All right, welcome to the Neuvottelija channel, and today we're talking about a hot topic — trams, specifically the Vantaa tram. Joining us for the first time, Jouko Jääskeläinen — you're a deputy city councilor in Vantaa, but a very long-serving Member of Parliament for the Christian Democrats (KD).
Welcome. Yeah, thanks. I've done four terms in Parliament and nine as a councilor, and now it actually feels like a relief to watch from the sidelines — maybe shout a bit from the front row about how things are going over there, it's a nice change for once. But you can reflect on both national decision-making and especially Vantaa's decision-making going back decades. So there's a bit of a mirror being held up here.
Well, that's great. And then Petri Roininen — you've been on the show, what, a million times now. I can't even keep count anymore, but welcome back again.
Thanks so much. Thanks so much. It's great to be back, and it turns out you've got a Vantaa connection of your own. In one episode you mentioned you're proud of your Vantaa roots. Yes. Hakunila's always close to my heart. Yeah. Do you remember when you go to Vantaa?
Ah right. There was something like — wasn't it that you go swimming with your family at Flamingo sometimes, and I've heard you say you go to Northern Finland. Yes. Yeah. So, during the autumn break, sometimes we've been too lazy to buy flights south, so we go on an 'exotic' Northern Finland holiday and spend a quality weekend at Flamingo. This is very much the Helsinki investment banker's perspective — Helsinki is basically 'the south'
and everything else is 'the north.' But I also want to bring up another urban legend here too.
You can come skiing in Hakunila next winter—
I mean, there's this really bad English joke: 'cross country skiing is only fun in a very narrow country.'
So those long-distance treks don't really inspire me. I like downhill skiing more. But I want to quote Käärijä (the Finnish singer) here. Käärijä did a cover of 'Ylivoimainen' ('Unbeatable'), and it goes like: 'Oh, I'm from Vantaa' — and it's actually a pretty catchy song. And then there's this kind of bleak line in it. It says that not even... doesn't even go here—
the metro doesn't even come here. And isn't that kind of a sign of a real big city?
This tram thing — well, we've got 'Stadi' [Helsinki] and the tram, 'Spora,' runs there. Then we've got Tampere — speaking as a Tappara (the Tampere ice-hockey club) fan — where they got the trams running reasonably well. In Turku even the funicular doesn't seem to run properly, so let's leave their project out of it. But why should Vantaa get a tram? For a moment there I thought, when you started off like that, you were going to ask us to sing — but thankfully we were spared that. So yeah, it's a good question — why, why should—
—get a tram. You have to remember that Vantaa already has rail transit — a couple of lines running east-west, and, sorry, a couple running north-south, and then also east-west — so in a way, the transit-demand argument doesn't really hold up as the main idea, which suggests there must be other factors, other reasons behind it. So, Jouko, has this been some kind of decades-long dream for Vantaa residents? No, in my opinion — in my opinion this—
—has really only come about over the last, say, twelve years or so. I don't know what's been discussed in the back rooms, since I'm probably not one of those invited into the inner chambers beforehand. But my sense is that this is really just a twelve-or-so-year thing. In [20]19 it came up for a vote in the city board for the first time, and I was already against it back then. But when it comes to this tram and transit—
—I understand the Tampere case pretty well. I studied there from [19]71 to [19]78 and left in [19]80, heading south from Tampere — south, meaning here. The whole shape of that city is different. It's exactly the kind of shape that supports a tram running east through downtown and out west.
Vantaa doesn't have a grid-plan downtown, so by some people's standards this isn't even 'a city.' And we're pretty spread out, so I've always said you really shouldn't compare Tampere and Vantaa directly. Tampere's starting point is that it has no commuter rail — Vantaa does. So these are two completely different starting points, which means—
—in Tampere, the tram connects Hervanta to downtown, a link that didn't exist before, or the same going west. In Vantaa, on the other hand, commuter trains already run every five or ten minutes. So in a way, transit capacity isn't really the central issue here. And in fact, originally, back in the last decade, the experts' recommendation for developing transport wasn't a tram at all — it was—
—electric buses, an electric bus network, which is flexible.
