out there. It is four times what it was in 2007 and the level in 2007 was not sufficient to sustain us when cataclysmic events occurred and we hit the nadir of recession in 2008 and subsequent years. Headroom is needed to deal with the economic management of the economy. When the debt is too high, that headroom is not there.

It has been said that any proceeds of a sale should not be used to reduce the national debt as it would have little or no impact on the debt-to-GDP ratio. This to me represents flawed logic. It is precisely because the nominal amount of debt is so high that the impact might be considered small, but this makes the need to reduce the debt level all the more pressing.

Furthermore, the cost of servicing the national debt has fallen, primarily as a result of improvements in our credit spreads - we are now issuing debt at lower interest rates and at longer maturities. While this is noteworthy progress, the reductions in servicing costs are due primarily to improvements in financing terms and the profile of our debt. Similar to the reduction in our debt-to-GDP ratio, this has arisen primarily from sustained improvements in economic growth rather than significant reductions in the absolute level of debt. Clearly the cost of servicing has also been greatly assisted by the ECB's ongoing non-standard monetary policy measures which cannot be assumed to be permanent.

There is no room for complacency, and the Government is committed to its target of a debt-to-GDP target of 45% by the mid-2020s, or thereafter depending on economic growth. I know, as Deputy Howlin pointed out, that the target under EU rules is 60%, but we are a much more open economy than most of our colleagues in the European Union.

If we look at countries like New Zealand and Australia, we can see that their debt to GDP ratio is in the teens. They are protecting currencies. We are part of the eurozone so we are not singularly protecting currencies so I am not advocating that we move down to 15% or 16%. However, there is a very strong case to be made for moving around 45% so that if we hit the bottom of the business cycle again and go into recession, the Government of the day will have the capacity to borrow to stimulate the economy, to keep business activity going and to stay out of recession in a classic Keynesian model with which many Deputies will be familiar. That is the purpose of that.

The target of 45% takes account of the particular risks that Ireland, as a small and very open economy, faces in an uncertain global context. It also takes account of the fact GDP is a less than perfect measure for Ireland. The Government's position on management of the public debt and the establishment of a rainy day fund are important examples of measures which will help to maintain competitiveness and sustain the public finances in a way that will help to protect against future risks.

Deputy Michael McGrath

I welcome the opportunity to contribute to the Private Members' motion put forward by the Labour Party this evening. While my colleagues in Fianna Fáil and I have sympathy with the spirit of the motion and the objective of increasing capital investment in our country, we do not believe a prerequisite of that should be to secure a change to the fiscal rules and that in the absence of changing those rules, the sale of the stake in AIB is blocked. This is essentially the thrust of the motion. It proposes that the sale would be stopped until the fiscal rules can be changed. Changing the fiscal rules at a European level and, indeed, at a domestic level is not an insignificant challenge and would be likely to take quite some time. In reality, it would entirely derail the proposal to sell a stake in AIB. Of course, that then requires an assessment as to whether or not one believes selling a stake in AIB is the right thing to do.

Our party's position is that provided the conditions are right, and the Government has access to a lot of expert advice to which we have no access, the sale of a stake of up to 25% would be a positive development. It would be a positive development for the bank and the country, represent an injection of private capital and be a statement of at least a degree of confidence in our banking system. What it would also serve to do is help to put a real value on the remainder of the State's share holding in AIB which, presumably, would be in or around the 75% mark. At the moment, we are working to a notional value of AIB because of the State's almost 100% ownership of the shares in that bank. In our view, having a sale successfully conducted would be a very important exercise in rebuilding confidence in the banking system and getting a proper handle on the valuation of our bank assets. Selling a majority share holding would be a different decision and would not be one we would be prepared to support - certainly not now or for the foreseeable future. It would be an entirely different decision if the State was to lose the majority share holding in AIB. I do not believe the bank is ready for that but I believe that private investment of up to 25% would be a positive development.

I will address increasing capital investment, the options we have and what we believe the Government should be doing. It is our position that the Government should seek support at European Commission level to use some or all the proceeds from the sale of AIB for once-off capital expenditure. It is my understanding that the Government has not even made that case. In fact, when one reads the Government amendment, it is very clear that Government policy is that the proceeds be used entirely to pay down debt. There is nothing wrong with paying down debt in normal circumstances. Irish citizens and businesses have gone out of their way to de-leverage and pay down debt where they could, particularly in the past seven or eight years. In normal circumstances, debt reduction is a fine objective and is laudable. The issue for this country is what the best use of the proceeds from the sale of AIB would be. It is our judgment at this time that the greater need facing our country is to address the infrastructure bottlenecks Deputy Howlin rightly identified and which are undoubtedly there. It is our view that the Government needs to make the case. We have made the case. We have written to Jean-Claude Juncker as president of the European Commission and have set out our assessment of the situation which relates to these being once-off receipts and how spending these receipts on capital investment if it does not displace other expenditure would result in Ireland exceeding the expenditure limit and breaching the fiscal rules. We support the fiscal rules. We believe that the Irish people made the right decision in voting in favour of those fiscal rules. That is not to say they are perfect or they should not be reviewed. It is our position as a party that the manner in which capital investment is accounted for in those fiscal rules needs to be reviewed. I do not think the balance is quite right in terms of the smoothing effect - that 25% of capital expenditure in any given year is accounted for in that year and the remaining 75% is accounted for over the following three years. There is a strong case to be made to extend that smoothing effect over a longer period of time. That should be examined by the European Commission and, in our view, it should be supported by the Government.

In respect of capital investment, one item we highlight in our amendment is the 10% domestic rule in place in respect of expenditure on public private partnerships, PPPs. In essence, it means that no more than 10% of the annual expenditure on capital investment can be accounted for by PPPs. We heard evidence at the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach last Thursday from Mr. Andrew McDowell, the Irish vice president of the European Investment Bank, EIB, that the EIB is more than prepared to provide additional financing to Ireland to do more under the heading of PPPs. The real constraint now lies in that 10% domestic rule. In our view, it is time that this rule is reviewed. If I look at our current level of PPP activity, I can see that at the end of 2016, the value of all Irish PPPs on the Government balance sheet was €500 million and €4.3 billion off balance sheet amounting to a total of €4.8 billion. That is a very modest contribution from the private sector to our capital needs given the size of our economy and the potential role PPPs can play so that should be reviewed. We are asking for an independent assessment of the appropriateness of what is a domestic rule. It is not a fiscal rule at EU level. It does not come under the Stability and Growth Pact. It is a domestic rule that should be reviewed.

The national capital investment plan will be reviewed over the course of this year. It needs to be more ambitious. If we look at the projection of expenditure on capital over the next number of years, we can see that it is projected that there will be significant increases in 2019, 2020 and 2021 if the anticipated fiscal space actually materialises during those years so we need to look at new ways, and at maximising the existing ways, of spending more on capital, which I agree is a key priority for the country at this time. Anyone who has heard the evidence from Transport Infrastructure Ireland cannot but be struck by how down-beat it is about the lack of activity in the investment pipeline in respect of projects that are going through the various stages to get to the end point. I will identify a few that are on my desk. They include the M20 Cork to Limerick motorway of which the Minister will be well aware and the Dunkettle interchange next to the Jack Lynch Tunnel in Cork - 2019 is the earliest that will happen because of lack of investment. Others include the Macroom-Ballyvourney bypass, which, at a minimum, has a similar timeline, and the M28 Cork to Ringaskiddy road scheme. These projects and many others are critical to the regions. We hear much from Government about balanced regional development, proper spatial planning, the national planning framework and so on. If the Government is sincere about that, it should back it up with proper investment in projects that would make a real difference to the economy in the regions in that respect.

