Germany: ‘New budget doesn’t reflect changes in the government’s thinking’

The recently released federal budget for 2024 has left the German rail freight sector questioning the government’s commitment to green goals and rail growth. At first glance, the additional three billion euros might seem like good news; however, the plan has some considerable weaknesses when taking a closer look. RailFreight.com discussed with rail freight associations Allianz pro Schiene and Die Güterbahnen to assess the situation.

Both parties agree that the new German budget for rail contains a decent increase in infrastructure investments–the extra three billion euros mentioned above; yet, it still presents some points of concern that include an unsatisfactory budget to build new infrastructure and a vague plan to use truck tolls to fund rail.

The industry feels cautious: “The new budget does not reflect changes in the government’s thinking regarding rail,” said Die Güterbahnen. Allianz pro Schiene’s transportation policy officer Bernhard Knierim also commented, “the budget is still far away from what we need to make up for the huge investment backlog that Germany has built up over the last years. Furthermore, it falls behind the promises made by the government a few weeks ago.”

Infrastructure investments

Die Guterbahnen has kept some positive notes about the infrastructure investment budgets for the German railway network. For instance, the association deems a positive development that the 2024 budget doubles the funds for ETCS and provides more funds for small and medium construction projects and electrification. “Those provisions are good and right,” commented the association.

Furthermore, Die Güterbahnen underlined that “the rail infrastructure urgently needs to be renovated and expanded, and the government has rightly identified this as the main problem.” However, it also stressed that this budget does not provide additional money for infrastructure expansion after deducting the additional costs for construction. This is a view also shared by Allianz pro Schiene. Knierim said that although the budget for maintenance and repair has increased, it still lacks substantial funds to resolve the investment backlog in Germany. According to Knierim, this backlog amounts to 90 billion euros of investments.

On top of that, just like Die Güterbahnen, Knierim stressed that the budget of 2.3 billion euros for new construction is way too low in relation to the backlog of projects of more than a billion euros which gets even more expensive over time due to the rise in construction prices. The additional 2.3 billion euros by 2027 translate into an extra 300 million euros for new construction in 2024, which Knierim said will be “completely used up by the rise in construction prices”. “That means it would take more than 40-50 years to finish these projects, urgently needed to expand capacities to deal with the growing rail traffic,” he added.

Where are the extra 45 million promised?

Another burning question to address to the German federal government concerns the promise to utilise truck tolls to fund rail. In fact, the government said that it could use a toll revenue of 45 billion euros by 2027 for rail. This would mean an additional 11 billion euros per year for rail. “With this budget, not even a third of this has been made available. This suggests that cuts in other items will offset the additional revenue from the toll. If that is the case, the toll will not bring in as much money for rail infrastructure as previously announced, ” explained Die Güterbahnen.

Knierim from Allianz pro Schiene stated that the industry appreciates that the truck toll income can now be used for other modes of transport as well. However, he highlighted that “if the government is serious about traffic relocation, it is necessary to use the money to expand and modernise rail infrastructure – as it is already typical in Switzerland, for example. He held an optimistic stance that the toll funds would eventually come to rail. “In the draft budget 2024, we don’t see the additional revenue of the truck toll going to other modes of transport on the promised level yet. But we do hope a separate rail fund will be set up,” he explained.

‘We need bigger changes’

Both rail freight associations concluded that the situation for German rail freight could be considerably better. Regarding the truck toll, Die Güterbahnen said that the government’s approach does not ensure more fairness between road and rail, also because many environmentally harmful subsidies that benefit road freight transport are to remain in place.

Allianz pro Schiene agreed, using the example of fuels, which are way cheaper for road transport and less taxed. “There is no fair competition between the modes of transport yet,” mentioned Knierim. He also added that many billions of euros are still going into expanding road infrastructure, while road traffic undoubtedly needs to be reduced.”

All in all, Knierim explained that the situation for rail freight in Germany is still quite difficult. The situation owes to many factors, including the deteriorating infrastructure condition, lack of capacity in critical routes, delays, and labour shortages. On their behalf, Die Güterbahnen mentioned that the German government does not keep the promise to ‘invest considerably more in rail than in road’ and that there is an urgent need for additional investments. “We need bigger changes,” was the closing remark from Knierim, which both associations share as a view.