“We should remove climate-damaging subsidies”

Machnig does not consider new debts to be a priority to finance the traffic light plans. “But I am in favor of removing subsidies that are harmful to the climate first. That should be the first step, ”he said.

The SPD politician referred to a list of the Federal Environment Agency, according to which more than 50 billion euros flow annually as environmentally harmful subsidies, for example for the diesel privilege or the tax exemption for kerosene. “You could start here,” said Machnig.

Read the full interview here:

Mr Machnig, the coalition talks have not yet started, as the FDP and the Greens are already publicly speculating about who will be the finance minister in the future. How do you find that?
The traffic light partners should stick to their previous style and maintain the trust they have built. Personnel debates are not very helpful for the climate in the future coalition. The division of responsibilities should be discussed when it is due and not beforehand.

Isn’t it clear anyway? In the traffic light constellation, the Greens are the second strongest partner, measured by the size of their parliamentary group in the Bundestag, and thus have the right to access the second most important office, the Ministry of Finance.
Another important office is that of Vice Chancellor. It is not specified with which department this is connected. Sigmar Gabriel, for example, was Vice Chancellor as Minister of Economic Affairs and then as Minister of Foreign Affairs. It is crucial that the content and personnel balance in a coalition is right.

This means?
At the end of the day, the division of responsibilities must be balanced. In addition, the partners have to find their way around the thematic priorities.

Is the focus perhaps also so strongly on the Ministry of Finance because the associated financial policy is the biggest hurdle on the way to a coalition agreement?
The general problem is that there have been no specifics in various policy areas. This applies to financial policy, the subject of investments, but also the deficits in the social security systems. With regard to the transformation in the area of ​​digitization and decarbonization, a lot is still unclear. The coalition partners still have a lot of work to do. They have to be much more specific, also and above all when it comes to the question of financing.

Shouldn’t there have to be a cash drop at the beginning of the coalition negotiations?
The incumbent finance minister sits at the table with Olaf Scholz. In this respect, it should be clear how large the financial leeway is. Without clarity about the financial possibilities there will be no serious negotiations.

How can extensive government investments in climate protection, digitization, education and research as well as infrastructure succeed if tax increases are ruled out at the same time?
There are several models that are currently being discussed. The question is how high should the share of public and private investment be? The concept of super-depreciation also needs to be filled with life. What does that actually mean?

You mean the depreciation for investments in climate protection and digitization, which should trigger an economic boost.
Exactly.

What do you think of public investment companies?
I think public companies like Deutsche Bahn can be a way of providing money without breaking the debt brake. Because they would not be included in the calculation. With the good will of everyone involved, something can be achieved.

Do you see any other options?
For example, the Economic Stabilization Fund (WSF), which was set up as a Corona aid measure for companies, could be further developed into a transformation fund. Such a fund could provide companies with the capital they need to promote pioneering innovations. The exploratory paper also mentions KfW, which can secure investments by companies.

There is also a proposal to take on debt in the coming year because the debt brake will remain suspended in 2022 due to the corona pandemic. Would that make sense?
You can do that. But I am in favor of removing climate-damaging subsidies first. That should be the first step.

What subsidies do you mean?
The Federal Environment Agency keeps a list according to which more than 50 billion euros flow annually as environmentally harmful subsidies, for example for the diesel privilege or the tax exemption on kerosene. One could start here.

The pension plans seem a bit half-baked. The pension level should stabilize at at least 48 percent, but at the same time pension cuts should be excluded and the retirement age should not be increased. Can that even work in view of demographic change?
That depends very much on how high the level of employment and economic growth will be in the next few years. And, of course, how the planned stock pension will develop.

But there are many unknowns. The decarbonization of the economy, for example, may be an unsustainable challenge for some companies, with the corresponding consequences for jobs.
That is why we need state support for the climate transformation of the economy. It won’t work without it. There will also be areas that are affected by structural change. It is therefore necessary that there is an active qualification policy in order to give prospects to people whose jobs are threatened. We have a high need for skilled workers on many levels. This can be an opportunity for the future for many employees from structurally weak sectors.

The traffic light negotiators promise a digital breakthrough, but there is no talk of a digital ministry. Isn’t that a little thin?
The digital plans are very vague. That is disappointing given the challenge we are facing. The fact that we have a lot of catching up to do in digitization has already been stated in many papers from previous coalition negotiations. We have to move forward now. Above all, public administration must be digitized in such a way that we can achieve uniform standards across the board and not every federal state goes its own digital path.

Do we need a digital ministry?
I’m rather skeptical about that. The bundling of digital responsibilities is the right thing to do. But whether you need a new ministry for this is not the decisive question.

So far there was a responsibility in the Chancellery.
That was a terribly wrong decision. A minister of state without staff and without assertiveness has taken herself ad absurdum as a model. In practice, none of this has achieved anything and has not given digitization the necessary impetus. So it shouldn’t be repeated.

The left in the SPD there are now four dozen Jusos in the new parliamentary group. Can that be a problem for Olaf Scholz?
I’m not so sure whether so many SPD MPs can be attributed to the Jusos. It is important that a culture of togetherness is established. It must be clear to everyone that a coalition requires the ability to compromise.

Aren’t you worried that the left wing of the SPD might still rebel?
I hope that the SPD as a whole has learned its lesson. The success in the Bundestag election is due to the unity of the party. Anyone who wants to govern successfully as a party should make unity the central element of their own work.

FDP and the Greens together have more seats in the Bundestag than the SPD, so quasi a veto majority. Can that become a problem for Olaf Scholz?
The coalition exists together, or it just doesn’t exist. I assume that all partners have an interest in working together for the entire legislative period. Anyone who speculates on veto majorities risks the end of the coalition. The traffic light coalition should rule in a spirit of cooperation.

Will the traffic light coalition be in place until Christmas?
It is not wise to set a time. Reliability and trust have to take precedence over speed.

Does that also mean: failure is not an option?
Failure is unthinkable. What would be the alternative? You cannot rule with a union that is preoccupied with itself. The traffic lights have to come, everything else is not an option.

More: Financing investments and pensions: Sharp criticism from top economists of the traffic light negotiators.