It is clear that the proceeds will be treated as a financial transaction and so, as Deputy Howlin has said, will not enhance the general Government balance. The Government will accept the money under the NTMA Act. It will reduce the Exchequer borrowing requirement and will, in effect, reduce the national debt of the country.

Do the Minister of State and the Minister for Finance, Deputy Noonan, intend to make the case to Europe for Ireland to be given a dispensation to allow that additional expenditure on capital investment because of the circumstances and, as a result, not contravene the fiscal rules? It is not often said, but investment was one of the real victims of the economic crisis, along with capital expenditure. Perhaps it was at an unsustainable level in 2007 and 2008. Gross voted capital expenditure peaked in 2008 at €9 billion, which was 4.8% of GDP. At the trough in 2013 it was €3.4 billion and 1.9% of GDP. This year, as Deputy Howlin has said, it will be in the region of 1.6 % of GDP or approximately €4.5 billion. In many respects, we are hardly even maintaining the existing infrastructure stock.

The Fianna Fáil position is clear. Provided the professional assessment is that the conditions are right for the IPO to proceed, it should proceed and we will support it for all of the reasons I have outlined. The Government is not doing enough on capital investment. The proceeds from the sale of the stake in AIB offer the potential to do more. That the Government has not raised that issue or had the ambition to seek support at EU level for additional leeway in respect of the one-off receipt from the sale of this stake is deeply disappointing from Fianna Fáil’s perspective. That sums up the overall Fianna Fáil position. I look forward to Deputy Kelleher’s comments and the rest of the debate.

Deputy Billy Kelleher

I welcome the opportunity to speak on the motion. It is a timely one as it highlights certain issues that this House has failed to address in recent months. These issues are infrastructure, capital investment and the review of the national development or capital plan which is taking place. Reference has been made to the need for further capital investment in the economy to ensure that it can move ahead in a seamless manner, unlike the current situation of bottleneck after bottleneck, in the area of investment in human capital as well as in the context of transport. There are huge challenges in our universities and educational systems. Beyond the area of transport, there is a huge deficit in investment in certain key areas of the economy. Roads, capital development, infrastructure and transport are all a means to an end which is to ensure that the economy can sustain employment, productivity and competitiveness and continue that seamless investment in people.

In that context and in respect of the sale of part of AIB, we must acknowledge that AIB exists by grace of the taxpayer and the Irish people who stood by it in the most extraordinary of times. It would be a non-entity if it were not for the huge investment in the bank by the Irish people. There was not only an investment, but also a guarantee. For that reason, an exception should be made in order to invest whatever is achieved from the IPO back into the Irish economy.

I accept that the fiscal rules are there for good reasons such as to ensure that states do not go rogue and play with currency thus undermining the credibility of the currency across the European Union and to ensure fiscal responsibility in member states. There are two ways to reduce debt. We could consistently keep paying down debt but growth in the economy would also reduce that ratio. When a level of 75 % or 80 % is reached, investment is needed. When there is a growing economy and bottleneck after bottleneck not only in the investment side or in the capital infrastructure side but also on the human side, there is a requirement to use that in a meaningful way. We are not proposing that there should be a breach of the fiscal rules, rather that this is a once-off receipt that will accrue to the Irish people and could be put into a very productive investment programme if we approach this cleverly. It is important that Ministers raise with the European Commission and Jean-Claude Juncker that this is an exceptional once-off circumstance and that it should be put to a use that benefits the Irish economy now and into the future.

Now is the time for investment. As Deputy Howlin outlined, overall capital investment is less than 2 % of GDP. That is not sufficient to maintain and expand the economy. As has been highlighted, there are huge continuing bottlenecks. These include housing, education, infrastructure such as roads and transport, broadband and the move to a clean energy environment. These are all critically important. The Minister for Finance, Deputy Noonan, said that reasons other than money are the problem. The main reason is that there has been a lack of ambition and foresight in drafting a plan that can set out a clear vision of what we want for this country over the coming years. The Government should revisit its proposal to proceed with the sale of the bank and use the proceeds to reduce debt. An expanding economy will reduce the debt ratio anyway.

We are not out of the woods and we must be vigilant and conscious of external threats. There is an immediate threat to this country which would be another good reason to explain to the European Commission that this once-off sale of what is now a State asset and was a State liability is an exceptional circumstance. That treat comes from Brexit. This country needs to be weather-proofed against the potential gale force winds which may be coming towards us in the context of Brexit and the negotiations after the triggering of Article 50.

There are many reasons for us to be able to make a case that this is a once-off receipt and a once-off payment. It is a payment in lieu of the Irish people standing by the Irish banking system. Not only did they stand by the Irish banking system by investing and maintaining AIB on life support, they also stood by the European currency. That should not be forgotten. When the Ministers are in Europe over the coming weeks making the case, as I hope they do after tonight’s debate, they must impress the importance of this opportunity to invest in the Irish economy and people in terms of capital investment upon those with whom they are dealing.

I could highlight many deficiencies across the country in terms of infrastructure, housing and our third level institutions which are under huge threat and pressure. The economy will suffer because of that. We must invest in third level education to ensure that we have a continuous stream of high quality graduates and post-graduates. They are the key to any economy. If we do not do that and we do not have the space, the access, the research and development and innovation, people will look at this country and say that we are not investing in the key areas that are required to maintain, enhance and advance an economy.

While there are varying views on the motion, the sentiments are the same, that the potential €3 billion should be used for investment. That should be done because it is a once-off receipt to the Exchequer.

An important matter which was not mentioned in some of the amendments to the motion is that the Irish people stood by the bank when it was going to fall over. It required massive investment which cost huge sums of money. That caused a lot of pain. AIB must ensure that, when it does fly the coop and the State no longer holds a minority stake, it understands that it has a duty and obligation which will be called in time and again while I am a Member of this House. That obligation is to ensure that it handles debt relief, debt forgiveness and assessment of debt for individuals and business across the economy in a fair and meaningful manner.

That is the very least they owe the people as they set themselves in train for an IPO.

The other important issue is that we must be very vigilant they do not start disposing of some of the assets to third investors, to outside investors and to vulture funds or venture funds in order to tidy up their balance sheets to make themselves more attractive. This would be throwing people to the wolves because the banks want to get back into the private market as quickly as possible - mainly for the right motivations but sometimes with a view to themselves and their salaries and shares in a couple of years' time and all that flows from that. We should be very conscious of this. I would be worried that in the next couple of weeks or months they would start that process while they try to muster themselves in the markets internationally. There is much concern and worry among the representatives of small businesses, the farming community and private dwellers but primarily among those with commercial loans that this could happen when the banks are tidying up balance sheets. That is the reason I raised the issue and the Minister of State might take it on board because I know he has a specific interest in that area. Overall this is an opportunity to seize this amount of money for the people and I urge that the €3 billion, or whatever the amount that is raised in an IPO minority sale of AIB, would be used for the reasons outlined by Members here tonight.

