April 17, 2012
This paper evaluates the German National Public Transit Policy from a Canadian perspective. While Germany possesses a decades-long record of federal regulatory and fiscal support for public transit, Canada remains lacking in any such federal policy, and for this reason there may be much to learn from the German experience. Today, Canadian urban areas continue to suffer from vehicular congestion, high levels of GHG emissions, inadequate public transit options, dislocated urban life and woefully underfunded public transit agencies. Congestion in the Toronto area alone has been calculated to be costing the Canadian economy over $6 billion dollars every year (Toronto Board of Trade, 2010). Canada is overdue in finally developing a strong, long-term, well-funded national pubic transit strategy in order to reconstruct its urban areas as well as the way in which residents travel within them.
Canada and Germany are both democracies with federal systems of government, in which the interaction of national, state/provincial and local levels shapes transportation policy (Buehler, 2011a). Germany is comprised of 16 states and has a population of 82.1 million people. Canada is comprised of 10 provinces and 3 territories, with a population of 34.6 million people. Both nations are highly urbanized, with 80% of Canadians and 74% of Germans living in cities (Statscan, Worldbank).
The subject of public transit necessarily focuses on urban populations. Germany’s urban centres are more densely populated than Canada’s, as would be expected from most Western European municipalities. Nevertheless, it must be noted that in World War II many urban centres in Germany suffered enough damage to require the construction of vast areas anew. Such developments however, although not as dense as preserved historic centres, are still not as sparsely populated as post-war Canadian suburbs. Figure 1 displays the population densities of the top five most populous urban centres in both countries.
Figure 1. Source: Demographia
Both of these highly industrialized nations have strong automotive industries, and along with them, high levels of car-ownership. Germany in fact boasts a higher car-ownership rate than Canada with 2008 levels being 502 and 399 respectively for every 1000 residents (International Road Federation, 2008). Notwithstanding this fact, Germany has made significant inroads in demonstrating environmentally sustainable alternatives to car use, and indeed popularizing their use (Buehler & Pucher, 2011a).
In nations with significant corporate or political lobbies such as the automotive or petrochemical sectors—as present in Canada—governments may claim investment in public transit may negatively affect the economy. Germany, a major player in the automotive world, has shown this indeed to be untrue (Buehler et al. 2009, 6), with an enviable national framework in place that supports local public transit throughout the country.
German National Public Transit Policy
The Canadian Urban Transit Association in a 2011 Issue Paper, defined an ideal National Public Transit Policy as one which “integrates the goals, priorities and activities of municipal, provincial and federal governments…(to) guide public funding of transit… (while) identify(ing) sustainable funding sources to enable the necessary operating and capital transit investments” (CUTA, 2011). Germany has achieved this ideal in all of these ways and more.
Germany is one of only three G8 nations that provides both capital and operating funding for local transit in a predictable and stable manner from federal funds. Beyond this however, Germany’s national public transit policy not only has decades of experience with central government involvement in municipal-level transit funding issues, it is equally involved with developing more environmentally sustainable transportation behaviour. In a unique configuration, the federal Transportation ministry is integrated with Housing as well as Urban Development—known by the German acronym of BMBVS. This unique ministry was created in 1998 by way of a merger between the Transport Ministry and the Building and Housing Ministry. Together with its executive agencies, the BMBVS is responsible for over 26 billion euros of public funds—the highest budget of all federal government departments in Germany—and a staff of around 27,000 civil servants (BMBVS1 , 2011).
The objective of this triumvirate is the collaborative project management and funding of synergistic initiatives in the development of interconnected community hubs (Stantec, 2011). The German government has implemented many coordinated policy initiatives that aim to further develop urban public transit operations, encourage usage and develop best practices to be shared throughout the country. Through such concerted efforts, policies are in place that create more appealing public transit while making private vehicular movement more expensive and less convenient (Buehler & Pucher, 2011a). An important reason for Germany’s ability to administer local public transit so differently from Canada is due to its distinctive federal structure. The key players involved with the National Public Transit Policy are namely the three levels of government.
