germany, Merkel, Schulz

Infrastructure woes rise up Germany’s election agenda

The issue of Germany’s crumbling infrastructure has taken centre stage in campaigning for September’s election after Martin Schulz, leader of the Social Democrats, vowed to pour billions into schools, roads and fast broadband. But Angela Merkel, the chancellor, dismissed the plan, saying the main obstacle to more spending on infrastructure was not lack of money but bottlenecks in the planning process. “We can’t spend the money we have right now,” she said in a TV interview.


Running repairs: recent polls show more than half of Germans want the budget surplus spent on infrastructure improvements © AFP

The main task was to “speed up planning procedures” and reduce the number of bodies that can appeal against priority projects, she said.

Mr Schulz’s promise is part of a wide-ranging “future plan” for the German economy designed to breathe new life into a candidacy beset by falling opinion poll ratings and a resurgence in support for Ms Merkel.

The centrepiece of the plan is a proposal for an “investment obligation” that would require future governments to spend surplus revenues on infrastructure. The idea is modelled on the “debt brake”, a constitutional amendment passed in 2009 that prohibits Germany’s 16 regional governments from running fiscal deficits.

It is unclear whether it will succeed in winning over voters, who have so far proven resistant to Mr Schulz, a former president of the European Parliament who has never held a big government post. An Emnid poll over the weekend put the SPD on 25 per cent, compared with 38 per cent for Ms Merkel’s conservative CDU/CSU bloc.

But according to a May survey by the pollster, 60 per cent of Germans want the country’s budget surplus invested in infrastructure, compared with 19 per cent who want it spent on tax cuts and 17 per cent on reducing state debt.

By focusing on the issue, Mr Schulz is aligning himself with the IMF, which has urged Germany to spend more on public infrastructure. The fund says this will encourage more private investment, which would help reduce the country’s massive current account surplus.

“The available fiscal space should be used for initiatives that enhance the growth potential, such as investment in physical and digital infrastructure, childcare, refugee integration and relief of the tax burden on labour,” the IMF said in May.

In a paper published on Sunday, the SPD says that if it wins in September it will launch a €30bn “investment offensive” over the next four years, pouring money into fibre-optic cables, clean energy, research and development, and roads and rail networks. Schools, kindergartens, hospitals and care homes would also benefit.

Mr Schulz said the plans would be financed from the budget surpluses of federal, regional and local government, which amount to €56bn, and from an increase in the top rate of income tax from 42 to 45 per cent.

“What is more important to us? To hand out tax giveaways to the rich or ensure that the rain doesn’t come through the school roof and that our children can go to the toilet?” Mr Schulz said.

Other parties ridiculed the plan. Andreas Scheuer, secretary-general of the CSU, the Bavarian sister party to Ms Merkel’s CDU, said states with SPD governments had already had “mega opportunities to invest in education and infrastructure, which they didn’t take advantage of”.

He cited the examples of North Rhine-Westphalia and Schleswig-Holstein, two states where the SPD had lost power to the CDU in elections earlier this year. Both states suffered from a major backlog of infrastructure projects that had failed to get off the drawing board, he said.

Source: ft.com

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