Deputy Pearse Doherty

I welcome the debate. It touches on the very serious and important issue of what we do with the shares of AIB. I say that it touches on the issue because unfortunately it does not really deal with the fundamental questions of whether we should sell AIB in the first place and whether that is in the interests of the people. For the guts of the last hour no one has actually put forward an argument. The Labour Party, Fine Gael and Fianna Fáil all agree one version, which is the sale of AIB, but no one has articulated an argument as to why we should sell the share of AIB in the first place. The Labour Party position falls into the logic that the sale is inevitable and that the only reason to delay the sale is to decide what should be done with the proceeds of the sale. That is not Sinn Féin's position and we have tabled an amendment to effect the position we hold. We believe that nobody inside or outside of this Chamber has articulated a case as to why AIB shares should be sold in the first place. It is now paying hundreds of millions of euro in dividends to the people. This is money with which we can do whatever we wish; we can invest it in capital, in our schools, in our health system or whatever. There is no constraint in regard to the dividends we receive from AIB.

Last week the Minister for Finance, Deputy Noonan, confirmed to me that the sale of a 25% share in AIB would reduce Ireland's debt by 1%, which is not going to make a massive impact in the reduction of the debt. We see from the economic growth, and because of some artificial adjustments, that the ratio of debt has shrunk considerably. The closest thing we have seen to any cost benefit analysis of the sale of AIB came from the former AIB director and former CEO of the NTMA, Dr. Michael Somers, when he appeared before the banking inquiry. Dr. Somers explained that if he was to sell the bank, "say a tranche of 25% ... you're going to have to sell it at a discount because people are not going to pay you the full value". He went on to say why they would not pay the full value. It was because the State was holding the other 75%. He then argued that it would be in the best interests of the State to retain the full shareholding because writing down debt when bond yields are quite low does not make financial sense. The best thing to do was to receive the dividends the State receives from AIB. That is the reality. Sinn Féin believes that it makes economic sense to hold on to AIB and as the bank becomes more profitable to continue to reap the rewards from that, while always having the option of selling off AIB in the future.

We know who would benefit from this measure. The bankers would benefit because their pay cap of €500,000 would soon be gone. The advisers would benefit and they would all get their cut out of it. In 2015 we were told that Goldman Sachs was appointed to advise the Government on AIB and that it was going to do this out of the goodness of its heart. Last month, however, we saw Goldman Sachs' real motivation when it purchased the loan book of non-performing loans from AIB. That is the type of thing that happens in a country when State assets are up for sale. The bankers gain, Goldman Sachs gains, and many others like Goldman Sachs gain. What do the people of Ireland get? They reduce their debt by 1% but they lose a strategic and financial State asset of huge importance. If we were selling an airline or a port we would be holding a full debate in the House over many days and there would be a national conversation about it but because it is a bank and is seen as toxic debt, the establishment party considers it a done deal. This is not where Sinn Féin stands.

The other element of the motion takes the Labour Party to the top of the table for brass neck. The Labour Party sold the fiscal rules to the people, along with their cheerleaders in Fine Gael and Fianna Fáil. They told us that the State needed the fiscal rules and that it was for the betterment of the country. Yet, every single one of these parties now agree with Sinn Féin's analysis from that time and they have all stated that it is preventing us from investing into the basic capital infrastructure that we need. Consider the words echoed by the Minister for Finance today telling us how the fiscal rules are not allowing the State to invest in our crippled infrastructure or into the types of infrastructure we need to invest for the future of our economy, our people and our communities.

Sinn Féin's concerns were dismissed and anyone who raised issues in respect of the fiscal rules was dismissed as a naysayer. Unfortunately we have been proven correct. The fiscal rules are having the exact effect Sinn Féin and others said they would have; they are crippling investment when it is needed most. I am glad the Labour Party has copped on to this. Fine Gael has also copped on to this and even Fianna Fáil is arguing that the rules need to be changed. Rather than seeking a blind eye to be turned or a rule to be tweaked they should be working to reverse the damage by renegotiating the rules in a substantial way.

Of course we need greater investment in capital infrastructure. We told Teachta Howlin when he was the Minister overseeing this-----

Deputy Brendan Howlin

They told nobody.

Deputy Pearse Doherty

-----that we did not need tax cuts for the wealthiest. When the fiscal rules were there, every euro cut in taxes for the wealthiest in society was €4 that could have been put into capital investment, but they chose the wrong policies. We still have options and space. Instead of abolishing the USC, which Fine Gael proposed - a policy the Labour Party has a version of and Fianna Fáil have a 90% version of - we should be investing in capital infrastructure. We should be investing in our country. Of course we need the fiscal rules changed, but the big conversation we need to have in the House is whether we should sell AIB at all. That conversation is not happening. I hope people will agree with my amendment on behalf of Sinn Féin and that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach scrutinises this area as we would if the sale was anything else bar a bank.

Deputy David Cullinane

We have had a very heavy dose of revisionism from the Labour Party and Fianna Fáil today. Teachta Howlin made a number of statements and he said the Labour Party was against a rainy-day fund. Last year, however, one of his colleagues - Deputy Jan O'Sullivan who sat beside him - issued a statement in support of a rainy-day fund and the Labour Party at the time was in favour of that. Deputy Howlin talks about capital investment and yet he was "Mr. Cuts" and took the axe to capital investment left, right and centre.

Deputy Brendan Howlin

We had no money. Would they have had us bankrupt the country?

Deputy David Cullinane

He is the one who brought about the cuts in all the Departments and areas in which he is now saying we now need investment. As my colleague said, it is very illuminating to hear all the parties, which were the cheerleaders for the fiscal rules, berating Sinn Féin for getting it right and for saying that the one-size-fits-all rules were not going to work, that they were too rigid and inflexible and would have a negative impact on the economy, on our ability to borrow and on our ability to invest in public services. Thankfully, they are all now on the same page and accept the error of their ways. They are all running around trying to find ways to clean up the mess they made; to sell off shares we should not sell, looking at off balance sheet options and special purpose vehicles and PPPs, and all because they messed up in respect of the fiscal rules.

It is welcome that the Labour Party acknowledges its mistakes. Now we have to correct them. The reality is that we need significant investment in capital infrastructure. That is why Sinn Féin put forward fully costed alternative budget proposals last year, including €1.2 billion in capital spending. It was the only party that used one of the very few flexible options we have under the fiscal rules, which is to smooth capital investment over four years, front-loading investment in all of the areas about which Deputy Brendan Howlin talked such as health, housing, infrastructure, rail and public transport and so on. We were able to put €1.2 billion on the table in our alternative budget.

