The chairman of Spanish transportation company Ferrovial, Rafael del Pino, 61, believes the coronavirus deescalation plan needs to be accelerated. The state of alarm, introduced in mid-March in a bid to halt the coronavirus outbreak, has served its purpose, he says, and now it is time to get as many people back to work as possible. He is also keen to see legal stability in tax matters, and believes that the Spanish government should not fast-track substantial changes without prior debate. But if it does, he argues, it should be with a view to building an environment that facilitates the creation of decent jobs for all Spaniards.
Question. How have you been spending the lockdown?
Answer. With my family – my three young daughters and some of my older children – and keeping abreast of the unfolding social and health crisis. I have missed hugging and kissing all of my children and visiting my mother who, at 92, has learned to use an iPad to make video calls. Crises are an opportunity to reflect on life’s priorities; the first serious crisis I had was more than 20 years ago when I lost my wife. Since going through that, my priorities haven’t changed – family, friends, health and work.
Q. How has your view of the world changed?
A. We have seen how unprepared we all were for a pandemic of this scale. The first surprise was how fast borders were closed and people’s movements were restricted across the world. It was an almost simultaneous global lockdown that was unimaginable and which hasn’t happened since the Second World War. We are also suddenly waking up to more nationalism and protectionism and less globalization. This has been apparent in the buying and selling of medical supplies and hospital equipment and may make us rethink which industries and stocks are strategic and which are not. On the bright side, we have seen people, companies and governments showing solidarity with those most affected.
Q. Do you think some of the changes are here to stay?
A. I don’t think there will be any substantial changes in fundamental areas but I may be in denial. Some of the trends that can already be seen may gather momentum, such as more remote working and teleconferencing in place of non-essential business travel; as well as more online commerce and greater use of digital platforms for entertainment. But we all need human contact and so much is lost when the interaction is on a screen or by phone. Once the fear of infection is overcome or a vaccine or effective treatment of the disease is found, our behavior will be much closer to what it has been in the past than what it is right now.
The state of alarm is an obstacle to economic recovery
Q. What should governments do to restart the economy?
A. There are many recipes, and they’ve all been tried and tested. We must maintain legal stability in tax matters, commerce and employment. I would ask the government not to be pressed into fast-tracking substantial changes without prior debate. But if they do, it should be to improve productivity in order to build a more favorable environment for job creation. The aim must be to reactivate the economy as soon as possible. And to do this we need to increase public spending on productive investments, rather than on current spending, as well as help companies so that the destruction of the industrial infrastructure is kept to a minimum.
Q. Is the deescalation being done at the right pace?
A. The state of alarm has served its purpose of containing the pandemic, but it should not be extended further. While I understand the government’s concern, the state of alarm is an obstacle to economic recovery. With each day that passes, more jobs are lost and more businesses disappear, and it will take decades to rebuild the industrial fabric that is being dismantled. It is much more effective to prevent this destruction in the first place. This can be done with alternative health protection measures that prevent or contain new outbreaks of infection based on the principle of test, track and trace, which have proven effective in other countries and are key to speeding up the return to normality until a vaccine is available.
Q. What would that involve?
A. We need to move from a situation of putting the brakes on and containment, which has been effective in containing the virus, to one of putting our foot hard down on the accelerator for economic development. I would ask the government to facilitate the quickest possible return to work. It must be accelerated as much as possible, with safety conditions in place for employees and customers. Every week counts. And in order to create jobs and grow, we must support companies; we must guarantee the necessary lines of liquidity, delay tax payment for companies that cannot afford it and stimulate internal demand. And this is achieved not by increasing taxes, but by reducing them, and by establishing a sensible fiscal spending and investment program.
Q. What kind of investments?
A. It would be useful to invest in infrastructure, particularly in the sectors of transport and tourism. And, of course, in health and social infrastructure. There is no energy greener than energy that is not consumed, so the thermal insulation of homes and offices could be subsidized in order to reduce energy consumption while at the same time creating jobs and increasing the quality of infrastructure. It is also essential to support the industries that have been most affected by the crisis – tourism, transport, aviation and the car industry – as well as to invest in construction and public works to stimulate growth and job creation.
Q. Is it more important to support the companies or the workers?
A. In a matter of weeks, 120,000 companies have disappeared in Spain, as well as 1.5 million self-employed while three million workers have been placed on an ERTE [Spain’s furlough scheme]. Without companies, there are no jobs and we have to support the self-employed and companies of all sizes so they can survive and grow. By supporting businesses, we support workers. Businesses are an essential part of the solution and strong government support is needed. We cannot leave anyone behind, so those without jobs must also be helped, but the key task must be to reduce that need for support by creating jobs. We must do what is necessary to be able, as a society, to offer decent jobs to all Spaniards. If we do not act quickly and decisively, a whole generation of talented young people will go and find work elsewhere.
Q. As the head of a multinational, have you noticed much difference in the way different countries have managed the crisis? For instance, how does the economic situation in Spain compare with the United Kingdom and the United States where Ferrovial has a strong presence?
