Speech by President of the Government at presentation of Extraordinary Investment Plan in Highways

Madrid

Madam Vice-President of the Government, ministers, ladies and gentlemen, dear friends,

I would like to start this speech by thanking you all for attending this event that the government considers to be of great importance for improving infrastructure in Spain.

As you know, our country has an exceptional asset in its infrastructure: we stand as a benchmark in high-speed railway travel, the second ranked country in the world in terms of the number of kilometres in service and our companies have found the way to export their model to the rest of the world through such emblematic projects as the high-speed railway line between Medina and Mecca. We are working on terminating some great railway corridors, essential for the structure of the country; our airports have set a new record in passenger numbers and we are boosting land-sea access in Spain, as can be seen in the Land-Port Access Investment Plan and the reform of the stevedore sector.

In short, we have wonderful infrastructures and we want to continue improving them. We want to do this based on the experience of other European countries; we want to do this by involving the private sector and we want to do this whilst maintaining our commitment to reducing the public deficit.

Spain has overcome the worst economic crisis in our recent history, a crisis which led us to lose 10% of our wealth, as measured in terms of GDP, and left 3.8 million more people out of work; a crisis that seriously endangered our international standing, as measured by the happily forgotten risk premium, and a crisis that also forced the public authorities to adjust their financial investments through their budgets to meet the much-needed fiscal consolidation.

And now that we have managed to come out of the crisis, and now that we are heading up growth and job creation in Europe, and now that we are on the verge of exiting the excessive deficit procedure, we are in a position to give a renewed boost to investment in the infrastructure that our country needs; a boost to the productive sector, which has still not fully realised its recovery and job creation potential.

We are going to do this, we are going to give a boost to investments in road infrastructure, a boost of 5 billion euros, with actions on 2,000 kilometres of highways over a period of four years, between 2017 and 2021, and with maintenance contracts over 30 years. These are the key figures of the Extraordinary Investment Plan in Highways (Spanish acronym: PIC) that we present today, and I would like to highlight that the 5 billion euros allocated to this plan is an investment effort that is six times the spending capabilities allowed by our Budget in a year.

So, and this is particularly important, we are going to set this plan in motion without charging this expense to the Budget. Furthermore, we are going to do this by calling for construction companies to take responsibility for the maintenance of these infrastructures for a period of 30 years, with the same levels of quality and safety as on the day of their start-up. This guarantee of maintenance is based on the formula of "payment for availability" that we will apply in this Extraordinary Plan.

The formula of "payment for availability" is a mechanism of public-private collaboration in infrastructure investment that has already proved to be successful in Europe, where it has gone from representing 5% to more than 90% of projects in Europe over the last 10 years.

The Investment Plan we present today will allow our highway infrastructures to be improved thanks to a financing mechanisms that is not only based on public-private participation, but is also backed by the guarantee of European financing under the best conditions through the European Investment Bank. This benefit of preferential financing is in addition to the possibility of the planned projects contained in the PIC of receiving financing under the umbrella of the Juncker Investment Plan. The European authorities have received this application with great interest.

I would remind you that the Juncker Plan, also known as the Investment Plan for Europe, involves setting up a fund created to guarantee investments, covering certain risks and thus facilitating the financing of infrastructure and transport equipment projects. These projects should offer added European value, maturity and a good return.

We are talking about public-private collaboration projects with long-term financing under the best financial conditions and with the backing of the European Union. In short, we are talking about making the implementation of the necessary investments compatible with meeting our budget consolidation targets. This is also part of being an active and responsible partner in a joint project as important as the European Union. We comply but also count on its support.

Ladies and gentlemen,

Let's not forget that in Spain, a total of 90% of passenger transport and 93% of goods transport takes place on the roads. We have a great highway network, with 26,000 kilometres of State roads and no less than 16,281 kilometres of high-capacity roads. This is an achievement we have managed in just a few decades and one that has transformed our country.

We travel by road and this makes the conservation and improvement of highway infrastructures an absolute necessity. Furthermore, we need to complete and improve the current network on an ongoing basis, reduce existing bottlenecks, condition infrastructures to the new parameters on road safety and noise levels, and boost sustainable infrastructures whilst reducing CO2 emissions, through rigorous planning.

Our country is the third most popular tourist destination in the world. Last year, we were visited by 75 million inbound tourists and the trend in the first six months points to us setting a new all-time record again this year. 18% of these tourists come to our country by car, whilst the vast majority who arrive by plane then travel around the country by car once here. National tourism chooses car travel in 85% of the trips made within Spain.

All of these are good reasons for having a top quality State highway network that is well maintained.

Ladies and gentleman,

In addition to this, the investment in infrastructure is a powerful driver of economic growth: we are talking about investments that generate jobs and create opportunities. Good infrastructures boost the competitiveness of a country and, in turn, promote its territorial structure and cohesion, facilitate the accessibility and connectivity of companies and consumers, and improve the quality of life of our citizens. In short, investing in necessary infrastructures, such as in improving our highway network, is an efficient medium- and long-term expense, and a responsible government must always think in the medium and long term.