The Key Players
• The Federal Government
Germany, although at first glance similar to Canada in being a federated state, is unique in both the fiscal responsibilities of its central government as well as the existence of a legislative chamber, the Bundesrat, which although in some ways similar to the Canadian senate in being comprised of members from each state, is in fact far more powerful as well as involved in the day-to-day governance of the country and defined by respective state interests. The German Parliament (the Bundestag) and the Bundesrat for decades have been locked in interminable conflict, with the Bundesrat having veto power over 60% of all legislation passed, as well as being required to approve any taxation and redistribution of federal government revenue (Hrbek, 2007, Gunlicks, 2005).
Relative to Canada, Germany is fiscally very centralized; in that the constitution dictates that many more taxes than in Canada are administered by the central government. Attempts at constitutional reform, which seek to reallocate both fiscal and regulatory responsibilities, are being and continue to be negotiated and implemented at this time (Gunlicks, 2005). This has been a difficult politically charged process as some states are much wealthier and more efficiently governed than others, especially in consideration of the reunification of the former communist East with the free market West in 1989, and thus there existing diverging interests regarding fiscally redistributive policies.
Unlike in Canada, individual German states, as well as municipalities, are quite limited in their ability to generate own-source-revenues for funding public transit (Hrbek, 2007, Gunlicks, 2005). For this reason the federal government has a variety of complex arrangements that reallocate nationally collected tax revenue throughout the country, in some instances with differential formulas for the former communist East, which receives reduced amounts in accordance with lower revenue generation (Gunlicks, 2005). This results with the German federal government being involved in aspects of the governance of German public transit policy, which the Canadian federal government is not. Indeed, the German constitution specifically assigns the federal government with financial obligations for local public transit (BMVBS3, 2012). Along with these obligations, the seniormost level of government’s role in public transit focuses upon high-level regulation as well as nationwide transit masterplanning. Following a reform of the German system of federalism in 2007, the federal government’s sole role in public transit issues became even more explicitly defined; the provision of allocated funding to the states as well as overarching national policy-making (Stantec, 2011).
• The 16 State/Lander Governments
Federalism Reform, occurring throughout the 2000s, culminated in 2007 with the transference of certain powers from the federal to the state level governments regarding public transit. This entailed complete responsibility, decision-making powers and budgetary obligations for the provision of public transit (Stantec, 2011). The State government continues however, to be limited in their ability to generate tax revenue for public transit funding, although fiscal reforms are currently on the table to alter this reality. With the overwhelming majority of public transit funding being distributed by the federal government, the role of the state government is to further allocate such monies to local municipalities. State governments also contribute their own funds (under the Passenger Transport Act, or PbefG), which total 9.9% of the total public transit funding in the country (Stantec, 2011).
The federal government in the 1990s made mandatory the regional or statewide coordination of public transit systems, under the administration of state governments. Annual subsidies from state to municipal governments have helped offset the costs related with such coordination—which involve intermodal ticketing systems, scheduling conformity and other forms of standardization. A program with the slogan “one timetable, one ticket, one tariff,” started initially in larger urban centres, is currently being expanded throughout the country to increase the convenience for passengers and thus increase as well, the attractiveness of public transit to the public (BMVBS3, 2012).
• The Municipal Governments
The German constitution specifically forbids municipalities from raising money for the funding of public transit (Stantec, 2011). In contrast to this, local governments are responsible for implementing 75-85 percent of federal and state laws (Gunlicks, 2005). The creation therefore of an obvious fiscal dependency arises—in many ways similar but perhaps more acute—to the Mike Harris Common Sense revolution in Ontario in the mid-1990s which left municipalities suffering from underfunded mandates. In relation to local public transit, German municipalities are required by both the state and federal governments to provide detailed project planning proposals in order to apply for capital funding. The approval of such public transit projects remains at the discretion of the state government. The municipal government returns to the process in the final design stages in order to reconcile the final designs with zoning laws—Planfeststellung (Stantec, 2011).
Elements of Germany’s National Transit Policy Framework
• Fiscal Policy
The federal government of Germany began reallocating a portion of funding for
highways in 1966 (BMVBS, 2012) in order to guarantee a more stable and predictable stream of funding for local public transit infrastructure (Buehler & Pucher 2011b).