Right. But just a little aside — there's that South Tampere junction to the Nokia Arena, so when HIFK fans come from Helsinki to the Nokia Arena, they can get there in their good shoes. Yeah, they can get there just fine by bus. Yeah yeah. But maybe there was a somewhat similar debate in Vantaa — the Helsinki-Vantaa thing — that we need something like the Arlanda Express, or a Heathrow Express
—a proper metropolis needs that rail link, a train — well, we already got that.
Yeah, it's a bit slow, but it's there — you can get from the airport to central Helsinki by train. It works. But here's the thing: back when this project was first pushed forward, ridership — meaning how many times a day someone boards the tram — was estimated at roughly double what it is now. So in a way, that ridership rationale has quietly disappeared from the picture, and now—
—the tram, its defenders now think of it more as an urban-development project — that this and that will spring up around it. Yeah. And they haven't just been thinking about it, they've gone ahead and started blowing up Tikkurila. Apparently, in this vision, Tikkurila is now Vantaa's heart, for better or worse. And then it runs out to Martinlaakso, and the other end is of course the airport in this vision. In between, you just have to build the new Vantaa.
Yeah, so Tikkurila is Vantaa's heart, and right now it's bleeding a little.
Right, so people there probably wonder every day whether this has something to do with the tram. I think that thought comes to mind when you're walking there, or trying to drive somewhere.
Doesn't it relate directly — that they've gotten ahead of themselves there?
Yeah yeah. The preparatory work has, so to speak, already started, and they've gotten way out ahead of themselves. And actually, today's news is that for the first time, they asked what Vantaa residents actually think about this tram. So, what do they think?
Well, the result was something like this: they gave four options — scrap it, postpone it, build it as the 'torso' version, or put in more money and build it to the original plan. Before we go on, explain what this torso plan is, because that's raised some eyebrows too. The torso plan was that the airport tram wouldn't actually reach the airport — it would stop a kilometer and a half short, at Aviapolis. And you even came up with a name for it? Oh yeah,
I came up with a name for it: the Patikka-Ratikka (the 'Hiking Tram') — the idea being that you take the tram to Aviapolis and then hike the rest of the way to the airport, that's where it came from. But in a way, Vantaa residents' thinking here was actually pretty clear-cut: 76% felt the project needs to be put on the brakes — either scrapped entirely or postponed. And one quarter felt it should go ahead either at full scale, or as the truncated 'torso' version,
—but that 76% figure was pretty clear-cut. And what was interesting was that SDP (Social Democrat) and National Coalition Party voters were roughly in the same place too — about three-quarters. So now SDP and Coalition Party councilors get to think about whether they'll vote in line with their own voters' opinion, or against it.
Yeah, just to clarify, this is being recorded on Friday, November 7th. So this will likely become clear soon, since the first decisive moment has already been decided. So there'll be, like, two possible voting situations coming up, but there might still be a chance to influence it. So if the public's will is that clear, it really ought to be respected and taken seriously.
And public awareness of this has really been growing the whole time. Because back in [20]19, when I was already critical — I even opposed it in the city board, and one other person from my group backed me there — what I had in mind was a sensible investment, a broader look into the electric-bus option, and it was always somewhere in the back of my mind that the economy wasn't exactly booming globally back then either, and that things could get—
—economically tougher, which is challenging for big investments like this. And sure enough, without my knowing it, along came COVID, and then that horrific, appalling war in Ukraine, and now, economically speaking, there could still be surprises in the air. We Christian Democrats had this position the whole time: let's really, seriously hit the brakes a bit and take—
—some time to think it over and so on. But now that people have seen the financial exposure involved for the municipal budget, almost 50% are saying a flat no. So people's awareness has clearly grown.
