Urban centers in North Rhine-Westphalia grapple with investment overload
Addressing NRW's Investment Backlog: A Multi-Faceted Approach
In North Rhine-Westphalia (NRW), a significant investment backlog looms over schools, hospitals, bridges, digital infrastructure, housing, and climate protection. Stefan Zimkeit, the SPD finance expert, has emphasised the urgency of tackling this issue, particularly in education, and has proposed an "Investment Program for Good Schools."
The CDU-Green government in NRW is tasked with resolving this investment backlog with targeted measures. However, the state government has yet to find a solution for the historical debt burden that many municipalities face. This debt burden, combined with high communal social expenditures in NRW compared to other western federal states, is a significant cause of the high investment backlogs in cities.
A study commissioned by the DGB provides feasible implementation proposals in the fields of climate protection, infrastructure, housing, health, and education. The study estimates an investment need of 156 billion euros for NRW over the next ten years. Zimkeit argues that the 10 billion euros earmarked for investments in the state budget is much too low.
To alleviate the historical debt burden of municipalities, enhanced public funding and budget relief are essential. This would enable municipalities to finance urgently needed investments without exacerbating indebtedness. Accelerated infrastructure investment programs could also benefit NRW, with rail infrastructure companies like Vossloh remaining optimistic due to global and national investment programs aiming to renew transport infrastructure.
Investment backlog in climate protection can be addressed by prioritising green infrastructure projects such as energy-efficient school buildings, public transport electrification, and sustainable urban planning. Germany's growing business optimism and business confidence indicate a political and economic will to pursue these investments despite the municipal debts.
Innovation and efficiency in construction and infrastructure development can also help address the investment backlog. Technological advances in construction, materials, and project management contribute to faster completion and reduced costs for infrastructure projects.
Public-Private Partnerships (PPPs) are a common strategy in German states to mobilise private capital for public infrastructure and climate projects, mitigating direct fiscal pressure on indebted municipalities.
In conclusion, NRW's approach to overcoming its investment backlog involves leveraging increased budget support, national and global investment momentum in infrastructure sectors, innovation in project execution, and climate-oriented infrastructure upgrades, all while managing the constraints imposed by municipalities’ historical debt burdens. Direct targeted debt relief or restructuring measures for municipalities are often part of the broader fiscal framework to enable these investments but require coordinated policy action beyond municipal level.
DGB Regional Chair Anja Weber emphasises that public investments can pay for themselves in a few years. Viewing public investments as necessary financing for a good and just future is crucial in addressing the investment backlog in NRW. The investment situation is dire, but with concerted effort and strategic planning, NRW can overcome this challenge and build a brighter future for its citizens.
[1] Source: Vossloh AG, Annual Report 2020 [2] Source: McKinsey & Company, "The digital construction revolution" [3] Source: Ifo Institute, Business Climate Index [4] Source: KfW, "Investment in the energy transition: funding opportunities for municipalities" [5] Source: Bundesministerium für Wirtschaft und Energie, "Investment in the energy transition: funding opportunities for municipalities"
1) To tackle NRW's investment backlog in education and self-development sectors, as proposed by Stefan Zimkeit, it is essential to consider enhanced public funding and implementation proposals from studies like the one commissioned by the DGB. This could help finance the construction of energy-efficient school buildings or implement sustainable urban planning, all while addressing the historical debt burden of municipalities.
2) Since Germany's growing business optimism indicates a political and economic will to pursue investments, Businesses, along with finance and construction sectors, can play a crucial role in addressing NRW's investment backlog by partnering with municipalities through Public-Private Partnerships (PPPs), which can mobilize private capital for public infrastructure and climate projects without exacerbating indebtedness.
