Labour party leader Brendan Howlin is calling on the Government to postpone the sale of a stake in AIB until European rules can be amended so that the proceeds of the flotation can be used for capital investment.
In an interview with Newstalk on Monday morning, Mr Howlin said "it is in the best interests of the Irish people" that the money is used to invest in roads, sewerage, houses and transport.
Arguing that the Government does not have any mandate to proceed, Mr Howlin said that if it does, it will be “fundamentally wrong and undemocratic”.
“The Government has no mandate because the Dáil has voted not to do this,” he said.
Outgoing Minister for Finance Michael Noonan is expected to push the button on the AIB sale as early as this week, selling 25 per cent of the bank in a public flotation that could raise as much as €3 billion for the state. The Government has previously signalled that the money would be used to repay our national debt.
Prudent
Last week the European Commission suggested that the use of the windfall to further reduce the general government debt ratio would be "prudent". However Mr Howlin said that while this approach may have made sense when the debt ratio was of the order of 120 per cent, it's already falling to 72 per cent, and he wants the money instead to be invested in infrastructure and capital projects.
Given that there are EU restrictions on how the money can be spent, Mr Howlin said he has raised the issue with the Socialist group in Europe, which is looking into an amendment that would allow windfall money, such as that arising from the AIB sale, to be invested in capital investment on a once-off basis.
“They have already given some leeway to Italy in this regard,” Mr Howlin said. “I have confidence that in a short period of time there would be leeway to invest this money in a much more useful way than the Government plans.”
Shares in AIB have risen from about €5 at the end of April to as high as €9 over the last few weeks. They closed at €8.25 on Friday.