As my colleague said, nobody from any of the parties that were cheerleaders for the fiscal rules has been able to point to a credible argument for selling off the shares in AIB. The only argument I have heard from the Labour Party, the Government and Fianna Fáil is that we have to do it because we have no other way of funding capital investment. They made a mess and sold the people a pup in respect of the fiscal rules. The Minister says so himself when he reminds the Labour Party that the fiscal rules are enshrined in law. They are enshrined in law because the Labour Party, Fianna Fáil and Fine Gael asked the people to vote for them. Now they are running to the European Union with their tails between their legs looking for changes which they should have got when the rules were being negotiated. They should have listened to us in the first place.

Deputy Joan Burton

Sinn Féin was opposed to drawing down.

Deputy Brendan Howlin

Of course, it was. It is ignorance.

An Ceann Comhairle

Less of the background noise, please. Let us hear Deputy Richard Boyd Barrett.

Deputy Richard Boyd Barrett

Sometimes when we propose that we need to significantly increase investment in social housing, the creaking public health system, public transport or other strategic areas of industry and enterprise that are in need of investment such as the arts, forestry, the sustainable energy sector or whatever else, the Government accuses us of fantasy economics because, of course, we do not have the money for it. Quite often, those of us on the left respond by pointing to untapped sources of tax revenue in the areas of wealth generation, profits and financial transactions. It is something we should talk about more because it is so obvious and the motion highlights it. If we ask where the money is, it is almost childlike to answer that it is in the banks. However, it is literally in the banks. The money for all of the investment mentioned is in the banks. In the case of AIB, €20 billion of public money was put into it. These are banks that generated €1 billion in pre-tax profits in the first six months of last year and €1.9 billion in pre-tax profits in 2015. Before the crash, the two big banks were averaging approximately €2 billion a year in profits and they are now moving back into that territory. We put in €20 billion when the banks collapsed and helped to collapse the rest of the economy. Just at the moment when they are starting to make money, we want to give them away again. One could not make it up.

It is madness to consider selling off AIB now or at any point, at it was madness to sell off most of our shares in the Bank of Ireland after bailing it out. What we should be doing is establishing and absorbing AIB into a public, not-for-profit banking system whereby we would direct investment and lending policy at strategic priorities for the State in terms of capital expenditure, infrastructure and the development of strategic enterprise and industry. It is so obvious that we should do this. After bailing the banks out, crippling the country and the cost of doing so, then nursing them back to health, we are now talking about flogging them off. All of the profits they are going to accumulate in the coming years will be given away to private investors. It is just bonkers and I do not know what case can be put forward for it. I cannot think of any other explanation for it other than ideological blindness and addiction to neoliberal dogma. There is finally recognition that we do not have enough capital investment but we are going to give away a vehicle that could actually deliver it. I find it ridiculous when we debate how distressed mortgage holders are being mistreated by the banks or how lending by the banks into areas such as housing is not satisfactory and we even have Fine Gael and other Government Members giving out about the behaviour of the banks. We own the banks, but the Government will not assert any control over them. Why is that? It is partly due to the ideological fetishes and addictions of Fine Gael and, albeit in a slightly diluted form, Fianna Fáil. The Labour Party has also joined in that failed neoliberal consensus, as is indicated by its support for the fiscal rules and, before them, the Lisbon treaty.

I hate the politics of "I told you so." I must also tell my Sinn Féin comrades that it was not just Sinn Féin that had this analysis. The left had it also, going right back to the previous treaties. In fact, the main plank of our opposition to the Lisbon treaty, the previous treaties and the fiscal rules was not sovereignty issues, as was the case for some, although they were important; nor was it democracy issues or even military issues. The main plank of our opposition was that the state aid rules and subsequently the fiscal rules would act as an economic straitjacket which would prevent us from strategically investing in key areas of infrastructure, the economy, or strategic enterprise. Now finally, belatedly, this recognition seems to be occurring across the board at the budget scrutiny committee, amazingly, accompanied, however, by total amnesia about the fact that we had warned that this would be the case. When we did so in the fiscal treaty debate on the state aid rules and the Lisbon treaty, we were told we did not know what we were talking about and that we were making it up. Now we are stuck in that straitjacket and there is talk of special pleading. I am glad that we are recognising it at last, but why on earth did the other parties not see it coming?

Deputy Billy Kelleher

The Deputy's side supported Brexit.

Deputy Richard Boyd Barrett

We supported an exit from the European Union which had nothing to do with the exit-----

Deputy Billy Kelleher

They campaigned for Brexit. I am just trying to remind the House in order to be accurate.

Deputy Richard Boyd Barrett

We did not support treaties that tied us to mad economic policies and which had crippled the level of capital investment. It is important to remind people of this.

On the specific issue of AIB, it is not just that it is the wrong time to sell it off. It should never be sold off. We should use it as a public bank to invest in infrastructure and the strategically important areas of the economy which are suffering from chronic under-investment.

An Ceann Comhairle

Deputy Catherine Connolly is sharing time with Deputies Thomas P. Broughan and Thomas Pringle.

Deputy Thomas P. Broughan

I thank the Labour Party for bringing forward this discussion on Allied Irish Bank. There is a major challenge to the State because of the level of the national debt and especially the re-financing of a major chunk of that debt between 2018 and 2020. At the same time, we need major investment in our infrastructure. We are not even meeting depreciation rates of infrastructure replacement.

I do not believe this initial public offering is the best way forward for AIB or the Irish taxpayer. Effectively, we bought this bank with our blood, sweat and tears and with €21 billion of our money. At long last, the 2016 accounts finally got back a small return of €250 million. It is said this IPO will realise up to €3 billion for a 25% stake. The real winners will be the highly paid bankers, as Deputy Doherty said earlier, and the legion of advisers led by Rothschild, JP Morgan and the rest. What we need is a great flagship bank that will serve, service and look after ordinary people, households as well as small, medium-sized and large businesses. We have such a bank. We own 99.9% of it and I believe we should keep it.

One thing the Government could do is look into the invigilation of banks. I have asked the Minister whether the Central Bank Act 1942 creates a separate justice system for bankers following the recent fine of €2.275 million imposed on AIB. That is something the Minister could usefully examine. I am against the sale of AIB.

Deputy Catherine Connolly

I thank the Labour Party for giving us the opportunity to speak on this issue. I can finally understand why the people have utterly lost faith in politics. Fine Gael is saying we must comply with fiscal rules and sell off a share of AIB to pay down the debt. Fine Gael wants to go even further and reduce the ratio even more. The Labour Party says we should not sell AIB until we change the fiscal rules that the same party actively supported. Fianna Fáil says we should obey the fiscal rules save for an exception on this occasion.

I agree with Deputy Doherty's comment to the effect that in the midst of all of this there is no discussion on whether we should sell it in the first place. It is our second biggest bank and it is now owned by the people. As my colleague, Deputy Broughan, said, it was as a result of their blood, sweat and tears. Surely the circumstances that led to the acquisition of a 99% share of that bank should, at the very least, spark some type of discussion on what we have learned and what we should do next, especially with regard to whether we should hold on to it 100%. Other questions arise relating to governance, the appointment of public interest directors and the importance of credit to small and medium-sized enterprises and individuals and so on. We have not heard a word on any of these things.

