Catalan government to set up independent agency against “AVE effect”

It will be tasked with examining projects earmarked for funding from Europe’s Covid relief package

Catalan government to set up independent agency against “AVE effect” / PERE VIRGILI

The Catalan government is readying an “independent agency” tasked with examining projects earmarked for funding from Europe’s Covid relief package. This newspaper has learnt that the plan will be unveiled “soon”. It remains to be seen what the exact nature of the body will be, as well as what actors will be represented in it. Albert Castellanos, the government’s junior minister of economy, has stated that the “proposal is not final yet” and that the project will also be “an invitation” to the other administrations.

The government plan —which has VP Pere Aragonès’ blessing— involves setting up an independent agency “to assess and follow up on” the infrastructure, training and new tech projects that will be funded with EU cash in the coming years. This new body should be “a structure that is able to coordinate” the various administrations involved in a given project and to establish criteria to rank projects according to their urgency and funding needs. Furthermore, Castellanos believes that it would be useful if “social and economic agents”, such as trade unions and employers’ groups, also had a say, especially in a “consulting” capacity, with the public administration being the decision maker. Castellanos says that “we should be able to limit discretion in political decision-making”.

The junior minister believes that public spending would be more rational if local authorities got involved to prevent most of the cash from being funnelled to large projects, as has happened so many times before. Additionally, Castellanos points out that we already have institutions like the European Investment Bank (EIB) that “require a cost-benefit analysis” for any project. The creation of an independent agency would allow us “to consolidate that practice” and “minimise any risk” that the cash might end up funding projects whose social and economic return is small. The best example of that would be Spain’s preposterous regional fast train network (AVE).

The Catalan government expects to receive €31.76 billion from the relief fund for Spain that was unveiled in July, €2.76 billion of that in 2020. Specifically, the Catalan government intends to spend €16.67 billion on environmental transition projects, €5.78 billion will go to knowledge society programmes, €5 billion to “life economy” projects (social inclusion, bio-economy and culture), €980 million to IT projects, and a further €3,310 million to lending and cross-department programmes.

The brainchild of Cercle d’Economia

The idea of such an agency was first raised by Catalonia’s Cercle d’Economia in a statement issued on 23 July. The independent group emphasised the urgent need for an independent body that assesses “any projects submitted by interested parties, including the administration, in a competitive manner”. The Cercle’s note went on to say that we must ensure that “any projects that receive funding will help to increase the productivity of Spain’s economy”.

Such agencies already exist abroad. A prominent Cercle representative says that “it’s been done in France, the US and Italy, where the committee is led by Vittorio Colao”. Their goal is to establish which projects will have a genuine multiplying effect”.

The Cercle d’Economia believes that the present needs are different from back when large infrastructures were built: “we need to invest in human capital, not public works. We must improve the adaptability of the workforce to handle what’s coming and what’s here already”.

The Cercle believes that the biggest challenge is the fact that “all of this is at odds with a short-term view. People are struggling today and won’t consider what will happen in ten years’ time. But we will never take a leap forward unless we look at it that way”. Their conclusion is clear: “we must find inspiration in what the north of Europe has been doing for 50 years. We have been talking about changing the production model in Spain for 40 years, but it hasn’t happened”.

Since thinking about the future “conflicts with the present time and winning elections, we need a leader who will take this idea onboard”. The same source admits that there are “a thousand legitimate interests” when it comes to handing out European funds, but we need “a transformational meritocracy and an independent body that can select projects that will transform Catalonia, ahead of short-term electioneering”.

The Cercle remarks that, ultimately, the challenge is how to grow the GDP without growing the population: “the bottom line is a key word that is not very attractive: productivity. We need to produce more without bringing in more people. Northern European countries have established that when GDP per capita grows, so do equality and cohesion”.