The German Taxpayers’ Alliance, Bund der Steuerzahler (BdSt) has launched its 2014 edition of the Black Book of local government spending in Berlin. This year the publication focussed on loss-making businesses owned by municipalities, including a failed health spa and a fish farm.
“Despite regular new tax take records, all levels of government complain about funding shortages. But the topic of waste plays no role at all. There’s a lot of untapped potential there,” wrote Reiner Holznagel, president of the BdS in the introduction to the book. Local administrations in Germany run around 13,000 businesses in Germany, and, according to Holznagel, have run up larger debts through mismanagement of those companies than they have in the public sphere, The Local has reported.
Examples include the Ahr Thermal Baths, a leisure centre and spa in Bad Neuenahr-Ahrweiler, which operated at a loss of €800,000 in 2010. The managing company, in which the city government was a minor shareholder, closed the spa forcing the municipality to step in and take over the business. They then spent €3million on the purchase, and a further €7.2million on renovations to the building, all of which was funded on credit. The city government will now have to service the loan with payments of €715,000 a year – and of course their taxpayers are still liable to cover any losses that the business makes.
Meanwhile, the town of Radebeul in Saxony is home to the Hoflößnitz winery, a fully nationalised estate covering 21 acres, and includes a gift shop, museum, bar and guest house. In 2013 it made a loss of €90,000, but that hasn’t stopped the local government ploughing another €1.7million into the refurbishment of the buildings, due to be completed in 2015. The upkeep costs taxpayers another €230,000 annually.
The BdSt has set its sights on everything from the very largest projects – the Berlin State Opera and Hamburg Planetarium come under fire; to the most diminutive – such as the €8,500 one commune spent on a viewing platform less than one metre high.
And, although the book primarily focusses on businesses, it also makes mention of egregious wastes of money, such as the €13,500 one mayor spent on his birthday party (opposition representatives put the estimate at more like €22,000).
Germany’s national debt hit a high of $2.9 trillion in 2011, which then equated to 80 percent of GDP. Although it has fallen back a little – 2013 estimates placed it at $2.85 trillion in 2013, each German citizen still owes over $35,000.
In 2010, German finance minister Wolfgang Schauble wrote “The truth is that a number of European and G20 countries have over the past decades lived well beyond their means. This is even true of Germany despite the fact that it is often considered a paragon of fiscal rectitude.”
Yet this report illustrates that, despite the German government setting new rules on borrowing and attempting to whip the rest of Europe into financial shape, when it comes to spending taxpayers’ money, governments just can’t help themselves.