Slow going

Tolls, Tolls, Tolls on the Autobahn

German Autobahn
The newest speed limits on Germany's autobahns: toll booths.
  • Why it matters

    Why it matters

    If the German government hands over the financing of roads to private investors, this would mean a shift in power over Germany’s road system.

  • Facts

    Facts

    • Currently, the German tax payer and a truck toll finance Germany’s road repairs.
    • In the future, the costs are likely to be outsourced to a public-private partnership agency, the highway company, which is open to private investors.
    • If this plan was executed the German government would save €2 billion.
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  • Audio

    Audio

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Germany may be close to developing a new way to pay for its world-famous autobahns, the world’s last modern highway network without speed limits.

After months of debate, three high-ranking officials in Chancellor Angela Merkel’s coalition government have identified two new ways to pay for road and bridge repair: new tolls on trucks and cars, and money from private investors.

The plan was drafted by the staffs of Wolfgang Schäuble, the German finance minister, Alexander Dobrindt, the transport minister, and Sigmar Gabriel, the vice chancellor and economics minister, according to people with knowledge of the pact. Each represents one of the three parties in Ms. Merkel’s ruling coalition of Christian Democrats, Christian Socialists and Social Democrats.

The broad support suggests the plan has a good chance of being approved by Ms. Merkel and her top cabinet advisers, which could lead to the partial privatization of autobahns and the creation of new fees for auto drivers.

Ironically, to secure stable financing of its highways — and to transfer the costs off of the federal budget — Germany may sacrifice the experience of unlimited speed or make its own drivers and those across Europe pay dearly.

“The three ministers only have to give the green light,” said a source the finance ministry, who wanted to remain anonymous. “Then, we can start working on the details of the plan.”

Germany spends €3 billion a year on highway repairs, of which €2 billion come from taxpayer funds and €1 billion from a toll on trucks that was enacted in 1995.

“The government cannot just sell the responsibility for infrastructure”

Michael Groschek, Transportation Minister of North-Rhine Westphalia

According to the proposal, Germany would create a new public-private highway company, which would be funded from tolls on foreign car drivers starting next year, and proceeds from private investors.

The reforms could radically change the character of the German autobahn, which still offers unlimited speed on many stretches. The new funding mechanism could lead to the creation of more toll booths or controls along the network.

Twenty other European countries already charge auto tolls, including France, Greece, Italy, Britain and Spain. Germany has been a popular transit country thanks to its free-of-charge roads.

The autobahn was first planned and built during the 1930s by Adolf Hitler’s engineer, Fritz Todt.

Germany wants to extend tolls to non-German car drivers using its roads. Germans would be effectively shielded from the new fees through corresponding reductions in annual sales taxes on cars.

But that plan, forwarded by Mr. Dobrindt, who is from the Bavarian Christian Socialist party, is controversial and likely to be challenged by the European Commission as discriminatory.

Backers of the new financing plan say the new tolls could raise €3.7 billion annually. In addition, private investors, such as insurance companies, would be given the chance to buy into specific road and bridge projects in Germany through bonds, shares or credit lending.

The grand plan could satisfy the competing aims of the three coalition parties. Mr. Gabriel has been looking for ways to boost government spending and give insurers low-risk investment opportunities; Mr. Dobrindt as transport minister is looking for more highway funding; and Mr. Schäuble wants a way to move highway expenses off of the federal budget.

Some projects in Germany already allow private investment, such as the A7 highway north of Hamburg. But those cooperations have been exceptions.

 

Experts think a long fight may be ahead. Individual states will not give up their rights easily, they predict.

Experts say maintenance and repair could be more easily financed through private investment and toll revenue.

“User financing for infrastructure has the advantage that the funding would be independent of the federal budget,” Reinhard Meyer, the Social Democrat transportation minister of the German state of Schleswig-Holstein, told Handelsblatt. “One does not have to renegociate annually, but one can invest and plan over a longer period of time.”

But critics of private-public partnerships see potential problems.

The legal and administrative costs of setting up a public-private partnership will increase, Alexander Eisenkopf, a transportation expert at Zeppelin University in Friedrichshafen told Handelsblatt Global Edition.

 

“Whilst there are a few benefits, such as that it would free up the government’s budget, there are quite a few disadvantages,” he said. “To start a public private partnership means a lot of transaction costs. Expenses will go towards contractual work which involves paying huge sums to lawyers and consultants.”

Beside organizational challenges and costs, a new system may also reduce the influence of German states in highway funding, which they exert now through the federal-state budgeting process for road work.

So far, individual states control roads within their borders.

Under the new system, a public-private highway company would be in charge and each state would have to cede highways to the new entity. Such a transfer of power may require a change in Germany’s constitution.

“It would not be acceptable that the federal government is taking care of these issues on its own,” Mr. Meyer said. “It also has to consider the wishes and ideas of the state governments.”

Some members of Germany’s political opposition — who have not participated in drafting the proposal — are supportive, saying the current system of highway funding has been abused by the more wealthy, powerful German states.

A new, more independent public-private management entity  may lead to a more targeted and effective allocation of funds.

“The current system has been a self-service vehicle for regional interests,” said Valerie Wilms, a Bundestag member of the Green Party. She said the current system does not direct funds to those parts of the country that need it most.

The finance ministry said federal-state control of the autobahns would be key in winning passage of the reform, which will now be discussed by the major political parties over the coming months. Experts predict a long fight may be ahead. States will not give up their highway rights easily, some predict.

“The government cannot just sell the responsibility for infrastructure,” said Michael Groschek, the transport minister of the state North-Rhine Westphalia. The northwest state — home to Bonn, Düsseldorf and Cologne, among other cities — is Germany’s most populous.

Not surprisingly, the state has some of Germany’s most extensive autobahn networks.

 

Daniel Delhaes reports on politics, transport and airlines from Handelsblatt’s Berlin office. Franziska Scheven and Sarah Mewes are editors with Handelsblatt Global Edition in Berlin and contributed reporting. Klaus Stratmann also contributed to this story. To contact the author: delhaes@handelsblatt.com

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