Cracks appear in Germany’s cash-starved infrastructure

Financial Times Financial Times

Bridges and roads crumble as local authorities use funds to reduce deficits

5 hours ago by: Guy Chazan in Leverkusen

As you cross the bridge over the Rhine at Leverkusen you notice something strange. This is one of Germany’s most critical transport corridors, near one of its biggest industrial hubs — yet among the thousands of vehicles that use it every day, there are no trucks.

The bridge has been closed to heavy goods vehicles since 2012, when cracks were discovered in the concrete. A replacement will be opened in 2020. But until then, lorries will have to find other ways across the Rhine.

Marcus Hover is the director of the VVWL, a local transport lobby group, but he says he is glad the bridge broke, calling it “a wake-up call for the whole country” and a monument to Germany’s infrastructure crisis.

To outsiders, Germany can seem like a well-oiled machine. But its reputation as a paragon of efficiency obscures the fact that many roads, bridges and public buildings are in shocking disrepair. Starved of investment for years, a lot of infrastructure is slowly crumbling.

On Thursday, authorities were forced to close another bridge over the Rhine after a crack was found in a cable fixture. Normally some 100,000 vehicles a day cross the bridge at Neuenkamp, which is about 80km north of Leverkusen and one of the most important transport links between the Ruhr industrial belt and the Netherlands.

Hendrik Wüst, transport minister of North Rhine-Westphalia, worries about economic disruption across his region. “When a businessman in Siegerland [in central Germany] can’t transport his wind turbine or transformer to his customer because the bridges are broken, then we have a real problem,” he says. “We risk losing jobs in the fastest-growing rural areas.”

Martin Schulz, leader of the left-of-centre Social Democrats (SPD), has put the infrastructure issue at the heart of his campaign for next month’s Bundestag election. He argues that Germany’s federal, regional and local governments should be spending their combined €56bn budget surplus on fixing school roofs rather than on the tax giveaways that Angela Merkel’s CDU is proposing.

According to KfW, the German development bank, Germany’s towns, cities and rural districts have an “investment gap” of €126bn, including a €34bn backlog of spending on roads and €33bn on schools.

“For too long, Germany was focused on balancing its budget and reducing the deficit rather than on investment, and over time that really adds up,” says Henrik Enderlein, vice-president of the Hertie School of Governance in Berlin, who helped write the SPD’s economic programme.

Statistics show that public investment as a percentage of gross domestic product fell from nearly 5 per cent in 1970 to an all-time low of 1.9 per cent in 2005. It has stabilised at about 2 per cent. The government insists public investment is “surging”, with an average annual growth rate of 3.8 per cent, and will increase by about 5 per cent a year until 2020.

But it also admits that the extra funds made available to local authorities over the past few years “have not triggered much new investment”. The money is instead used “to reduce budgetary deficits and build up surpluses”, it says.

Some economists blame the “debt brake”, a constitutional amendment passed in 2009 that imposed a straitjacket on Germany’s state and local governments by prohibiting them from running structural deficits.

Marcel Fratzscher, head of the DIW think-tank in Berlin, says infrastructure spending suffers in both bad times and good. When times are tough and unemployment and social spending go up, regional governments have found that investment is the “easiest thing to cut”. When the economy does better, Germans prefer to “give ourselves a treat” rather than invest.

One such “treat” he cites is the contentious — and expensive — pension reform of 2014 that cut the retirement age to 63 for certain long-serving workers and increased pensions for mothers of children born before 1992.

Mr Schulz has proposed an “investment obligation”, a kind of mirror image of the debt brake that would require governments to spend surplus revenues on infrastructure. In this he is making common cause with the International Monetary Fund, which wants Germany to spend more on public infrastructure to encourage private investment and reduce the country’s massive current account surplus.

Ms Merkel argues that the main obstacle to more spending on infrastructure is not a lack of money but bottlenecks in planning. “We can’t spend the money we have right now,” she said last month. In its manifesto, her CDU promises to remove red tape, ease planning restrictions and fast-track high-priority projects.

Indeed, money is rarely the main problem: in the case of Berlin’s new airport, which was supposed to open in 2011 and is unfinished, the main culprits have been technical problems, poor planning and frequent management changes.

Leverkusen’s bridge epitomises Germany infrastructure problem. Opened in 1965, by 2012 it was carrying 128,000 cars and 14,000 lorries daily — a load it was never designed for. Martin Schulz, SPD leader, has put the infrastructure issue at the heart of his campaign for next month’s Bundestag election

The closure has taken an environmental toll. Mr Hover says it adds 40 minutes and 30km to the average truck-driver’s job, which means that each day 126,000 more litres of diesel are consumed and 330 more tons of carbon dioxide emitted. Trucks have snarled up Leverkusen’s traffic as they find alternative routes. “I know one firm with a small fleet of 30 vehicles that says it is costing them €15,000 a month,” Mr Hover says. He fears that more cracks will appear and the bridge will shut completely. “Then we’ll have total chaos.”

Mr Wüst says that in North Rhine-Westphalia alone about 300 bridges must be completely rebuilt. Infrastructure from Germany’s boom years of the 1960s and 70s was not designed for today’s traffic, he says.

“It makes a huge difference if 1,000 or 10,000 lorries a day cross a bridge, or if they weigh 22 or 44 tonnes,” he says. “These structures are reaching the end of their service life much earlier.”

Yet echoing Ms Merkel, he says that more money is not the solution: after years of cutbacks, many towns and cities lack the institutional capacity to handle big projects. “It’s critical that local authorities have enough qualified staff for the planning, inspections and permits process,” says Mr Wüst.

Public attitudes also need to change, says experts. Politicians are unlikely to get elected by promising to invest in a bridge that might collapse in 30 years if left untended, says Mr Hover. For most people, he says, such time horizons are “like science fiction”.