Yeah. And before Petri jumps in, let me add one more correct observation: there wasn't really room to spare, and unfortunately Matias Mäkynen wasn't right that interest rates would stay permanently negative or at zero — money really does cost something after all. Yeah, money really does cost something. But indeed, this project isn't the same one the previous council decided on. Vantaa isn't in the same financial situation. So what's happened is the project has shrunk, it's become the—
—'torso' version. And it's grown by another 100 million or so. Meanwhile the city of Vantaa's finances have deteriorated fast. So the ability to carry out a megaproject like this has weakened, and now, like Jouko says, Vantaa residents have woken up to look at this, and three-quarters say 'no thanks' that strongly. So, in a way, so many things have changed here that now, in my opinion, every councilor should have the chance—
—to reassess this calmly, rather than have it forced through. If you think back to [20]19, consider how much more remote work there is now, which of course ties back to that awful, unpleasant COVID business. Our whole thinking on this has been completely upended, and the ridership figures being measured now are clearly lower than at the start — clearly lower than originally projected. It really makes you wonder — that number could actually be even higher if it weren't for—
—this option [remote work]. Yeah. Teams and similar tools became everyday tools right in this period. And indeed, if ridership — meaning tram usage — has, by some estimates, dropped by half, that lines up remarkably closely with, say, the state's remote-work guideline of 12 in-office days a month. And if we keep going with the rational reasons rather than just the emotional side, then think about how cities' cash flow has—
—weakened or changed, because the wellbeing services counties took away, what was it, 12 percentage points or so of tax revenue, and Vantaa was left with under 7%. So in terms of cash flow, there really isn't a lot of room to maneuver. It used to be that healthcare spending would run over, and it'd get covered through cash flow the following year — but the margin we're living in now is pretty narrow.
Yeah, that's a really excellent point.
And at the same time, employment services were shifted from the state mostly down to the municipal level, which, at least in this cycle, has been a fairly big negative.
That's a really tough one for us in this cycle, because now unfortunate unemployment is really piling up on top of it. And on top of all that, there's one more really big, fundamental question: when we talk about the tram costing 750 million euros, that money doesn't buy you a single tram car. That money buys you the tracks.
Right, that's the price of the tracks. Then if you want the actual trams and cars, plus a depot for them, that costs extra — a few hundred million more. So altogether we're talking about a billion-euro project. And what's extremely odd about the decision-making here is that elected officials are being pushed, at breakneck speed, into making a decision about the—
—tracks. Hmm. But the decision about the trams themselves, and the 100-million-euro depot they need, isn't being made as part of this. I don't know how an investment banker would look at an investment like this, where you build the tracks but decide on the actual vehicles some other time. Yeah. And then you look at the mess on the Helsinki side over this — Škoda Transtech versus the Swiss company Stadler — where it went right back to square one. We'll get into
that same mess in just a moment. And I have to say, when these figures are shockingly large — both the rail project and the vehicle situation — if the chips on the table come in increments of 100 million, and that's not even counting the last stretch of the Patikka-Ratikka — because if you actually wanted to build that final kilometer and a half properly, with all the trimmings, you'd need to build bridges and probably bore tunnels — then that's going to cost—
—really a lot, just for finishing that last stretch. It's such a strange situation, because alongside this tram decision, a three-year financial plan is being drawn up at the same time, and in that financial plan they're debating things like whether we should close the libraries on Sundays, because we'd—
—save 20,000 euros a year doing that. And then, on the other hand, we've got this billion-euro pot here, where this investment, along with other factors, pushes the city's debt up to two billion euros. Which means the interest costs alone run to 60-some million a year. And meanwhile we're debating 20 grand on libraries.
And then, if we raise a bit of an emotional question, which is also an economic one — what's Vantaa's image? Vantaa isn't Helsinki, after all. And for all that, it isn't Tampere either. I actually lived here for a short while back in the late [19]60s. Maybe some of those impressions have stuck in the back of my mind.