Certain German federal taxation policies work to inhibit automobile usage while at the same time fund public transit. The federal gas tax was increased 500% from 1999 to 2003 Revenues from this tax are in part dedicated to support public transit initiatives (Buehler & Pucher 2011a). The per-capita expenditure on public transit of the German federal government when compared with that of the Canadian federal government reveals the dramatic divergence of national transit policy in the two respective countries—with Germany’s central government spending $147 per resident to Canada’s $22. This is illustrated in Figure 2.
Figure 2. Source: Stantec Consulting Ltd.
Federal subsidies are raised annually at twice the rate of inflation, proving Germany’s strong commitment to the provision of stable predictable funding for its public transit sector (Pucher, 1998).
• Stable Funding
The German federal government provides 90.1% of total funding for public transit, with the state government making up the difference (Stantec, 2011). This funding is stable, predictable, and long-term in scope for both operating as well as capital requirements. Canada remains today the only G8 nation that does not have such dedicated central government funding (Hjartarson et al, 2011), and current intermittent federal monies provide merely 12.6% of total public transit funding in Canada (Stantec, 2011).
Public transit initiatives—the construction of fixed links such as light-rapid transit and subways—are highly capital intensive and for this reason require funding strategies beyond the capacity of municipal budgets. Planning horizons for such systems are at times multi-decade—exceeding budgetary and political cycles of all levels of government (Chong 2010, 3). Through the availability of stable, consistently earmarked federal government funding, financial risks to projects are greatly reduced and private capital partners are also more easily secured for Public Private Partnership ventures (Alcoba, Natalie 2011). Additionally credit is more easily available due to the future stream of funding, which the government guarantees and shows a track record of providing. Stable legislated and guaranteed funding also overcomes issues of political risk, in that as experienced in Toronto numerous times in the past several decades, even after public transit projects have been proposed, planned and even paid for, elections may result in abrupt changes in direction and in the long run, a transit system that does not achieve its short, medium or long-term objectives.
• Targeted Funding
An issue in many federated states such as Germany is whether to distribute federal transit funding in equalized proportion throughout the nation. One concern with such a manner of funding is its diminished strategic value and tangible benefit at ground level (Stantec, 2011, Hjartarson et al, 2011). Targeted funding is exemplified with ridership being taken as a key determinant of funding allocations. German federal funds flow to transit networks that attract the most users in addition to certain other measures. This ensures the greatest benefit from limited federal funding rather than small, overall inconsequential, amounts being peppered upon transit infrastructure across the country, while not addressing large capital cost necessities. (Buehler and Pucher 2011a).
• Research and Innovation
The German central government does not merely fund the capital and operational requirements of urban public transit, it funds research and innovation within specific federal bodies that are focused on each of the respective elements of the Ministry of Transport, Building and Urban Development.
The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) is the research-oriented advisory body to the BMVBS (BMVBS3, 2012). Through funding this body, the German central government actively invests in the development and propagation of best practices and transit innovation, thereby increasing future returns on transit funding while enhancing the public transit experience.
Germany is one of a few countries that have achieved high levels of connectivity between modes of transit, both with regard to scheduling as well as technological advancement. Such efforts, through innovative research and national standards, allow for far greater convenience for passengers and attracts more users away from private means of transport (Buehler and Pucher 2011a).
Today, the federal government of Germany requires public transit to be tied to land use planning—with such requirements being linked to capital investment (Stantec, 2011). National funding is provided conditional upon a high level of integration between land use plans and transportation projects. In 1971, West Germany enacted a Local Government Finance Reform Act that laid the foundation for a permanent fixed allocation of funding for local transportation improvements.
Along with the earlier stated constitutional obligations, there exist two national laws that affect the regulation of public transit as well as funding at the national level, the GVFG and the RegG in German acronyms. Since the 1970s, through a variety of reforms, as well as the amalgamation of the East and West German states in 1989, the Federal Government Financial Aid to Improve Transport at the Local Authority Level Act (GVFG) was legislated.
This act specifies the capital budget funding for local public transit as one of two targets for federal funding—the other being roadway improvements. (BMVBS 2012) With regard to operating budget funding, the 1993 Public Transportation Regionalization Act (RegG), stipulates that federal public transit funds go to state authorities to distribute them at regional levels, thus ensuring consistent transit operations in all urban areas (BMVBS 2012).
