A German Government’s Plan to Allocate 100 Billion Euros for Infrastructure Raises Concerns of Misuse
The German Federal Association of Taxpayers and the Union have expressed concerns that the 100 billion euro allocation for the states to invest in infrastructure may be misused. According to the association’s president, Reiner Holznagel, the blank check for the states could lead to the financing of projects not originally intended.
The German government has proposed a law that would give the states a significant degree of freedom in deciding how to use the allocated funds for infrastructure investments. The states would be responsible for ensuring the proper use of the funds and would establish the procedures for doing so, according to the draft law presented by the Federal Ministry of Finance.
The allocation of the funds is part of a 500 billion euro special fund, agreed upon by the Union, SPD and the Greens, to modernize the country’s infrastructure and invest in climate protection. The states are expected to have a high investment demand in areas such as education, energy and transportation infrastructure, hospitals, digitalization and population protection, the draft law states.
However, the Union is concerned that the states might not use the funds for investments, but instead to cover budget gaps. “In order for the desired economic effects to occur and the project to be crowned with success, the states must consistently channel the funds to the municipalities” said Christian Haase, a CDU budget politician. “Therefore, the share of the funds that falls to the states should be more in the direction of 70 percent.” Currently, the law stipulates that the states must transfer at least 60 percent of the funds to the municipalities.