Green light for PPP on German motorways?

• Author: Green light for PPP on German motorways?
• Pages: 311-334

FRONTIERS OF LAW IN CHINA

VOL. 14 SEPTEMBER 2019 NO. 3

DOI 10.3868/s050-008-019-0016-2

FOCUS

RETHINKING PUBLIC–PRIVATE PARTNERSHIPS

GREEN LIGHT FOR PPP ON GERMAN MOTORWAYS?

Hartmut Bauer∗, Michael Meier∗∗

Abstract While public–private partnerships (PPPs) have surged worldwide since the

1990s, they have been met with growing skepticism during the last years. A recent

revision of Germany’s constitutional rules on motorway construction and observations

on the use of PPPs published by both the German and the European Courts of Auditors

illustrate this new caution. These two examples fit into a general trend towards a revival

of the public sector, which can be summarized under the cross-level umbrella term

“publicization.” It would, however, be remiss to replace the uncritical euphoria that once

surrounded privatization with a similarly undifferentiated euphoria regarding

publicization. Rather, it is crucial to identify the most appropriate solution for the

fulfilment of each public task from the “toolbox” of publicization on the one hand and

privatization on the other hand in order to ensure the most effective completion of public

functions.

Keywords publicization, remunicipalization, recommunalization, nationalization, rena-

tionalization, public–private partnerships, PPPs, privatization, motorways, infrastructure,

construction, toll, economic efficiency, court of auditors, debt ceiling, economic impact

analysis

INTRODUCTION .................................................................................................................... 312

I. REFORM OF THE ADMINISTRATION OF GERMAN MOTORWAYS ................................. 313

A. Background .......................................................................................................313

B. Government Draft Bill....................................................................................... 316

C. Legislative Process............................................................................................ 316

1. Barrier to Privatization of Motorways and the Infrastructure Company....... 317

2. Public–Private Partnerships on Individual Sections of the Motorways......... 318

∗ Hartmut Bauer, Dr. iur., Dr. iur. habil., Faculty of Law, Augsburg University, Augsburg, Germany; Professor

in Public Law, Faculty of Law, Potsdam University, Potsdam 14482, Germany. Contact: lsbauer@uni-

potsdam.de

∗∗ Michael Meier, ass. iur., LL.B., Bucerius Law School, Hamburg, Germany; Ph.D. candidate and

Scientific Assistant, Faculty of Law, Potsdam University, Potsdam 14482, Germany. Contact: mimeier@uni-

potsdam.de

312 FRONTIERS OF LAW IN CHINA [Vol. 14: 311

D. Modified Reform Law ....................................................................................... 320

E. Impact of the Reform......................................................................................... 322

II. ECONOMIC EFFICIENCY OF PUBLIC–PRIVATE PARTNERSHIPS IN LONG-DISTANCE

ROAD CONSTRUCTION............................................................................................ 323

A. Recommendations of the German Federal Court of Auditors........................... 324

1. Systemic Additional Costs............................................................................. 324

2. Minimal Efficiency Gains.............................................................................. 326

3. Relationship to the Debt Ceiling.................................................................... 326

4. Macroeconomic Disadvantages ..................................................................... 327

5. Shortcomings in the Economic Impact Analysis ........................................... 328

B. Recommendations of the European Court of Auditors ...................................... 329

III. THE “RETURN OF THE PUBLIC”............................................................................. 330

CONCLUSION........................................................................................................................ 332

INTRODUCTION

The use of public–private partnerships (PPPs) in the fulfilment of government tasks

has spread worldwide since the 1990s. In both Germany and China, PPPs have

established themselves in the construction of long-distance roads in particular.1 In the

meantime, however, the euphoria surrounding privatization that prevailed just two

decades ago has noticeably subsided.2 While efficiency advantages and the procurement

of capital attributed to the involvement of private entities continue to be cited as

arguments in favor of PPPs, other scholars warn of additional costs and loss of state

control. The German attitude towards PPPs can nowadays be described as ambivalent, as

illustrated by the most recent reform of the constitutional law on the construction and

management of German motorways which entailed a comprehensive revision of the

provisions contained in Article 90 of the Basic Law (Grundgesetz, Germany’s federal

constitution, hereinafter referred to as “GG”) (see Part I). More can be learned from

observations made by the German Federal Court of Auditors (Bundesrechnungshof) and

by the European Court of Auditors, both of which have recently come to a skeptical

assessment of PPPs in long-distance road construction and administration from an

economic perspective (see Part II). Overall, these developments dovetail with a more

general tendency to return to the public sector which can be summed up with the term

“publicization” (see Part III). If the participation of private entities is to be successful, it is

crucial to identify the appropriate extent to which they should be involved and the most

advantageous combinations of privatization and publicization (see Conclusion).

1 For more detail on Chinese and German long-distance road construction, see YU Wenguang, Praktische

Erfahrungen und rechtliche Probleme mit Public Private Partnership in der Verkehrsinfrastruktur in

Deutschland und China (Practical Experience and Legal Issues with Public–Private Partnership in Transport

Infrastructure in Germany and China), Peter Lang (Frankfurt am Main), at 88 et seq. (2010).

2 Hartmut Bauer, Publizisierung, Begriff – Befunde – Perspektiven (Publicization, Concept — Findings —

Perspectives), 69 Juristen Zeitung (JZ) (Lawyer’s Journal), 1017 (2014).