Aside from funding legislation, the federal government also created legislation during the reunification process that required state governments to coordinate public transit statewide by way of regional administration and networking (Buehler and Pucher 2011a). A 2007 reform of the German constitution resulted in a further redistribution of responsibilities between the federal and state governments with regard to public transit, with the state-level administrations gaining much more control over decision-making and budget management.
Having explored the fiscal and governance aspects of Germany’s National Public Transit Policy, in some detail, certain best practices stand out from the German experience. “Stable, recurring, and flexible” public transit funding from the federal government to the state governments is mentioned by many as something to be emulated for a successful National Public Transit Policy. Similarly, simply making public transit more attractive an option is also something Germany has been quite successful at. Germany outdoes many other countries with its federal requirements for not only long-term, strategic transportation planning, but also inter-modal integration and service standards. These are considered as necessary for not only constructing and enhancing public transit networks, but for drawing the public away from car dependency.
In this regard, the combining of such federal requirements to funding is said to be an easier and more efficient way to gain municipal level compliance, than efforts that punish non-compliance, (Stantec, 2011) and in the same manner Germany excels at non- punitive measures to draw more users to the public transit systems, such as disincentives for automobile use in the form of discounted monthly and annual pass pricing, combined with superior provisions of transit which do not cause negative reactions from the public (Buehler, 2011a). Land use planning integration, both horizontally within the BMBVS as well as vertically with funding requirements necessitating the enhancement of public transit by complementary land development makes the German example unique in certain ways. While collaboration is explicitly coordinated at each level of government between environmental plans, transit and housing, neighbouring jurisdictions as well are mandated to engage with one another to create efficiencies and mutually beneficial transit results, whether at the state, regional or city level (Buehler and Pucher 2011a).
Relevance To Canada
Even though this paper has contrasted German and Canadian national public transit policies, with regard to funding, it is important to note that in fact both nations contribute the same proportion of their federal budget to public transit. With Germany’s public transit expenditure being 0.33% of their GDP and Canada’s 0.36% (Stantec, 2011), it is clear that within the G8, Germany and Canada do compare well. Indeed on this measure, they are the closest of all G8 nations. The difference of course is the level of federal government involvement in setting transit policy and funding transit projects.
While Germany has federal legislation that stipulates a high level of integration between land use planning and transportation projects, in Canada municipalities are merely required by the federal government to complete an Integrated Community Sustainability Plan (ICSP) for federal gas tax transfers. The ICSP does not require stringent integrative planning policies and due to what Stantec Consulting (2011) refers to as ‘administrative fragmentation’—the lack of coherent and collaborative policy making between the three levels of governments, in conjunction with transportation and land use authorities—results in ineffective municipal level results from federal public transit funding in Canada.
Germany’s BMBVS has the largest budget of all federal government departments (BMBVS1 , 2011). With this monetary discretion comes a great deal of political influence. A challenge Canada may encounter with any implementation of a strict, targeted funding program is the desire for political expediency faced by politicians who may lack the courage to disappoint certain constituents. This may in fact reveal an important secondary benefit for federal legislation explicitly specifying the quantity and destination of national public transit funding.
Besides the mere provision of the funding, which in itself is currently lacking in Canada, the ability to overcome the ‘administrative fragmentation’ found in both the provincial and moreso municipal levels of government is a very significant lesson to take away from the German experience. Public transit is one aspect of planning which, it may be argued, is more effectively administered as well as funded from higher levels of government. Rather than tens or hundreds of cities making individual decisions regarding what to do with relatively small amounts of transit funding, Germany shows than more central bodies with larger financial resources can affect dramatic changes in each local jurisdiction in turn. Higher-level control allows for clear, transparent and accountable transit planning while achieving efficiencies both in monetary as well as streamlined decision-making terms.
Today, Canada’s federal investment in public transit has increased from nothing to $1B in annual funding (Stantec, 2011) although this is not permanent, nor predictable and there exist no current plans to develop a national public transit policy. It is also notable that $1B is a very small sum when considered at a national level and in light of the costs involved in building and operating public transit systems. Hopefully this short exploration of the German National Public Transit Framework conveys the potential of improving the situation in Canada and learning from the success of a more centralized framework, which has been recognized and admired throughout the world.
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