This exercise in responsibility leads us to combine the effort in investment in infrastructure with fiscal consolidation policies that have led us to recoup the standing we had lost. It now falls to us to meet the 3.1% deficit target set for this year, 2017, and continue reducing the deficit in 2018 to stand at around 2.2%.

The Extraordinary Investment Plan in Highways through public-private collaboration will allow us to meet this dual aim in investing in highways whilst strictly meeting our budget targets. This is a plan which will complement the annual investment provided for in the General State Budget and will help us to further boost the economy and improve mobility throughout Spain.

We will principally allocate the 5 billion euros under the PIC to four areas: first, to completing the stretches of the Trans-European Road Transport Network that are still outstanding; second, to resolving the bottlenecks that exist in the current highway network; third, to improving and adapting the main existing motorways to the requirements of new legislation on road accidents, noise pollution and CO2emissions, and fourth, to ensuring the maintenance of all those projects that are carried out, since everything undertaken must be maintained in perfect conditions of service for the 30 years of the concession.

The specific actions contained in the PIC, which provide for investments in more than 20 large corridors, will be presented after the summer. We will shortly look in further detail at the specifics of the plan with the associations ANCI, CNC and SEOPAN, whose support is fundamental for this plan to reactivate the sector and create jobs.

We are sure that the impact of the planning, design, construction and implementation phase of these new investments in highways will in itself give a major boost to the process of economic recovery. Furthermore, all the actions proposed have passed or will have to pass a preliminary filter to ensure a minimum return, and a clearly positive profit/cost ratio. They have also passed or will have to pass a strict assessment of possible environmental impact that guarantees sustainability.

Ladies and gentlemen,

An investment of the magnitude we are presenting today offers a multitude of additional benefits. The PIC will cover more than 2,000 kilometres of Spanish highways, with additional investments to those provided for in the Budget. These are investments that will not only mobilise the construction sector; they will also improve road safety on our highways, reduce the accident rate and the mortality rate; they will help us combat climate change, since we estimate that the improved quality of the highway network will lead to a reduction in CO2 emissions of approximately 6 million tonnes a year, reduce the noise on those routes that pass close to populated areas and are investments with a high fiscal return. We know, as do you, that a 1-euro investment in spending on infrastructures generates almost 0.5 euros of fiscal return, and hence we estimate that this plan will lead to a fiscal return of some 3 billion euros.

This plan will also have a major knock-on effect on employment in the construction sector in Spain. The commitment to infrastructure presented today will not only lead to improved connections and quality of life, but it will also give a major boost to activity and employment in a strategic sector for the Spanish economy. Experts estimate that the implementation of this plan will lead to the creation of approximately 48,000 direct jobs during the construction phase, 30,000 indirect jobs and 72,000 other jobs triggered by this plan; that means we will manage to create some 150,000 jobs during the investment phase. Then, during the maintenance and operation phase, some 12,000 direct jobs, 8,000 indirect jobs and 19,200 other jobs triggered under the plan will be created. Accordingly, we can add another 39,200 jobs during this period. We are talking, in total, about an employment impact of 189,200 jobs.

Ladies and gentlemen, I will draw to a close now.

We are faced with an historic opportunity to launch an Extraordinary Investment Plan in Highways though public-private collaboration. We are in a position to take advantage of exceptionally low interest rates, the guarantee of European financing and additional backing under the Juncker Investment Plan. This plan will allow us to complete, improve, renew, operate and maintain a significant part of our exceptional highway infrastructure system whilst further enhancing the thriving economic recovery we are now seeing, which is giving rise to us enjoying economic growth at a rate in excess of 3% for three straight years. I know that this is a goal we all share, because it benefits everyone.

We want to see the Spanish economy continuing to push on quickly down the path of recovery, a path that under this Extraordinary Plan will transform Spain into having the best high-speed highway system.

I will end now, ladies and gentlemen,

The government continues to govern, that is its obligation and that is what all the Spanish people want. This plan is very important for our future. We are talking, I repeat, about an investment of 5 billion euros, which will generate wealth and jobs, and which will be the result of collaboration between the government and Spanish society.

I would like all the public authorities to work together so that we can grow more, create better quality jobs and improve the well-being and wealth of people.

What we are doing today is in sharp contrast with what is happening in Catalonia, with a regional government engrossed in its own quarrels. Today we have witnessed yet another authoritarian twist in which it has broken the law and the rules that we have all enacted together. After exerting pressure on the media, the opposition, the regional police force, public servants and the local councils, they are now doing so to their own party. If they are pressurising their own party, what wouldn't they do to everyone else? What is happening shows a government that works against the general interest, against the people of Catalonia and against Catalonia itself. Today they purge those in doubt and radicalism triumphs. What kind of dialogue do they want with this kind of conduct?

I repeat what I have said, and say once again to all of you that the Government of Spain will be up to the task. You can rest assured of that.

Thank you very much for attending and for your attention.