Affairs

Urbanism

Germany’s welfare black hole— Berlin

Preface

Walking through Berlin can make you feel as though you are on the set of one of those post-apocalypse films from the 1980s, such as Mad Max or The Day After.

Politics, Welfare

15 February 2010

Walking through Berlin can make you feel as though you are on the set of one of those post-apocalypse films from the 1980s, such as Mad Max or The Day After. A few weeks of snow has almost brought services to a halt. Pavements and streets are covered in thick ice as the city has no grit left. Street bins are overflowing and rubbish trucks cannot reach people’s homes and workers are on strike for more money. Where roads are cleared, deep potholes are revealed that turn driving into an unwanted adventure.

All this is a symptom of a bigger problem: many German cities are almost broke. They are bearing the brunt of the financial crisis and will have a record deficit of €12bn in 2010 alone. Their tax revenue fell on average by more than 10 per cent in 2009. Municipalities now sit on a total credit debt of €33.8bn. A few days ago Petra Roth, president of the German Association of Cities, warned that some members are “in danger of becoming fully incapacitated”.

One reason for the strain on the public purse is clear: German cities are spending a quarter of their budgets on welfare. These costs have almost doubled since the reunification of Germany – in 2010 they will reach €41.6bn – which is forcing cuts elsewhere. But already “many cities are saving themselves to death”, claims Stephan Articus, the Association’s chief executive. “For citizens this means painful cuts in infrastructure and urban services,” he says.

In the city of Duisburg entrance fees for swimming pools, concerts and theatres are going to rise. Hamburg is chopping the money it spends on urban development and public transport. Stuttgart is raising land taxes. Hannover is set to privatise street lighting and raise the tax for owning a dog.

Still critics accuse politicians of making cuts in the wrong places – cutting services instead of the number of civil servants. Alexander Kraus, the head of a Berlin taxpayer’s association says, “Our cities do not have a revenue but an expense problem.” He says he has been thinking of buying a SUV because of the disastrous condition of Berlin’s streets after the heavy frosts, “The public infrastructure is wrecked.”

Internationally Germany has the image of being an efficient country with an efficient welfare system but much of this could be lost over the next few years. Cities are claiming more money from the state to cover their ever-increasing welfare obligations but this is not the solution. Politicians will have to start concentrating on the core task of community management: maintaining quality of life for citizens, not the number of jobs in their administrations.

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