A. There are far more similarities than differences. The greatest similarity is that they have all locked down the country to a greater or lesser degree, bolstered their health systems and increased the number of intensive care beds... I would say that the biggest difference with the United States lies in their interest in accelerating the exit from lockdown to prevent the recession from worsening. Although unemployment has shot up in the US, I believe their recovery will be faster because they are easing the lockdown in an orderly manner and guaranteeing safety conditions for workers while putting a lot of emphasis on economic development. Unfortunately, every week of additional confinement aggravates the crisis, delays recovery and increases unemployment.
Q. How have you been running Ferrovial for the past few months?
A. Teleworking, with some face-to-face meetings in the office with distance and protection measures. There have been no long work trips – which in our case are abroad – due to quarantines and border closures. The visits to the construction sites are an essential part of my work. They keep me in touch with reality and I learn a lot from the people who are in charge of the projects, so I look forward to getting back to them.
The best way to raise funds is not by introducing new taxes, but by encouraging economic growth
Q. How will the crisis affect the construction and infrastructure sectors?
A. It is too early to say yet. There may be a reduction in regular travel and more teleworking, but not a fundamental shift. I do think international travel and tourism will be affected and, given the importance of tourism to Spain, we must be pioneers and facilitate the opening of our borders and the safe access of tourists to our country. The plans regarding fiscal stimulus should boost demand for public works projects and housing. Spain is a leader in the engineering and construction sectors, particularly in terms of public-private partnerships.
Q. Is there money to finance such initiatives?
A. Money is not an issue right now. There is plenty of liquidity available in the world to make investment possible. All it requires is a sound legal framework and reliable institutions. I am optimistic about the future of the sector and I am sure that all the big players will propose solutions that would be more efficient and respect the planet.
Q. Ferrovial is a major shareholder in Heathrow Airport in the United Kingdom. How can people be persuaded to start flying again?
A. The industry survived and grew after 9/11 [terrorist attacks in the United States], and something similar will surely happen now. But first, we must open our borders, eliminate quarantines and reduce the fear of travel by making airplanes and airports safe and seen as such by users. Once we do that, the demand that is already there will flourish. I have no doubt that we will come back from this, though it may be the business we are in will be slower to do so.
Q. What steps should be taken in the aviation sector?
A. We are making a number of proposals to governments that include removing the need for quarantine by creating safe travel corridors, avoiding unnecessary contact with the widespread use of e-passports and detecting symptoms early by measuring temperatures with infrared cameras.
Q. How will the crisis affect urban mobility?
A. Naturally, traffic fell with the confinement measures, but it is already recovering, and hopefully it will do so quickly. An essential factor is the re-opening of schools because, with children at home, many parents cannot go to work, so the return to school, although delicate from a health point of view, becomes essential if we are to get back to normality. Keeping schools closed will also have a greater negative impact on women as, in many cases, they will be the ones who will stay home to look after the children. We do not believe that there will be immediate substantial changes; rather the initiatives designed to improve air quality and protect city centers will continue to be pursued.
Q. The Services division of Ferrovial is among those least affected by the crisis. Will you press ahead with its sale?
A. The sale of Services is still underway. It’s a strategic decision and has not changed. Covid is delaying the process, but we are not able to say by how much.
Q. What have your priorities been at Ferrovial?
A. We have followed three essential strategies. The first has been to guarantee the safety of our workers, promoting teleworking, using protective equipment, respecting distance, temporarily closing common spaces and imposing quarantines, though unfortunately we have had five people die from the coronavirus among our 100,000 employees. The second has been to ensure the survival of the company in the face of a crisis whose length and depth remain an unknown. Highway traffic has fallen by up to 85% and is recovering; airport traffic has fallen by more than 95% and is taking longer to pick up. Works and services have suffered, though less so, which means we have made sure we have sufficient liquidity by extending credit lines and issuing bonds. And the third strategy has been to collaborate with society in areas where we have a presence to mitigate the impact of Covid-19. We have created the Ferrovial Juntos Covid-19 fund, with a budget of almost €9 million, which has been used to purchase and supply protective material and respirators, to co-finance research for the development of a vaccine and to support various social initiatives, including donations to various NGOs.
Q. What do you think about the proposal to tax large fortunes or introduce a coronavirus tax?
A. A wealth tax discourages savings and penalizes investment, which is just the opposite of what we need right now. The best way to raise funds is not by introducing new taxes, but by encouraging economic growth. The more economic activity there is, the more revenue there is. We shouldn’t be raising rates or inventing new taxes – quite the opposite. There is no tax on wealth or large fortunes almost anywhere else and those countries that had it have abolished it. In France, a country that has been cited as an example, this tax has been replaced by another tax that only taxes the possession of real estate and always at much lower rates than those being suggested here. Perhaps we should do the opposite in order to compete with Portugal and attract European pensioners to buy homes and pay their taxes here rather than elsewhere.
English version by Heather Galloway.