Is Spain squandering money on public infrastructure projects? Report says yes

Has Spain been squandering money on public works projects? A new study that looked at two decades of public investment would suggest so.

Just the high-speed railway system, known as the AVE, accounts for inappropriate allocations of public money in the range of €26.2 billion in the 1995-2016 period, according to a report called “Approximation to the geography of wasteful spending in Spain: assessment of the last two decades,” a joint project of the universities of Barcelona, Girona, Valencia, Cantabria, Tenerife, Seville, Málaga, Alicante and Madrid’s Complutense University.

There are four main ways in which public money has been wasted: corruption, underutilized projects, useless projects, and inadequate priority-setting

The report, which was published by the Association of Spanish Geographers, estimates that between 1995 and 2016 government agencies spent more than €81 billion on “infrastructure that was unnecessary, abandoned, underutilized or poorly programmed.”

And this figure could surpass €97 billion in the near future, factoring in the amounts that have already been pledged.

The authors of the study said there are four main ways in which public money has been wasted: corruption, underutilized projects, useless projects, and inadequate priority-setting.

The report says that between 1985 and 1995, Spanish authorities misspent the equivalent of 5% of gross domestic product (GDP). Then, during the economic boom of 1996 to 2007, this figure shot up to 20% of GDP. From the beginning of the economic crisis until now, it has come down to around 3%.

Of all the wasteful spending, over a third has gone into the AVE railway system for projects that did not produce the kind of social benefits expected of such investments. There were “too many multi-million-euro train stations, closed lines, stretches that were dropped halfway through construction, unnecessary lines, and cost overruns.”

“All of it was done without a proper cost/benefit analysis, and often on the basis of estimates of future users or earnings supported by a scenario of economic euphoria that was as evident as it was fleeting,” adds the report.

Researchers underscored the cost overruns on the AVE lines connecting Madrid, Barcelona and the French border (over €8.9 billion) and on the Pajares Tunnel (€3.5 billion).

After high-speed rail, airports and seaports are other major recipients of excessive government funds (€9.5 billion). The report finds that “a mere look” at official data provided by AENA, the national airport operator, clearly shows that at least a third of its airports are unnecessary.

To this must be added all the airline facilities built by regional governments “following no criteria other than attracting votes; these facilities are now shut down, lacking passengers or with such reduced numbers of them that they will remain in the red for decades.” Castellón airport, in the Valencia region, is a case in point.

As for seaports, the biggest example of wasteful spending is in the port of A Coruña, in Galicia.

Desalination plants are a chapter unto themselves, representing more than €2.3 billion in cost overruns, inefficiencies or mismanagement in places such as Torrevieja, Alicante, Oropesa and Moncofar. And excessive spending on roads has reached €5.9 billion, according to the report. Of this amount, nearly €5 billion have gone into the nearly deserted “radial” roads outside Madrid, which had to be bailed out by the state.

Regional and local governments have also squandered away €34.6 billion on unnecessary education centers, hospitals, cultural and scientific facilities, parks and major events. The list of big spenders is headed by the regional governments of Catalonia (€9.1 billion), Madrid (€7.7 billion) and Valencia (€5.9 billion).

At the local level, the report mentions unnecessary projects such as tramway lines in Parla, Jaén and Vélez-Málaga; the City of the Environment in Soria, the City of Light in Alicante, the City of Justice in Madrid, the City of Arts and Sciences in Valencia, and the Alicante theme park Terra Mítica.

English version by Susana Urra.