Tommy Broughan (Dublin Bay North, Independent)
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85. To ask the Minister for Finance if he will ensure that the reported €3.4 billion to be realised from the sale of shares in a bank (details supplied) will be spent on critically needed social housing, transport and water infrastructure and on measures to lessen the negative impacts of Brexit; if he and An Taoiseach have raised this with the EU Commission and Council; and if he will make a statement on the matter. [30813/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The sale of shares in AIB held by the Ireland Strategic Investment Fund does not result in a beneficial impact to the General Government Balance under the European System of Accounts 2010.  This is due to the fact that it is classified as a 'financial transaction' whereby it is essentially the exchange of one form of asset (shares, equities, loans) for another kind (cash). Consequently the sale of any shareholding in AIB does not count as general government revenue. Thus there will not be an increased capacity to spend on capital projects as a result of the sale of shares in AIB without affecting the general government balance.

While not improving the deficit, the cash proceeds arising from the sale of AIB shares, which have been transferred to the Exchequer, reduce the Exchequer borrowing requirement and result in lower general government net debt initially and gross debt in time. A lower level of debt is not only beneficial in terms of the fiscal sustainability of the State but will also result in reduced interest payments in future years. The strategy of reducing the national debt is consistent with the Government policy of repaying the borrowing previously undertaken to finance the recapitalisation of the banking sector during the financial crisis.  As previously stated, it the Government's position that the proceeds from the sale of the State's shareholdings in Irish banks, including AIB, will be used to reduce the outstanding level of public debt.   

I have previously acknowledged the need for increased public investment. The current Capital Plan sets a baseline from which this Government intends to increase investment in critical infrastructure, and in areas such as housing and health, as the Deputy has identified 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 €325 million in comparison to the 2016 outturn. By 2021 it is envisaged that Gross Voted Capital Expenditure will reach €7.3 billion, an increase of over 100 per cent in comparison to its level in 2014.  These increases in investment over the coming years will be allocated to identified priorities on the basis of the outcome of the review of the Capital Plan currently under way.

I would also point out that it is not just because of the fiscal rules that the Government is using the proceeds to reduce debt - as the Taoiseach has stated, it is the right thing to do. 

Finally, it should be further noted that the SGP also includes flexibilities that are designed to promote capital investment. For instance, within the expenditure benchmark, capital formation increases are smoothed over four years with the result that only one quarter of the increase in public investment must be funded in the first year from within the fiscal space. This provision, which means increases in capital spending for housing and other purposes can be front-loaded within the EU rules, has been utilised in Ireland's budgetary plans.  With regard to Brexit and other external risks to the outlook, the best way to deal with such risks is through competitiveness oriented policies and prudent management of the public finances. That is what this Government will continue to do.