Our old name was 'Helsingin pitäjä,' a rural municipality. And now, if you think about what kind of taxpayers would bring us a bit more — I don't mean 'good' taxpayers, I mean the ones who bring in a bit more in tax revenue than your average good Vantaa resident — we're all good, of course — well, this tram isn't going to do that. I doubt anyone would even claim that the nearby housing stock, which is apartment blocks, is going to be—
—as attractive as that old, ancient memory of 'Helsingin pitäjä,' the rural municipality, with detached houses and nice living. This is going off in another direction now — but here's a good one — since Käärijä did that 'I'm from Vantaa' song, and since Vantaa used to be 'Helsingin maalaiskunta' [Helsinki Rural Municipality], I could write a song called 'I'm a Maalaisliitto man' [a member of the old Agrarian League].
Let's not drag politics into it up there in Northern Finland.
Exactly. But the situation right now is that the Christian Democrats, the Centre Party, and the Finns Party have proposed sending the whole project back for further preparation. And at the city board meeting at the end of October, I made that motion on behalf of the three parties, and four—
—members, out of the board's 15, backed it, and we lost the vote 4 to 11. The discussion continues this coming Monday, and sending the project back for more preparation — or even scrapping it — would really seem like the only sensible solution right now, given that the city's finances, the project costs, and residents' attitudes have all changed. So, that's really how I see it. But then, maybe a word in its defense — I haven't gotten as deeply into this case—
—as some people, but I'm coming at this from a gut-feeling angle, which is always really sensible with billion-euro projects. Maybe a bit more on those numbers though: we Helsinki folks are apparently chipping in something like 15 million as an initial cost contribution — thanks for that — and maybe the state kicks in around 100 million, and Helsinki residents maybe another chunk under some agreement. Then you'll pay too, when you come and ride the tram and rack up fares, you'll pay for that as well—
—over the decades, one way or another. All of this flows through the HSL [Helsinki Region Transport authority] mechanism — either through taxes, or through fares, or through infrastructure compensation baked into ticket prices. But don't get discouraged, Sami, as a Helsinki resident, because we in Vantaa pay for your billion-euro bridges too. Yeah, and I might be a bit of an outsider here anyway, since I'm actually a Tampere guy who supports—
—Tappara, a proper Tampere man through and through. But on the emotional side, let me open this up a bit: I lived in London for 13 years, and I had a boss there, an Austrian-Swedish guy named Bengt Hammar, and oddly enough, he once said — in this rather posh way — that he preferred taking the bus, because he couldn't be bothered with the dirty underground, where it smells of sweat and all, which felt a bit beneath Bengt. But then, when I think about myself, I've never liked—
—taking the bus either, I've always liked the underground instead, it's somehow just cooler — this from a Tampere guy where, back then, there wasn't even a metro or a tram yet, just the Nysse buses. So I've thought about where that comes from — I have a really strong preference ranking, where the metro is king for some reason, the tram is a strong second, then comes your own car—
—and Ubers, and then the bus is pretty far down the list — I'd honestly rather walk than take the bus. I don't know how common that is, but there must be some kind of rail-fetish going on with me, because I consider myself a rational, hard-nosed investment banker and free-market guy, but the moment you start talking about building a fixed rail link, well — that might just be a fetish specific to investment bankers, I suppose—
—or maybe the last time you rode a bus was back in the '50s, with the engine sticking out the front, and it never quite got you all the way there — maybe your memories are just a bit old, you got on the wrong bus, it turned off somewhere, and suddenly you're up in Northern Finland. Let's push the investment-banker idea forward a bit here at Vantaa: what if, instead of building this tram, you extended the metro from East Helsinki instead, so that it—
—could run in a kind of loop around the whole Helsinki metro-area labor market, I think that would actually make more sense from a transport standpoint, and residents might understand the logic better too. Right now it's really hard to understand — if you want to go from, say, Mellunmäki to the airport, you first come in on the metro, then transfer to the tram, and then at Aviapolis you hop off—
—off the tram, and wait for a train coming from Tikkurila — a train you just passed on your way there, just to get to the airport. So, this kind of transport system really ought to be looked at on a whole Helsinki-metro-area scale.
