Subnational finance and investment ten years after the crisis, Event higlights

forums
  • economy
date
15-11-2018

 

Max Kunneman, Financial Advisor for the City of Cologne and member of the EUROCITIES Working Group on Long-term Investments, speaking at the conference

On 12 November the Committee of the Regions and the OECD co-hosted a conference where key developments in subnational finance and investments over the ten years following the crisis were discussed. The speakers provided extensive evidence about the fundamental role of subnational government investments (SGIs), and particularly that of cities, to support investment in key areas, ranging from social services and innovative sectors to resilience policies.  Notwithstanding the fall of SGIs during the crisis, the evidence provided show that they still account for 52% of overall public investments in EU. Yet, to return to pre-crisis level SGI’s should be increased by 12%.

In this respect, Max Kunnemann, Financial Advisor for the City of Cologne and representing the EUROCITIES Working Group on Long-term Investments, shared his view about local governments’ potential to shift towards more effective spending and fiscal sustainability. Discussing the initiative of Cologne on sustainable infrastructure financing, Kunnemann showed that more efficient spending can help local government go beyond limited supply of basic services towards a more extensive infrastructure that exploits the advantage of proximity. This can be facilitated by the introduction of models of financial sustainability that put together financial needs and investment priorities with a long-term vision. This is consistent with the cities’ need to mitigate future risks and foster socio-economic and environmental resilience.

With the on-going financial consolidation imperatives, new innovative public finance instruments are being experimented in regions and cities across Europe, such as in the case of PPPs.  For Joaquim Oliveira Martins of the OECD these instruments should be welcomed but should be used primarily when incentives are consistent with the real needs of the market, and not simply to avoid fiscal consolidation.

The speakers conveyed on the idea that, while fiscal decentralisation consisted in growing responsibilities for regional and local authorities, this did not translate in the provision of more resources necessary to meet the demands. The consensus is that higher investments at the local level remain a priority, but local governments should also embark in more effective budget spending, reaping the benefit of new innovations, such as in the case of e-procurement. Doing more with less is possible, and the evidence shows that there is room to improve competition in subnational public procurements.

For more information and to access the presentations visit the event website