As I have stated previously, 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 is no increased capacity to spend on capital projects as a result of the sale of shares in AIB without affecting the general government balance and compliance with the fiscal rules.
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's policy of repaying the borrowing previously undertaken to finance the recapitalisation of the banking sector during the financial crisis. As previously stated, it is 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. Taking account of the recent decision to increase capital expenditure by €500 million in each of 2019, 2020 and 2021 by lowering the contribution to the Rainy Day Fund, it is envisaged that Gross Voted Capital Expenditure will reach just under €7.8 billion, an increase of over 115 per cent in comparison to its level in 2014.
Furthermore, my colleague the Minister for Housing, Planning, Community and Local Government, earlier this month released his Department’s review of ‘Rebuilding Ireland’ alongside a number of newly announced measures specifically designed to tackle the current issues faced around housing and homelessness in Ireland.