Given the rapid changes our societies are undergoing and the 'short-termist' tendency of many economic and political actors, the need for long-term vision is more important than ever. The implementation of far-reaching global objectives such as building sustainable infrastructure for sustainable investment, fighting climate change or innovating in our resources consumption and in production technologies is not only an absolute necessity: it is also a path, in itself, to recovery from the current crisis on a new basis to avoid its return and ensure the well-being of future generations.
High-level Task Force on investing in Social Infrastructure in Europe
- Publication of the report -
A year ago, ELTI Association asked Romano Prodi to chair a High-Level Task-Force bringing together highly experienced persons from different backgrounds (former minister, trade-unionist, economists, representatives from public companies …) to scrutinize investments in Social Infrastructure in Europe and to find ways to enhance them. On January 23rd, former President of the European Commission Romano Prodi and former French Economy Minister Christian Sautter presented the report at a conference in Brussels to a large audience of stakeholders from the social sector and to the European Commission, represented by Vice-President Jyrki Katainen.
Healthcare, education and affordable housing are crucial basic elements for every single citizen. Ongoing trends such as an ageing population and new technical developments, combined with a backlog of past investments in hospitals, kindergartens, schools, universities or social housing will require additional efforts in all EU Member States, notably in the less developed regions. Today, EUR 170 billion per year are spent on Social Infrastructure mainly by local, regional or national public authorities. Taking into account foreseeable developments, Europe needs the same amount per year in additional investments to adapt Social Infrastructure to future needs. In a context of scarce public resources, this additional effort can only be achieved through the mobilisation of public and private investors.
Although investments in Social Infrastructure have proven highly beneficial for the community, the report points out a continuous lack of investment in the sector, estimated between EUR 100 and 150 billion per year. Because these investments are mostly financed by public bodies, they exhibit a limited risk profile, allow to diversify the portfolio of investors and their volatility is mostly independent from other assets. These strengths should be further highlighted and initiatives should be taken in order to encourage and channel investments in this area.
The report identifies how to shift from the present scenario with a major social investment gap, towards a scenario we define as smart capacitating strategies, by focusing efforts on empowering people. In this context, the report illustrates how major bottlenecks could be removed by - among other things - improving technical assistance, financial and non-financial regulatory affairs and facilitating financing.
Proposals of the report presented by in different timeline horizons (short, mid-term and long -term) and are articulated around three main ideas.
« Labelling » National and European institutions could grant labels to projects according to social efficiency criteria. These labels could facilitate identification and, in turn, the financing of these projects.
« Bundling » projects. As most projects are small-scale projects, requiring a limited amount of investment, bringing them together could reduce the fixed costs and favour their dissemination.
« Blending » financing. In the current state of the economy, financing for these projects cannot come from one single body. Mixing public and private financing and/or using social impact bonds, could facilitate the access of Social Infrastructure to financing, while maintaining their unique benefits for the community.