I sit on the Committee of Public Accounts. Repeatedly, week after week, one of the greatest failures on the part of the organisations that come before us is a failure to carry out a cost benefit analysis in respect of their decisions. We are in the Chamber tonight courtesy of the Labour Party in respect of the motion to have an opportunity to make some comment on this debate. I thank the members of the Labour Party in this regard. The Government wants to confine the debate to a narrow context, that is to say, how much to sell off and when to sell off in order to pay down a national debt that is already being reduced in any event. If we keep going down this road, we are going to be in a position in several years' time whereby we will have to write off the national debt. This is because we are not investing in our economy. We are not building houses, investing in integrated public transport or investing in our health. Further down the road we will be unable to pay off the debt at all.

Are we seriously being asked to forget the history of AIB? I am referring to the history of being bailed out by the taxpayers as far back as 1985, its poor corporate culture, its excessive remuneration of senior staff and its overcharging of customers. Let us remember that this bank was bailed out. Let us remember that it had 53,000 bogus non-resident accounts. It wrote off over £500,000 for a former Fianna Fáil Taoiseach. It overcharged customers. Is the Government seriously expecting us not to have a debate on this? Are we to accept the Government's word that it is a good thing to sell it off for the sake of rules that do not need to be complied with in such a rigid manner?

Deputy Thomas Pringle

This motion from the Labour Party calls for the sale of the State share in AIB to be delayed until the Government negotiates changes in the fiscal rules with the EU. I find it interesting that the Labour Party put forward this motion when in opposition, because when it was in Government it would not have heard tell of such a radical proposal. I suppose big bad Fine Gael would not let the Labour Party do it when they were in Government together. Those of us who would have proposed such things during the last Dáil were naive and reckless according to the Labour Party at the time.

Having said that, it makes perfect sense that if there is to be a sale of the shares in AIB, then the proceeds should be used for capital investment. The fact that this would even have to be proposed in the Chamber says much about the intentions of the Government. We have the lowest levels of capital investment in the EU. The European Commission has commented on our low our levels of investment. The Stability and Growth Pact will continue to stifle capital investment for us. The Government should be pursuing changes to the fiscal rules at European level, regardless of the fact that the sale of AIB is approaching.

The proceeds of the sale could be used to do so much good for our citizens. It could be used to help solve the housing crisis by providing for compulsory purchase orders for vacant properties throughout the State to house people in need of housing. It could be used to fund the roll-out of broadband infrastructure to deliver proper high-speed broadband to all houses throughout the State. It could also be used to develop the many piers and harbours around our coast that require investment. It could be used to provide proper roads infrastructure into the north west, including the development of the N4 and completion of the N2 A5 road. Those are some of the projects that the proceeds could be used to fund.

However, I believe we should not even consider selling AIB. There are growing demands throughout the country for a public banking model to be established in the State while we still own 99.9% of AIB. AIB is a ready-made bank that should be converted into a bank that works for the benefit of all the citizens in the State. It could be a bank that works for and on behalf of the people. However, that is something the Government cannot understand.

An Ceann Comhairle

Deputy Mattie McGrath, you are sharing with your two colleagues. Is that correct?

Deputy Mattie McGrath

Deputy Michael Healy-Rae is first.

Deputy Michael Healy-Rae

It is galling to hear what I have heard tonight. When I think of AIB, the first thing I think of is who the important people are. They are those who have been good, loyal, true, respectable customers of AIB over the years. I am talking about small business people, small farmers and young couples who, starting out in life, took out a mortgage and who were dutiful, honest and straight. During the crash they kept going. They went without to pay their mortgages every month. They put their shoulders to the wheel. They kept putting in and scrounging and scraping to keep their nose clean with AIB.

I hear that if the bank is sold now, the people who will make a great deal of money are the big rich people within the banking sector. Let us consider those who lost their shirts to AIB. Who bailed out AIB? Let us consider the people who worked within the banking sector and who, instead of receiving dividends, took AIB shares. Eventually, those shares became worthless and they lost their shirts again. These are the people I would like to think of tonight. They are the people who made AIB and they are now hearing of this proposal. Not enough is being said for the young couples, farmers or business people who are struggling while trying to honour their debts. They are being forgotten about. There were bailouts for everyone but there was no bailout for the ordinary, small, honest, genuine customer of AIB or any of the other banks either.

Deputy Danny Healy-Rae

I am glad of the opportunity to talk on this important motion. On the one hand, the sale of AIB to reduce our debt is laudable, but where does this leave the surety of a bank service for the people in rural sparsely populated areas? If the new owners decide to take banks out of rural towns, what will the people do then? They will have to travel longer journeys. The people have stood by this bank in good times and bad. Will the people, account holders, borrowers, mortgage holders and all who trade with the new owners get fair play? This is the most important aspect. The people we represent are the most important.

I believe there is not enough competition in the banking business to ensure that interest rates remain at an acceptable level. Will our farmers and small business people get loans to keep their businesses going? This move could very well suit big business and millionaires at the cost or expense of smaller operators and entrepreneurs who are trying to get going.

The sum of €3 billion is a big figure on the one hand but, if an entity or someone else can see the sense in buying AIB, surely this Government should see that the bank has started making money and that it could make money for the taxpayer also. Most importantly, we are losing control for the Irish people. We do not have enough banks to ensure competition.

I, too, would like more and better infrastructure in our country. This Government, and all the parties here, should be going back to those in Europe and telling them that we will pay them what we owe them when we have it. It should not be putting this generation under the pressure it is putting it under. Employers, sole traders and anyone going out working in the morning are being taxed too high and not getting services for it. I am asking the Government to go back with its cap in its hand to tell the Germans, who did not pay their debt following the First World War until approximately three years ago, that we will pay them when we have it. When small businesses tell us they cannot pay us this year but will pay us next year, we accept it. This is what we should be about and not selling the one bank that we have control over. It is very wrong. The Government would want to think about it again. I am asking it of Fianna Fáil as well. It is not doing right by the Irish people to sell this bank. Go back to those in Europe and tell them that we are paying too much but that we will pay them when we have it.

Deputy Mattie McGrath

I, too, welcome the motion tonight from a Labour Party that has made a Damascene-like turnaround. It must be the first anniversary of being out of Government - it was just 12 months last week - that has caused this Damascene-like turnaround. We could not talk to the former Minister, Deputy Howlin, who was like the high priest, when he was the Minister for fiscal responsibility. However, I agree with the motion. Deputy Joan Burton can smile away but she was as bad when the hand was going. I remember the night of the bank guarantee how she railed here that we should not-----

Deputy Joan Burton

The Deputy is always-----

Deputy Mattie McGrath

Then the Labour Party got into bed with Fine Gael. What did it do? Persecute the ordinary people and put them into penury and here we are now thinking of selling off the bank. If this bank is sold, the money must go into infrastructure for rural and urban areas of Ireland and the ordinary people.

