Kieran O'Donnell (Fine Gael) | Oireachtas source

I welcome my constituency colleague, the Minister for Finance, Deputy Michael Noonan, to the Chamber and commend him on this partial flotation of AIB. Like everyone else, I acknowledge the fantastic work he has done as both Minister for Finance and long-term Minister at the Departments of Health, Energy, Industry, Commerce and Trade, and Justice. I thank him for his dedicated service to Limerick and nationally, and more recently in terms of his period as Minister for Finance. He has guided us through these difficult times and it has been a pleasure to have been a colleague of his for so long.

I shall now deal with today's issue. As much as €21 billion of taxpayers' money went into AIB, which is a phenomenal amount of money particularly when one considers that the annual budget for the Department of Health is €13 billion and that for the Department of Education and Skills is €8 billion. When I talk about taxpayers, I am talking about everyone. I mean people who pay VAT on items that they purchase, unemployed people and every person living here. When Ireland was bankrupt, a decision was taken to keep a banking system alive by pumping in that level of funding. We cannot get away from the basic financial principle that one must repay borrowed money. The national debt is currently €200 billion, which is a frightening sum.

Two elements are missing from this discussion. First, I fundamentally believe that we need a properly functioning banking system. At present the State controls nearly 100% of AIB. We need to nurse AIB back to health. For the first time ever, AIB has paid a dividend. It is also making a profit. It is extremely important that legislation is brought in. Do the banks realise that they have a level of responsibility? I am of the opinion that when reckless trading took place, the banks were of the view that the State would bail them out. They can never have that view again. A European resolution mechanism has been set up to ensure that it is a European-wide responsibility and not just the responsibility of the State. There is obviously an element of judgment as to the timing of the flotation. It is about getting the maximum amount of money. Obviously there is the advice that the Minister has received, which is coupled with the fact that there has been a general strong response since the French elections. We also have uncertainty due to the UK election that will take place and Brexit going ahead. I wish the Minister well and I hope that good price is obtained for the shares when they are floated on the market in the middle of June. If the proceeds were used for capital investment, they would, under European rules, add to our national debt, whereas not doing so will pare down the debt. It is extremely important that people are aware of that. The sale of 25% of the shares is part of the programme for Government. Opposition parties continually say that Governments do not deliver on what is in their programmes for Government but the Minister, Deputy Noonan, has done so. They cannot have it both ways. It was agreed that we would dispose of 25% and we have disposed of 25%, meaning we will be left with 75% of the company.

In the graveyard years for the Irish economy between 2010 and more recent times, infrastructural investment dipped to a level that was far too low. As a result, we now have to improve our infrastructure and I would expect a couple of things in this regard. The Minister has met Andrew McDowell, the vice president of the European Investment Bank who came before the finance committee recently and discussed with it the possibility of the bank providing funding to allow the State to invest in capital projects. This avenue has to be pursued, but the European Investment Bank will not give money for free or in respect of projects that do not stand up to scrutiny. It will, however, give it at low interest provided the projects are there. As a result, it is extremely important that, during the mid-term capital review, heavy due diligence is done on projects. The Minister and I are based in Limerick and the M20, which links Limerick to Cork, is a huge project for all of us in the mid-west. I hope it finds its way back into the capital plan.

People say that our national debt is at such a level that €3 billion will only make a small dent in it but every euro makes a difference. We have to start somewhere in order to reduce our national debt. There may be scope for flexibility as the economy proceeds to recover and the Minister mentioned a ratio of 45%. At any rate, we must bring the debt down to 55% at least. Once the review of the capital plan is completed, the Government should engage heavily with the European Investment Bank. It is extremely important that we engage with Europe to look at the fiscal rules and the stability and growth pact and how they measure capital investment and stability and growth targets. As we continue to release the State's AIB holding to the market, we need to look at how we can use the proceeds and whether there is scope to use them when our debt falls more manageable levels. This is the correct time to proceed and I support the measure. The key thing now is to get the highest possible price. After that, we should engage with Europe to find some flexibility regarding capital projects so that we can raise our level of investment above 2% of gross domestic product. It used to be 4.5% so it is too low.

I compliment Deputy Noonan on his work as Minister for Finance and across a range of Departments. As a colleague of his in Limerick and the mid-west, I wish him well.