The government should invest in transport networks that are important for business life, especially in the current recession, when interest rates and costs are low. Even if more debt were to be taken on for the projects, the economic and employment growth they bring about can reduce the share of public debt in the gross national product.
In many industrialized countries' infrastructure investments, the growth effects have been so large that even the use of debt money has lowered the debt ratio. This is evident from the Pellervo Taloustutkimus report on the transport network and national economy published by PTT, which uses, among others, the International Monetary Fund's IMF research as a source.
In the short term, infrastructure projects provide work and increase the demand for related services and materials. In the long term, the reduction of companies' transport costs and movement costs will make economic activity more efficient.
"In Sweden, the benefits of investing in infrastructure have been understood better than us. In the neighborhood, more money is spent on basic road maintenance and especially on investments, also in relation to the size of the transport network", manager Heikki Jämsä The construction industry from RT states.
According to PTT's report, in 2013, Sweden spent approximately 1,1 percent of the gross domestic product on the maintenance and development of the transport system. Finland's corresponding contribution was 0,8 percent. The construction industry RT proposes an increase in infrastructure funding to 400 percent, in order to bring both basic road maintenance and investments to a sustainable level. This means an increase in the level of annual funding of around XNUMX million euros.
A wider comparison of benefits and costs needed
"In recent years, road rehabilitation has focused on the busiest roads. The perspective of the natural resource economy and industry has been forgotten, as the importance of smaller roads is considerable, especially for the business world. The study shows that by removing the bottlenecks of the lower road network, Finnish industry can achieve a total of 50 million euros in cost savings annually," Heikki Jämsä points out.
Based on the report, it is good to learn from Sweden also in the long-term planning of infrastructure projects and the versatile use of financing models.
"We also need to move to an infrastructure program and financial plan lasting at least twelve years. In financing, new types of financing methods must be introduced and the state's favorable loan interest rate must be used more effectively. This is also what the parliamentary repair debt working group came to in its report published at the end of last year," says Heikki Jämsä.
Heikki Jämsä also highlights the need for further development from PTT's report. The profitability of transport infrastructure projects is currently measured by a benefit cost estimate, which mainly takes into account the effects on the transport network and travel times. However, it does not include regional and overall economic effects at all. In order to find out the total benefits of the projects, a new method is needed to evaluate the wider benefit-cost ratio.
INFRA ry, a member of Rakennusteollisuus RT, is one of the fifteen financiers of PTT's research project. The financiers also included, among others, the Finnish Transport Agency and several employer and trade associations.
More information
Director (INFRA ry economic policy) Heikki Jämsä, tel. 050 587 2911, Construction Industry RT
Director (communications and economic trends) Merja Vuoripuro, tel. 040 587 2642, Rakennusteollisuus RT
PTT's bulletin and report Transport network and national economy http://ptt.fi/press_releases/liikenneverkko-ja-kansantalous-suomi-ruotsi-vertailuja