What about the people in the courts in Clonmel, Nenagh and all over the country today who are being evicted by the same bank? Here we are trying to pay back this money to Ms Merkel and the rest of them. As I stated, if there will be a sale, there is no one in this House that understands it better than those we represent. I note the work carried out by Civitas and its analysis of the Growth and Stability Pact and, in particular, its conclusion on failing to impose penalties on Germany and France. Why were the penalties not imposed on them? We are the good boys of Europe and the good girl, when Deputy Burton was Tánaiste, as well. Cailín deas álainn. She was the one that said, "Yes, yes, yes." I say, "No, no, no." This cannot be sold. We must resources back into the schools, into cataract operations, into special needs and into the mobility allowance, which has not happened for five or six years, to try to support our people for once given what happened over the past ten years.

There are many good people working in this bank but there are also many high officials in it whose remuneration is considerable. We talk so much about rural banking and community banking but we are paying lip service to it. Rather than selling it, we have a chance to make it a real community bank. Let it be owned by the people. Let it serve the people who saved it and who are still saving it. We will pay back the money to Europe when we have it. We will put it into our infrastructure now because our infrastructure is crumbling. We cannot get investment into rural areas anywhere outside of Dublin.

I say to the Minister of State, Deputy Eoghan Murphy, who is here, and to the Minister for Finance that it is time to think of the people. Those in Fine Gael got returned to power after 70 days of talks. We were all trying to talk sense into them but they got carried away again when they got into Government. They still want to look after the big bankers. They still want to look after the Germans and the Europeans. Think what happened in Brexit. Think what could have happened and what happened in France and what could have happened if Le Pen had got in. Listen to the people. There are salutary lessons there for the Government.

The people will not stand for this and I, as a customer of AIB for 40 years, will not stand for it because it is useless to anyone. A person can go in and talk and fill out forms all he or she likes, but AIB is no good to the small farmer, the ordinary working man, the mortgage holder, community services or anyone or anything. AIB is only self-serving and serving the Government and the Government is serving it. It is like rubbing butter to a fat cow's or fat pig's you no where. It does not do any good. It would not even make the pig fatter. This is a bad deal and bad business and cannot happen.

An Ceann Comhairle

The next speakers are Deputies Róisín Shortall and Eamon Ryan who are sharing five and a half minutes.

Deputy Róisín Shortall

Is it not seven and a half minutes in total?

An Ceann Comhairle

No. Two of the minutes are going to Deputy Michael Fitzmaurice, so it is five and a half minutes in total.

Deputy Michael Healy-Rae

They have half of it gone now.

Deputy Róisín Shortall

We were not notified of that.

Deputy Mattie McGrath

They were at the Business Committee last week.

An Ceann Comhairle

You were. It was part of the arrangements for the week.

Deputy Róisín Shortall

My apologies. I thought the request had to be made. I did not know it was automatic.

A major part of the problem with the Government's proposal is its claim that the proceeds of any sale cannot be used for investment purposes. There is no doubt Ireland is hugely lacking in terms of investment in our public services. The expected proceeds of the sale amount to a mere 1% of our debt. It seems like a very small amount but think about what could be done with those proceeds in terms of making up the deficit that exists. The Social Democrats very much believe that, at a minimum, we should be seriously challenging those rules.

Even if there is no possibility of the proceeds of sale being invested, the Government's plan still makes very little economic sense. AIB is about to pay a dividend of €250 million to shareholders. Given the fact that the State practically owns the entire bank, it is a huge amount of money that could be put to very good use. Why would we pass up on an opportunity to continue to receive those substantial dividends yearly. We could spend those, although under the rules, we could not spend any proceeds. The Social Democrats has called for a cost-benefit analysis to be carried out to look at the pros and cons of a decision to sell 25% at this point because we simply do not know whether that makes sense.

We have not been given any of the material but the Government certainly does not lack advice. There is a serious problem with the fact the Government seems to be employing so many different financial consultants in regard to this matter with the fee pool reported to be somewhere in the region of €40 million. We know the Government has engaged more than a dozen companies to advise it, including all the usual suspects and names which were involved in and turned out to benefit very much from the bank bailout. Here we are again with, it would seem, the similar kind of gravy train. The most recent tranche of appointments included Goldman Sachs, for example. Last month this firm purchased 1,200 buy-to-let mortgages in a portfolio with a face value of €400 million from AIB. How can there not be a serious conflict of interest when insiders, made up of people who stand to benefit substantially from the proposed sale, are advising the Government?

In the time that I have available to me, I urge Members to support the Social Democrats' amendment to at least insist that we have a Dáil vote before any decision is taken on this important matter.

Deputy Eamon Ryan

On behalf of the Green Party, I am happy to support the Labour Party motion. It was interesting to read the Minister's speech. I will make two arguments in terms of postponing the one quarter sale of AIB in the proposed IPO. In his speech, the Minister stated that the establishment of a rainy-day fund would be an important example of measures which will help to maintain competitiveness and sustain the public finances in a way that will help to protect against future risks. I agree that we need to protect competitiveness and to protect against future risks. However, I believe firmly that the absence of public transport, sufficient housing and broadband networks is the greatest threat to our competitiveness. Investment in that sort of productive infrastructure is the best way for us to help to protect against future risks. There may be - Lord knows there probably will be - other future risks, but we face real risks currently due to our under-investment in capital infrastructure.

My second proposal has a slightly different approach. In fact, it is very different, but it is with a view to economic development. Rather than selling AIB, we have been discussing and pushing, as have others, the idea of a public banking system. The AIB network of branches could go back to what it was years ago. It was made up of really strong local and regional branches that helped the development of the local economy. Our economy is booming in Dublin but it is not booming in rural areas. A serious question needs to be asked. Could we not, instead of just selling AIB as another standard clearing bank sale, look to see it start doing things differently and start thinking about how some of that branch network could be used as the initial seed for a public banking system that I believe we need?

We need it in particular because it would invest money raised in local areas in those areas. It must have that regional characteristic which would be of huge economic benefit to rural Ireland where we need to develop the economic model. I do not see the model proposed by Rothschild or any of the other advisers taking that kind of strategic political decision on economic development in this country. If we must sell the 25% stake, I would use the money to pay for capital investment. If we do not sell it, I would love to see us examining alternative models of banking into the future, specifically public banking that would develop the economy in rural Ireland, not just the cities.

Deputy Michael Fitzmaurice

I commend the Labour Party for the motion which I support totally. In the past few years we have seen all of the banks come through difficult situations. However, at the end of the day, it is ordinary people who have through blood, sweat and tears bailed out the country. Now, when we see the laying hen starting to do better, the Government is thinking about selling shares in AIB. There are many house owners who have problems with their mortgages and the first thing AIB needs to do is to come to terms with them and sort out resolutions for them, no more than all of the other banks, instead of trying to sell the roof from over their heads. It is ordinary people in every part of the country who have kept the system afloat in recent years.

