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The German government moved to dispel its reputation for not spending enough on the country’s infrastructure as it unveiled a 10-year, €86bn investment programme for the German rail network — the biggest in its history.
The plan foresees a 54 per cent increase in spending compared with the previous funding round, with much of the money earmarked for modernising Germany’s tracks, railway stations, signal boxes and energy supply systems. “This is the biggest growth, investment and modernisation offensive in the more than 180-year history of the railways [in Germany],” Richard Lutz, Deutsche Bahn’s chief executive, said on Tuesday. The plan comes with Chancellor Angela Merkel’s government under growing pressure to abandon its commitment to a balanced budget, the so-called schwarze Null, and raise government spending.
Even some of Germany’s more hawkish economists have said that in a time of bumper tax revenues and low interest rates the government should be investing much more in the country’s schools, roads and bridges. The investment programme also establishes Deutsche Bahn as central to Berlin’s ambitious plan to fight climate change and shift consumers to less carbon-intensive forms of travel.
Germany has committed to cutting its transport sector CO2 emissions by up to 42 per cent by 2030, and wants to increase the number of customers using Deutsche Bahn’s long-distance trains from 148m in 2018 to 260m by 2030. Last year ministers moved to make rail travel cheaper by reducing value added tax on long-distance train tickets. From left, Deutsche Bahn chief executive Richard Lutz, transport minister Andreas Scheuer, finance minister Olaf Scholz and Deutsche Bahn head of infrastructure Ronald Pofalla sign the new rail investment programme contract in Berlin © Filip Singer/EPA/Shutterstock But the Bahn suffers from an image problem in Germany, with frequent complaints about the quality of the service. Just 76 per cent of its long-distance trains were on time in 2018, well below the official punctuality goal of 82 per cent.
Thanks to the injection of funds from the deal, which was signed by Andreas Scheuer, Germany’s transport minister, Mr Lutz and Ronald Pofalla, Deutsche Bahn’s head of infrastructure, that should now improve. “We have the task of creating a modern rail network that is more punctual, more reliable, more efficient, with more passengers and freight travelling by rail,” Mr Scheuer said. Olaf Scholz, Germany’s finance minister, who was also at the signing ceremony, said: “The big issue right now is how to stop climate change, and we’ll never be able to do that without an efficient rail infrastructure.” Under the agreements, the German government will pay €62bn towards the investment programme, and Deutsche Bahn itself €24bn. Deutsche Bahn’s dividends will also be completely reinvested in the business.
This article first appeared on www.ft.com
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