Yeah. Well, I immediately get excited about that, because since my clear priority is that the metro is king, I'd be all set to swap over — even at that billion-euro price tag — to this metro project instead, simply because it ranks higher in my personal preference order.
Now we're talking about other people's money.
Right, yeah. That's the ongoing problem here — as a decision-maker myself, and everyone else deciding this, we're not talking about our own money, we're talking about tax money, and above all, borrowed money. In Finland, [19]92 was, I think, the last time that in municipal politics, taking on new appropriations required a two-thirds majority — I don't recall the exact form of it. And I don't want to sound like—
—an old-timer here, but municipal debt has been rising — though of course it's risen far more at the state level. For projects like this, which are easily contentious, there ought to be some mechanism that ensures people don't just change their minds again tomorrow, or a third time after that. I don't know if a two-thirds majority requirement is the right answer here, but it would at least have made sure everyone had—
Right now it's just a simple majority-or-not situation, and that could be broadened. I was actually really pleased and even a bit surprised that, well, they handled the Yle (the public broadcaster) license fee — froze the increases — through cross-party cooperation, which was quite painful, but we did get cooperation on the debt brake, with only the Left Alliance opting out. The state's debt brake, that is.
Yeah. Should we get a debt brake at the municipal and wellbeing-county level too, however that would work? Since a supermajority requirement isn't currently in use, that could be reasonably justified to some degree. But actually, as three parties we've specifically proposed a debt brake for Vantaa — set at a level that would still allow—
—for investments, just not this tram investment. So in a way, a debt cap, exactly, would be a useful tool, and one that's also needed for municipalities, because municipalities are strange creatures — they take on debt both at the parent-municipality level, but they also rack up debt through the municipality's—
—owned subsidiary companies, for instance Vantaan Energia (Vantaa's municipally owned energy company), or in Helsinki's case the housing company, and so on. But municipalities don't necessarily think in terms of the whole municipal group — they tend to just think of the parent entity. And these subsidiaries — well, the law technically requires you to think of the whole group, but in practice, de facto, there just isn't a mechanism in place to look at—
—how much financial liability or debt the municipal group as a whole is carrying, and what that means. Instead, these big municipal subsidiaries basically live their own independent lives. And that's a whole area that needs work — municipal ownership steering is really, really thin on expertise at the moment.
Yeah. And speaking of innovation, when you mentioned Vantaan Energia — Espoo, for instance, once sold Espoon Sähkö, first to E.ON, and at first their investment returns from that were kind of underwhelming. But now they've discovered index funds as an innovation, so returns have picked up a bit. But these energy companies and so on are big pools of money — let's take an example—
—someone might think that Vantaan Energia is a company that just handles the energy supply for businesses and residents in Vantaa. But it's not like that at all — if you look at Vantaan Energia's strategy statement, it says, roughly, that the company aims to become the leading circular-economy energy-solutions provider in the Nordics. A billion—
—euro investment program, and just this week it came out in the paper that they're building some kind of bedrock-excavated energy storage cavern. 200 million was the original investment plan, but it's now been updated upward — by another 100 million again. So, in a way — and I think that state—
—ownership steering has its own challenges, but at least there's culture, expertise, methods, and people there. Municipal ownership steering, though, is still very much in its infancy, which is why I proposed this week that some structure should be created to give ownership steering of municipally-owned companies more expertise and drive. And in these municipal companies, where the municipality plays a decisive role—
—40% of the energy company was sold to Helsinki, back in the day. There were some debt issues and so on at the time too. I still remember we were quite pleased about it — sorry, I wasn't even the city director back then — but actually, looking back now, I think I was pleased at the wrong moment. Why did we sell 40% to Helsinki? Why didn't we keep the whole thing for ourselves? Well, and here's my question about a limited company, where you have—
—a board, and its executives carry much heavier legal liability than what's normal in municipal politics — they can't just hand out, say, extra profit, or any kind of special discount, to all Vantaa residents.
