The German infrastructure is in bad shape and there is not enough money for large-scale renovation. A new idea: infrastructure funds.
Source: dpa
The collapse of the Carola Bridge in Dresden has sparked a discussion about the backlog of bridge renovations. Experts estimate that many of the 130,000 bridges need to be replaced. September 12, 2024 | 1:26 minutes
Resolve investment backlogs in infrastructure
Now the transport ministers would like to see the establishment of an infrastructure fund worth billions to remedy the situation. In other words, a fund that will probably be used to repair the ailing infrastructure on Germany’s roads and railways for decades. This is independent of the annual budget negotiations.
Up to now, the funds for renovations have had to be made available in the budget every year at short notice. Of course, this makes long-term planning difficult. Federal Transport Minister Volker Wissing has also called for such a fund.
Without an infrastructure fund, we will not be able to sustainably modernize the country at the pace we need.
Volker Wissing, Federal Minister of Transport
The idea, according to Wissing, could roughly look like this: Public revenue, for example from the truck toll, flows into the fund. This attracts private investment funds that receive a return from the income. However, experts point out that private capital is often only invested if high returns are expected. Infrastructure projects also take many years to become profitable.
The state transport ministers are now putting pressure on Wissing. After his initial proposal in April, he has not yet presented a concept, according to the current chairman of the conference, Transport Minister Oliver Krischer from North Rhine-Westphalia.
If massive, long-term investments are not made now, there is a risk of further deterioration.
Oliver Krischer, Transport Minister from North Rhine-Westphalia
This is “at the expense of future generations and the economy in Germany,” said Krischer. In addition, there is basically no overview of how much and when needs to be invested.The consequences of the FDP’s austerity policy are already being felt in many places, including the dilapidated rail network. This should be expanded.04/23/2024 | 7:53 minutes
Toll: Austria as a role model
Krischer would like the fund to be financed from “transport-related” state resources, for example from the truck toll. He refers to the Austrian model. The infrastructure there is in significantly better condition. There is, for example, ASFINAG, the “Autobahnen und Schnellstraße-Finanzierungs-AG”, which is financed through various toll revenues. ASFINAG is owned by the state of Austria and is responsible for building and maintaining the road network there. It is financed through toll revenue without taxes.
In principle, most experts agree: “An infrastructure fund is a good instrument because it pools resources, makes them available in the long term and thereby creates planning security and continuity,” explains Heike van Hoorn from the German Transport Forum in Berlin.
“We have an incredible backlog of renovations,” said railway boss Richard Lutz. There is no alternative to the general renovation of the heavily used routes. March 21, 2024 | 8:40 minutes
Did the Finance Minister whistle the Transport Minister back?
Some economists are promoting a special fund à la the Bundeswehr to finance the fund. In the end, that would be new government debt. Michal Hüther, director of the employer-related Institute of the German Economy and Sebastian Dullien from the trade union-related Institute for Macroeconomics and Economic Research said in May that the budgets simply lacked the reserves to modernize the entire infrastructure – not just in the transport sector. They estimated the sum for the expansion of road and rail to around 127 billion euros. No wonder that the lord of the money, Christian Lindner, has repeatedly made critical comments about an infrastructure fund – and so it is suspected in the Ministry of Transport in North Rhine-Westphalia – that he also “whistled back” to his party colleague Volker Wissing. Lindner sees the need to invest in infrastructure, but would like to finance this within the existing budget and without taking on new debt.Sometimes there is no need for a speed limit anymore: on some roads in Germany, the potholes are enough to slow down the speed. There is not enough money for a complete renovation.02/20/2024 | 3:25 minutes
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