June 03, 2012

Spanish governance is colossally unfit

More about the uncontrolled spending in Spanish local government, this time from the BBC.The local naiveté, and the apparent lack of any higher level control on the spending at all, are breathtaking - and this is only the stuff we know about.

Thus three years ago the mayor of Alcorcon (population 180,000) embarked on a hugely ambitious project. Some 100m euros was to be invested in a world-beating culture and arts centre, complete with nine buildings, three underground levels, and even a circus. But the area where the project was being built is now a sorry sight. Inside, light fittings hang loose and the half-finished futuristic buildings are surrounded by a graffiti-covered corrugated iron fence. A project that was meant to put the local area on the map has instead become yet another symbol of Spain's regional overspending. legal fees and out-of-control costs have pushed the final price of the culture and arts centre to perhaps as much as 170m euros.

"It has eaten up all the town's resources," he says, pointing to how they have been left with 612m euros of debts.

"Even the electricity bills aren't being paid. All the money has been sacrificed to this building."

Many regions in the country owe billions of euros, partly because some local politicians built anything from airports to swimming pools to cultural projects during the boom times. Some of those projects now lie unfinished, empty or inactive. Others were completed as planned. But most of them have one thing in common: they have left big holes in local public finances.

Valencia's City of Arts and Sciences, which was opened back in 1998, still has a budget deficit of some 600m euros, with local media claiming that costs doubled to almost 1.3bn euros.

Here's the killer. Much of the debt held by Spain's regional governments is owed to small, local businesses in their own communities, which carried out work for local authorities and have still not been paid. So the businesses have to cut back and shed employees.

The governing infrastructure and culture just wasn't there. So doubtless there's more bad news to come. We know there's a huge legacy of debt.

Hard to believe that the Spanish infrastructure is now more suited to governing properly.

1 comment:

James Higham said...

The thing is, PS, none of them are fit and that's the puzzle - there used to be halfway competent governments or at least, not wrist-slittingly bad and they've all gone.