That's just not possible — prices are the same for everyone. The city can demand a certain amount of dividend, sure, but beyond that it's really no longer the city's business, it belongs to the shareholders. And in my view, that's exactly what's problematic about this setup: the city is still the owner, but if you say it's not the owner's business, then that's exactly when you end up with, in effect, a state within a state—
—and these municipal subsidiaries easily end up living their own separate lives without ownership steering, and then there's a real risk that you end up taking on risk with taxpayers' money — for instance in international energy business, the way Vantaan Energia does. And remember, even a company like Fortum (the Finnish state-controlled energy company), which has really strong expertise and a really strong balance sheet—
—and really strong resources, still took a bit of a beating in this international energy game. So I'm genuinely worried whether Vantaan Energia can hold its own. Yeah, and speaking of the Uniper (the German energy company Fortum bought a majority stake in) deal, there was that Tuppurainen woman involved (the minister then responsible for state ownership steering), and by the way Sanna Marin (the former Finnish PM) has a book out now — I don't know how long the chapter on the Uniper deal is in it, but probably not very long, since they're probably trying to keep quiet about that multi-billion-euro loss that came out of it. I haven't read—
—the book, but if I had to make a wild guess, the Uniper deal probably gets about a text message's worth of coverage in it.
Yeah, but that's a good point. This could actually be examined theoretically too. Actually, let me throw this in — I was on the Vastuu Group podcast right before this, and they asked me: shouldn't a shareholder in a market economy just demand profit from a market-economy company, rather than some kind of 'impact' — is that even necessary? And I quoted Milton Friedman, this brilliant—
—right-wing economist. Milton Friedman wrote, 55 years ago now, back in [19]70, this widely cited column, in which he argued that — well, because shareholders can be a very diverse bunch — take Helsinki and Vantaa here, that's a pretty divergent group too — it's dangerous to start guessing at what the company should do based on their individual preferences. But it's even more dangerous if—
—the company itself gets to decide where the money goes, and then you start getting things like 'let's put it toward making the world a better place' and hiring some buddies to go pursue some completely different agenda than the market-economy pursuit of profit and customer benefit. There's a certain tension here, in that companies need to be able to sense what society's priorities are, and—
—values and so on, and genuinely live by them. But the risk I see is that once this goes too far in that direction, companies start behaving politically. And if companies start behaving politically, then who exactly is doing the politicking? Very often it's the executive management — it's not the owners starting it, and they don't even want it, but—
—it becomes a difficult equation, in the sense that, on one hand, you should be able to sense society's will and live by it beyond just following the law — but then, once you go down that road, you get overreach, and you lose sight of what a company's function in society actually is. And a company's function in society, in the end, is above all to create jobs, economic—
—wellbeing, growth, resources, and to serve customers as well as possible. Yes.
Yeah. But in a way, Milton Friedman had, if I remember right, this brilliant two-by-two matrix: are you spending money that's your own, or someone else's, and are you spending it on yourself, or on someone else's projects? And unsurprisingly, when other people's money gets spent on other people's projects, that's when things go badly — money gets thrown around wherever, and there's basically no accountability. And the most—
—accountability you get is when you use your own money on your own projects. And it gets a bit more problematic with other people's money on your own projects — isn't that the riskiest of all — that's where you're exposed to corruption. And I'd actually raise that point, because whenever the stakes are 100 million euros, that's going to attract a lot of people who'd be quite happy to have that 100 million, and it can be broken up into all sorts of projects — and yes, corruption risk is close by there, and what can you do about it, well, in this—
—case, specifically that Helsinki tram-order decision — because in that case, the justification used was that Transtech was disqualified, and it looked like people were trying to sway that particular deal, and now they got that decision overturned. But when hundreds of millions are on the table, the corruption risk really is quite significant.