I agree wholeheartedly with Deputy Róisín Shortall when she states a vote in the Dáil is required. As politicians, there is a responsibility on us to do the right thing. In this case, I agree that the right thing - Deputy Eamon Ryan touched on it - is to have a public banking system. Some of the private banks, or the banks into which the Government did not put as much money, have absconded from parts of the country, especially rural Ireland, since they started to recoup. For all the Government's talk about regional development in all parts of Ireland, we need a public banking system, whether people like it. A public banking system would present an opportunity to get the banking system right around the country. Governments love to talk to the likes of the Rothschilds and the different consultants who will come up with different ideas. However, at the end of the day, AIB has come through a difficult time and is now starting to return a profit which, in my opinion, in the next number of years will increase. Be it in Dublin city which needs infrastructure or other parts of Ireland, north, south, east and west, if one were in business and had something which was giving a yield every year, be it €260 million this year or any other figure, it would increase during the years. It would give the Government a dividend and reaslise a value. There is no point in putting X amount of money in and then getting back half or three quarters of it. One may have to wait for a long time, but in the end one will receive a dividend, plus more. The one thing the Government needs to do is to put the matter to a vote in the Dáil to see whether it would get a majority of Deputies to support it. I believe it would not get a majority if we are to do the right thing for the people. Regardless of what the European Union states or whatever pressure is exerted, we need to do what is right for the country. The one thing that would be right is making sure AIB is held as it is because, with the fiscal rules and given the way money must be paid back, if we were to receive a lump sum, I do not think the European Union would even allow us to spend it. We need to be able to stand up and put infrastructure in place around the country. We have so many sectors that require investment, including hospitals, disability services, road and rail projects, that we would want five AIBs to yield us enough money. I hope the Minister of State will take this on board. I ask him to make sure the matter is put to the Dáil when he might see where people stand.

Deputy Joan Burton

The Government's proposal to sell off 25% of AIB is pure folly at this time. Ireland will sell off 25% of a bank that has cost the taxpayer tens of billions of euro for something in the region of €3 billion and we will not be able to give the people any dividend from the cash raised from the sale. For a long time I have been making the case for changes to the Stability and Growth Pact in order to allow for greater investment in public infrastructure. Unfortunately, the Government has so far utterly failed to push this idea at a European level. The result is that none of the proceeds from any sale of AIB could be invested in building houses, hospitals or schools. I ask the House to bear in mind that AIB is the bank that has been rescued three times by the people of Ireland. The original policy of selling off our holding in AIB was based on a need to reduce the national debt. However, that position has changed dramatically: Ireland's net debt has fallen and will continue to fall as the economy performs well and expands. To use Keynes's phrase, when the economy expands, debt melts like snow off the ditch. That is true, but the Government cannot recognise it.

Diverting everything we would get from selling one quarter of AIB would only reduce the national debt by 1% to 1.5% of GDP. Everyone recognises that Ireland is in dire need of additional spending on houses, hospitals and schools and particularly on such things as public transport and broadband. The social case for greater investment in housing and hospitals is clear. The economic case for investment in transport and communications infrastructure is equally clear, particularly with Brexit on the horizon. The Minister for Finance, Deputy Michael Noonan, is foolishly proposing to press ahead with the sale of 25% of our shares in AIB. However, he tells us that not one cent of the proceeds can be invested in improving infrastructure. The financial advisers working on the sale stand to earn €40 million from this action; the people will see no such benefit. Public investment has the potential to yield great long-term benefits to Ireland and give citizens some concrete advantage from the vast sums spent on the bank bailouts. The social good it could yield, if invested in public infrastructure, would be much greater.

I will give two small examples in the Dublin area. In the area I represent, Barnwell and Hansfield, a special development zone is ready to provide an additional 3,000 houses on a serviced site at Clonee on the Dublin-Meath border. The hold-up is due to the fact that a road needs to be built to access the area to build the houses. However, when the Government recently made an announcement on infrastructural investment to allow houses to be built, the fund was not big enough to provide for the project. Another vital infrastructural project is the electrification to DART standards of the Maynooth railway line. The Government is now stalling on the project, despite detailed plans having been available for many years. If the electrification project were carried out, people would be able to buy houses in areas from which, as happens in London and other great metropolitan cities, they could commute quickly into the city centre.

The Government is spreading the finance for infrastructural development too thinly. Pushing for changes to EU rules in the financing of essential infrastructure would provide for much-needed projects such as these. We can see the adverse effects of German-inspired EU fiscal rules not only in Ireland but also in France and Italy. Germany , by its own acknowledgement, is not investing in essential infrastructure to the long-term detriment of its economic health.

This absence of public investment is due to the ideological stranglehold on the European People's Party, which meets in Ireland this week, by German ordo-liberal financial theocrats who prioritise debt targets over essential infrastructure investment. I reiterate that Irish people have bailed out Allied Irish Banks no less than three times. While I understand senior executives and stockbrokers want a 25% stake in AIB to be sold as soon as possible - after all, they are in business to do business - the wider national interest requires a more considered strategy.

Here we go again, with a Minister anxious to boost the feel-good factor. Harold McMillan's slogan, "You've never had it so good", seems to be the maxim of the Minister for Finance, and perhaps the proposed sale is based on the expectation of an early general election. The Minister would be well advised not to repeat the mistakes of the Government of former Taoiseach, Mr. Bertie Ahern, by electioneering and encouraging people with a spare €10,000 in savings, of whom there are not many, to invest in shares. We all remember the consequences of the Eircom flotation and how smaller investors were burned. A quick sale of the State's share in AIB would not do justice to Ireland's chronic infrastructure needs.

Deputy Boyd Barrett, who spoke a few moments ago, wants to walk Ireland out of the European Union. This would mean we would not have any capacity to invest in infrastructure. While we can trade history about different positions on the European Union at different times, there is no doubt that if we can collectively utilise the vast financial muscle of the European Union for a genuine growth and investment pact across the EU, we could see the best years. People such as Deputy Boyd Barrett and his colleagues in the Anti-Austerity Alliance who are in favour of Brexit are the allies of President Trump because they are in favour of Europe going it alone. The logic of their position is that they will be privately in favour of the privatisation of Allied Irish Banks.

We have an opportunity to make some of the essential investment of which the country is starved. Appearing before a committee today, representatives of Dublin Chamber of Commerce set out approximately 20 priority targets for the Dublin region to allow the economy to grow and shrink the national debt. This is the correct approach. Every other region can also point to opportunities, for example, completing the road network and providing skills and investment in industry and infrastructure. To throw all of that away or diminish it for a partisan sale of a partial shareholding in AIB is the greatest folly I have heard proposed for some time.

Minister of State at the Department of Finance (Deputy Eoghan Murphy)

It is the Government's policy that the State will exit its shareholding in Allied Irish Banks and other banking investments over time and in a prudent manner. The taking of these important decisions should not be impacted or influenced by discussions around future capital expenditure because, as the Minister for Finance outlined, these issues are not related.

The programme for a partnership Government provides for a 25% sale of AIB and our other banking investments during 2017 and 2018. This reflects and reaffirms the Government's commitment to maximising the recovery from these investments for the taxpayer and reducing the residual risks associated with these shareholdings. Concrete steps towards achieving these objectives have been taken in recent months, as the Minister described. It is the Government's clear position that the proceeds from the sale of banks assets will be used to pay down our national debt.

While the reductions in our debt to GDP ratio and debt servicing costs are to be welcomed, I urge caution from extrapolating from this that our elevated debt levels are no longer of concern. Notwithstanding the recent reduction in our debt to GDP ratio to slightly more than 75% of GDP at the end of 2016, risks remain. As a small open economy, Ireland is sensitive to economic shocks in any region of the world. The new debt to GDP target of 45% announced last October will provide an additional buffer against risk and increase the capacity of Governments to borrow to alleviate the impact of such shocks in future.

