It’s been an expensive few years for Germany: We’ve had Mr. Scholz’s “double whammy” energy price brakes, a 180 degree shift toward rebuilding military power due to the war in Ukraine and a hefty rescue package back in the early days of the COVID pandemic. Do you have to skimp on Germany’s future viability because in the past, we have been too focused on the present?
A combination of past crises and the insufficient level of investment in the future during the pre-COVID era is limiting our scope for action in this period of dramatic change in the interest rate landscape. I want us to look toward the future. Because the very fact that so much has been left undone is what gives us such wide scope for shaping the future.
There’s a lot of rumbling about crises at the moment: Is there still scope for shaping the future beyond all that?
Crisis management goes hand in hand with efforts to shape the future. If we consider the major effects of the crisis – rising prices for fossil- based energy sources, ending our neglect of our armed forces – then we will see that these were tasks that we would have had to tackle in any case. Perhaps some people might wish we had more time to accomplish them. But for responsible politicians, these are not tasks that we can shirk.
How do you intend to ensure that Germany can make adequate investments in the digital transformation, climate protection and technology to secure its future?
As I explained earlier, we are already investing at a record level through the priorities we have set in our budget. That’s what we can do in terms of public funding. However, we cannot afford to forget that this accounts for only 1 in every 10 euros of investment in Germany – so our primary focus must be on mobilizing private funding. This is why I am working to create better conditions for private investments – for example, through the Financing for the Future Act (Zukunftsfinanzierungsgesetz). With the Growth Opportunities Act (Wachstumschancengesetz) on the other hand, we’re expanding fiscal support for research and development.
Let’s take a concrete example: This Growth Opportunities Act, one of the showcase projects of your ministry, is in the pipeline as we speak. What effect do you hope it will have on Germany’s position as an innovation location?
To keep things brief, I’ll break this down into three points: The reduction of strain on small and medium-sized enterprises, the creation of more incentives for private investments and the provision of better conditions for industry in Germany.
What role will research have to play in Germany’s future?
A big one. Because unlike in decades gone by, administration alone is not enough anymore. To safeguard our future viability, we need to tap into new sources of prosperity. We have the necessary know-how. What I — and my colleague, Bettina Stark-Watzinger – want to do is ensure that we also have the ideal conditions for this.
Let’s talk about AI, to take just one example: Other domestic economies like the USA and China are supporting future technologies through massive investments. Can we afford to fall behind here in Germany?
No, of course we can’t afford to do that. However, I believe that creating good conditions for research and industry is a more effective and sustainable measure than subsidizing individual sectors on a situational basis.
Is technology neutrality more than just a buzzword for you?
If it were just a buzzword for myself and my party, we could have saved ourselves an awful lot of debates within the coalition. But because it isn’t just a buzzword, we have acted on it decisively. In the 90s, it’s unlikely that anyone – especially politicians – could have predicted the technological possibilities that we have today. Why should that be different when it comes to the next 30 years? This is why I am explicitly advocating against choosing one-sided solutions. Then, if certain technologies fail to become established, it’s not a problem – but we shouldn’t jeopardize our future prospects by becoming overly dependent on them.
Education is an important factor for the future: On the subject of child poverty, were you surprised by the outrage that resulted when you spoke out in favor of improving language development, integration,and schools and daycare centers “rather than putting more money into the parents’ accounts”?
If we discount the shrill tone adopted by some media outlets, I found that a lot of people were in agreement with me. My opinion remains unchanged: I think our goal should be to bring people into employment and out of dependence on social security benefits.
Your party colleague, Bettina Stark-Watzinger, has been heading up the educationand research ministry for two years. How doyou think the collaboration between your min-istry and the education ministry is working out?
We are working together closely and with a great deal of mutual trust. Our collaboration has given rise to some excellent initiatives, such as increased funds for education and improved financial education in Germany.
Has the FDP succeeded in preventing the parliament from having a noticeably liberal tone?
The goal of political parties is not to influence the parliament, but to implement good policies for the country on the basis of the knowledge available. For example, the German Federal Ministry of Education and Research (BMBF) has already implemented and launched importantprojects such as a reform of the German Federal Training Assistance Act (Bundesausbildungs-förderungsgesetz, BAföG) and an excellence ini-tiative for professional development (Exzellen-zinitiative Berufliche Bildung). This strengthens the possibility of social mobility in Germany, which is a core element of liberal politics.
Two years in government – it’s half-time for the coalition. What should our “team coach” Chancellor Scholz and his players bring to the field for the second half?
It’s not my job to advise the coach, if we stick with your metaphor. The coalition must resolvechallenges in areas such as migration. Getting our country back on track for economic success is no less important. This is the guiding principle for my actions.
Time for four short questions: What’s your stance on raising the minimum wage?
This is a question that will not be answered by politicians, and for good reason – that’s for the collective bargaining agreement partnersworking in the Minimum Wage Commission to decide.
And on wealth tax?
I am working to reduce the strain on our society’s working middle class. This is where my focus lies. Taken as a whole, Germany as a country already has high taxation levels.
On the inheritance tax reform?
I believe that a further increase in the taxation of the substance of assets or inheritance would be wrong. In many cases, the assets in question are commercial, and many jobs in the SME sector depend on them. However, I do see a need for reform when it comes to the amount that is exempt from taxation. These figures were last set in 2009, and we have experienced significant inflation since then. That’s why I’m open to the idea of a reform – one that increases the tax-ex-empt amount. However, to do this, I need to have the federal states on my side, because they are the beneficiaries of the tax revenue.
And on a sovereign wealth fund for more investments?
Our fund for investments is provided for in the federal budget. In any case, improving condi-tions for private investments is more importantand more effective than new public funds.
Minimum wage increases, wealth tax, inheritance tax, sovereign wealth funds: These are all proposals by the Social Democratic Party (SPD), your coalition partners. How can you defend the future of your partnership when members of your party are already referring to the “traffic-light” coalition as a “Punch and Judy show” or a “red-green lemon press” with your party getting squashed in the middle?
Parties exist to represent the purest form of their political ideals in a clear, emphatic fashion. We in the Free Democratic Party take advantage of our freedom to do just that. It is no surprise to us that the SPD and the Greens are on the left of the spectrum. It was clear from the outset that our task would be to keep the governmental strategy on a middle course. If you consider the actions this government has taken so far from an unbiased perspective, then you will see that we have succeeded in this.
You described working in the traf-fic-light coalition as follows: “We are a government where things really get hammered out. That means there’s a lot of noise, but something still comes out of it in the end.” Chancel-lor Scholz liked this turn of phrase so much that he started using it himself straight away. Of all the things that have “come out” of this government, what are you personally most proud of?
We have provided hundreds of billions of euros in financial aid for our citizens and our economy. Very few people would have thought our coalition capable of achieving this. The Inflation Compensation Act (Inflationsaus-gleichsgesetz) comes to my mind in particular here, as this law recognizes the struggles of our society’s working middle class.
When all the wrangling over crises and budgets is finished with, what do you actually like spending money on as the federal finance minister?
You’re swallowing a tall tale there. I have no problem with using public funds – so long as they’re being effectively invested in the future viability of this country. And I think the best way to do that is to invest in the digital trans-formation, education and research.
And as a private citizen, what do you like spending money on – and if a nice meal comes to mind, will that still be the case when sales tax hits 19 percent in January?
My private life has been the subject of specula-tion often enough already, with varying degrees of accuracy. I would like to keep things that way. To answer your actual question: The reduction in sales tax for the food service industry was a temporary measure originally introduced during the pandemic. This measure was extended by a year at my instigation. But now we are returning to normality.
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