2023 Annual report on Federal Financial Management

Despite the current difficult budget situation, the Federal Government (Government) spends billions of euros for tasks which, in principle, fall within the remit of state governments. Here are some examples:

• The Government failed to appropriately involve the state governments in funding economic aids, such as in the case of the COVID-19 support programmes for businesses and the assistance in cases of hardship during the energy crisis (No. 3).
• For 25 years, the Government has supported higher education under the umbrella of “EXIST-Gründungskultur” (culture of entrepreneurship) even though the state governments would be responsible for that task (No. 7).

The Government has to be more thorough in providing evidence of the need and efficiency of its projects and comply with the requirements of budgetary law. For example, the Federal Foreign Office purchased a park-like residential property with expensive features in Brussels for almost €8 million without providing any evidence of its need and without complying with the principles of efficiency and economy (No. 4).

In the area of communications infrastructure, the Government also could have avoided unnecessary expenditure by means of an accurate needs assessment: For more than 18 months, high-quality IT equipment worth half a million of euros have not been used and have become obsolete in the warehouse (Nr. 5). The Government plans to construct new and upgrade several existing federal roads even though there is no need (No. 15) or the conditions have changed significantly and the costs have increased considerably (No. 14).

The importance for the German Armed Forces, called Bundeswehr, to set the right priorities and to adequately coordinate procurement projects is underlined by the premature purchase of new machine guns (No. 17) and also by the termination of procurement activities in the case of much needed mine countermeasure vessels (No. 16).

The money used for the machine guns of which some had for years not been in a condition to be used as envisaged could have been spent better: for much needed, readily available items of equipment or arms. The Bundeswehr should also have closed any gaps between military requirements for new mine countermeasure vessels and their affordability in good time. This would have prevented project termination and the expensive interim solution: to poorly modernise obsolete vessels.

We also identified room for improvement in the areas of climate action and the implementation of Germany’s Sustainable Development Strategy: For example, the Government promoted alternative drives in rail transport even though the greenhouse gas savings that this funding programme can achieve are actually very low. This applies in particular to rolling stock with hybrid drives with diesel engine funded with €94 million that are not free of emissions (No. 23).

Furthermore, the Government needs to increase its efforts to ensure that the business activities of Deutsche Bahn AG are targeted to meet Germany’s sustainable development goals. This includes, for example, the greenhouse gas balance of Deutsche Bahn AG and the barrier-free access to long-distance trains via the platform (No. 12). The Government needs to urgently establish an energy data management for the federal buildings that has long been overdue in an efficient way to ensure an energy-efficient use (No. 22).

The Government also needs to act with regard to the revenue side. For example: The Government should ensure that the competent public bodies commit to implementing their measures. If not, the European Recovery Fund risks to cause revenue shortfalls worth billions of euros (No. 2). Furthermore, shortfalls in tax revenue caused by tax-free refunds made by the employer that have so far often not been taken into account need to be avoided in income tax assessments (No. 26).