We need to be cautious in respect of current low debt servicing costs as these costs are being partially driven by the ongoing non-standard monetary policy measures being undertaken by the European Central Bank. These measures cannot be expected to continue indefinitely. The consistently stated Government position is that the proceeds from the sale of bank assets will be used to pay down debt. This policy has been clearly articulated by government since 2011 and consistently endorsed by a number of market analysts and international financial institutions. For example, the International Monetary Fund's 2015 Article 4 report on Ireland noted the importance of the State actively seeking to sell down its bank shareholdings in order to further reduce public debt and contain contingent liabilities. A change in this position, as proposed in the Labour Party's motion, would be detrimental to the market's perception of our ability to reduce our overall debt levels in the medium term.

The need for sustainable capital investment is evident to all of us and the Government intends to further increase such investment in the years ahead, with funds to be allocated to key priority areas as identified by the outcome of the ongoing review of the capital plan, Building on Recovery. The plan sets out a €42 billion framework to address our priority capital projects up to 2021 and is the appropriate forum for addressing these priorities. The Minister for Public Expenditure and Reform will consider the various submissions received from the public consultation along with proposals received from Departments, with a view to making recommendations to the Government in the third quarter of 2017 to inform final decisions on revised capital allocations which will be announced in the context of budget 2018.

Some Deputies believe the State should retain ownership of AIB or the other banks indefinitely. I beg to differ as it does not make sense for the State to continue to own a significant portion of the banking sector in perpetuity. Reducing debt and building fiscal shock absorbers give the State the flexibility to invest in more appropriate areas and allow it to respond to economic downturns in a way that underpins sustainable medium-term economic growth and future growth potential. Moreover, if we have learned anything over the past ten years, it is that banks are risky entities. As long as the State holds bank shares, taxpayers will be exposed to this risk and competition in the sector will be restrained. The Government does not want to see a scenario in which vital competition is hampered or taxpayers are exposed to the risks arising from the private activities of commercial organisations. Ultimately, it is necessary for the State to clearly separate the sovereign and banking system by selling the State's shareholdings in the banks. It would be inadvisable to link or delay the sale of bank shareholdings as sought in the motion until we can effect changes in the fiscal rules for which there is no concrete timetable.

I thank Deputies for introducing the motion for discussion and participating in this debate, which has facilitated discussion on a number of important policy areas. I encourage the House to support the amendment proposed by the Minister for Finance.

Deputy Sean Sherlock

There is no attempt by the Labour Party to prevent the normalisation of the banking sector, as the Minister of State alleged. There is certainly no attempt to conflate two separate and discrete policy areas, namely, banking policy and capital investment constraints. The debt to GDP ratio is at a sustainable level and the general Government debt has fallen by €18 billion in the past three years. Debt stock is now €1 billion lower than it was at the end of 2015 and this is the third successive year of decline. Gross Government debt declined from a peak of approximately €218 billion in the third quarter of 2013 to €200 billion in the fourth quarter of 2016. The debt to GDP ratio, which peaked in 2012 at almost 120%, is forecast to fall below 73% by the end of this year and to reach 62.8% by 2021. We may even reach a ratio of 60% by 2021.

From a macroeconomic point of view, the Minister seeks to sell 25% of an asset ultimately to achieve a debt to GDP target of 45% by the mid-2020s when the current target under the Stability and Growth Pact is 60%.

What is flawed is the idea of accelerating unnecessarily the repayment of debt when the country is crying out for infrastructural investment. Using the proceeds of the sale of any portion of AIB for capital spending could boost the amount available for investment by approximately €3 billion. The Minister of State referred to Keynes. Keynes would have something to say about the establishment of a rainy day fund. He might say that, instead of having just €2.5 billion to invest in schools, transport and homes, the Government would have more than €8.5 billion in the coming years without any negative risk to our economy.

There are infrastructural bottlenecks. We do not have a proper motorway linking Cork to Limerick to Galway to Sligo to Donegal, or the Atlantic corridor as we call it. If the Action Plan for Jobs, which is a Government policy, is to mean anything in terms of creating the target of 350,000 jobs outside of Dublin, we will need that investment in infrastructure. What we are subjected to now - it has been a function of the House for many years - is areas competing against one another for investment at regional and county levels. We believe that such vital infrastructure should and could become a reality if the necessary capital was available to meet requirements.

Ireland is on track to meet its medium-term budgetary objective. Government policy seems to be geared towards a counter-cyclical buffer with the debt target of 45%. There is no external pressure to reach that target. There is no abiding international pressure on currency markets to do so by dint of our membership of the euro. The Taoiseach stated: "The Government is fortunately not under any particular pressure to sell, so the market conditions will impact on when the Minister decides to make his recommendation to Government to sell." In the Minister of State's speech - I reach to get the copy of it that I had in front of me but I no longer have it - he stated that no final decision to proceed had been made.

We contend that the Stability and Growth Pact is key to the arguments that we are making. Its constraints place too much of a restriction on Ireland at a time when we need infrastructural investment. According to the programme for Government, nothing will be sold before the end of 2018. There is a great deal of time between now and then in which we can negotiate politically at EU level - this will take EU leadership - to release the constraints of the Stability and Growth Pact. If we are to sell any stake in any of the banks in order to proceed to "normalisation" or roll back the State's investment in banking, there is space before the end of 2018 to negotiate for better terms and conditions under the Stability and Growth Pact so as to allow us to invest more in infrastructure and remove our constraints.

Key systemic risks have reduced, unemployment has fallen and ECB funding of the banking system has decreased from a peak of €156 billion to €5 billion. NAMA bonds have decreased from €30.2 billion to €500 million and Government-guaranteed liabilities have fallen from €375 billion at the time of the guarantee to €1 billion. A Programme for a Partnership Government contains a key commitment not to sell more than 25% before the end of 2018 and that "the State will use its bank shareholding in the best interests of the Irish people".

There is no conflation between banking policy and the constraints posed by the Stability and Growth Pact. The pact is a political and economic constraint to further economic growth and growth is predicated on infrastructural investment. Now is the time for EU leaders, including this Taoiseach and the incoming one, whoever that may be, to make the political case for a relaxation of the rules so as to ensure that whatever dividends are ultimately yielded are used for productive purposes and investment in infrastructure.

Even if we accepted the premise of the Minister of State's argument and ceteris paribus, or all things being equal, he has still not made a compelling argument for the sale from a macroeconomic point of view except that, if I understood him correctly, the State should not be vested in the banking system and it should be a function purely of the market. However, the State has always been a major investor - in fact, the largest investor - in job creation, be that through Enterprise Ireland, the IDA or direct subvention of the very businesses that depend on the banking sector to thrive.

The motion before the House is to ensure that we can relax the rules of the Stability and Growth Pact and use dividends from the banking sector productively by reinvesting in our economy and society.

Amendment put.

An Ceann Comhairle

In accordance with Standing Order 70(2) and the report of the Business Committee dated 4 May 2017, the division is postponed until the weekly division time on Thursday, 18 May 2017.