Blame the bureaucracy for Germany’s sick infrastructure

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Germany needs to start spending to make up for years of underinvestment, and there is a ton of money on the table if political parties agree on the terms to form a new government.

Perhaps half a trillion euros for climate-related projects could be unlocked over a decade, and squaring such ambitions with demands for budget cuts is a critical issue for Germany and its public infrastructure. so much decried.

But increasing spending is not just about fixing the roads, hospitals and telecommunications networks that are a source of daily frustration for Germans. It’s also about modernizing and greening the economy, and helping it stand up to the might of China and the United States.

Global climate talks begin on Sunday as some 200 countries meet in Glasgow this week to develop strategies to curb global warming.

Germany has woken up to the challenge, even though its track record of major projects raises doubts that the new government will be able to meet it. The country has a reputation for being thrifty with public money – critics regularly cite its controversial debt brake – and bureaucracy and understaffing add to concerns.

There have been fiascos that have made the headlines, like the crash-ridden airport in Berlin or the Stuttgart train station, which is a testament to inefficient planning and construction. During the pandemic, Germany’s technology gaps were exposed when health services had to rely on faxes for Covid-19 test data.

This means that putting Europe’s largest economy at the forefront of technological innovation and addressing years of neglect while tackling climate change will be a Herculean task for the next government, which could take office. in December. Germany is already more than 400 billion euros behind on investments, according to Scope Ratings, threatening competitiveness in a rapidly changing world.

“I would like us to tackle these tasks head-on because they are urgent,” said Fritzi Koehler-Geib, chief economist at German public development bank KfW. “The longer we wait, the more it will cost. “

Germany is ranked 23rd for government effectiveness in the IMD World Competitiveness Yearbook, lower than Kazakhstan and Chile. On infrastructure, it’s behind Sweden and the United States

The OECD criticized Germany late last year, saying that although public investment had picked up, it was not enough to resolve the backlog.

Much of this backlog is at the local level. KfW estimates that municipal under-spending in areas such as roads and education is around 150 billion euros.

Years of belt-tightening to bring the cities’ high public debt under control have resulted in staff cuts in planning and construction offices and a shortage of qualified personnel. Of the more than 10,000 jobs currently listed on the German public sector job portal, almost 10% are for architects and engineers.

This skills gap means that there is a barrier to investing even with the money available.

The current budget plan foresees 50 billion euros per year in investments until 2025, to which is added 25.6 billion euros from the European Union recovery fund. Added to this is infrastructure spending by federal states and municipalities – over € 80 billion this year alone.

There is also no shortage of grants to support investments – in broadband and wireless technology or digitization in schools – but applying for them is often far too complicated, according to Gerd Landsberg, managing director of the Federation of Cities and Municipalities. German.

“It would make a lot more sense to trust the municipalities, to give them money and to see that they progress,” he said.

The nightmare of German regulation and red tape goes far beyond the public sector. Electric car maker Tesla Inc. has lamented an “irritating” system of government approvals that has delayed construction of its new plant near Berlin for several months.

The government has lifted some obstacles to speed up processes, streamlining regional planning procedures and waiving approvals for major construction projects such as railroad electrification.

“Covering the growing investment needs in digitization and climate neutrality is indeed a gigantic task,” said Koehler-Geib of KfW. “Many suggest that if there is no change, the investment gap will continue to grow.”

Disclaimer: This article first appeared on Bloomberg and is published under a special syndication agreement.

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