There's one really important thing worth remembering here: sure, there has to be some budget figure, or at least a sense of how much it is, but you shouldn't lock in that sum as though you're now ordering goods for exactly that amount. The competitive tendering process needs to be extremely rigorous — we've allocated enough for this, but now we're actually looking for the real, right price.
So, so, so — I'm certainly no business-world guru, truth be told, but you have to be able to push the price as close to the truth as possible, and it doesn't help, of course, if you just say 'well, we've got the resources for it.' This might be a bit of a trivial example, but maybe business people are better at analyzing that kind of thing. Can I even say 'businessman' — 'market-economy man' sounds better. Market-economy—
—entrepreneur. Yeah. Or actually, maybe we could rehabilitate the term 'businessman,' since it's become a bit of a left-coded term now — let's talk about a 'job creator' instead. Not to go off topic, but I had a guest here, Kim Väisänen [unclear], who then joked, ironically, that 'a businessman from Turku' isn't exactly a flattering description of a person. But, well, I think you could—
—listen more to people who actually operate in the market economy, and Petri, you're one of those, so go on with that thought. Well, yeah — people always say Finland doesn't have corruption, and then they go on to say it's 'structural' and so on, and that's genuinely hard to define — what it means is that certain structures have something like usufruct rights, or—
—even natural monopolies. That's probably right. And this accountability question does get tested from time to time — take, for instance, the debate currently going on at VAV [Vantaan Asunnot, the city's housing company], where it's a question of the procurement of a single apartment building, which has resulted in—
—a three-million-euro loss, on a wooden apartment block. And the debate is about whether the procurement was done correctly, and if not, whether the board — meaning the board appointed from local politicians — bears responsibility. If I understood it correctly, the former board is, in effect, facing some kind of charges over this. At the very least it's being investigated, and it's being looked into, and it's also—
—measuring where exactly responsibility lands in this particular case. But it seems like, quite regularly, some kind of misconduct pops up out of these municipal construction projects. And yeah, as a Helsinki resident, I have to say it somehow—
—seems like these things happen a bit more often on the Vantaa side — not every project there has gone quite as smoothly as this Tampere guy's tram project.
—the Tampere tram project actually went really well. But then again, there too — I don't really know how well Bile Ilmari [unclear] is running Tampere these days, I'm a bit concerned about how things are going over there, but let's hope for the best. From a citizen's point of view, though, transparency really is absolutely critical when public funds are at stake, and that's also when—
—the accountability of decision-makers and those managing public funds matters. Yeah, and that's also interesting, what Jouko said about that municipal-tax-rate pressure — in Helsinki, for instance, the municipal tax rate was just set starting with a '5,' but then the social-and-health-care [sote] slice was carved right out of the middle of it and went straight to the state, and that sote reform hasn't exactly gone perfectly, and cost pressures there are heavy. But it really is a narrow slice left, whether it's five, or seven, or—
—eight, or even ten percent left. And Jouko's point is a really good one, because in a situation where such a large chunk of the budget disappears and less than half is left, the scale of what a municipality can bear needs a reality check — this simply isn't the same Vantaa it was before the sote reform. Exactly right — the financial capacity to take on a megaproject like this weakened quite—
—substantially. And in a way, if the need arose to cover costs by raising taxes, that tax-hike requirement would scale up proportionally larger too. That's a really good point — it's now only that roughly 19% or so that scales — so if tax revenue does go well, you only get a few extra million per percentage point. And that's—
—a lot of money, but once it's sitting at under 7%, it just doesn't move the same way — not for the better, but also not for the worse — it's just not great either way. And after this sote reform, we end up in a situation where the wellbeing services counties have their own well-known problems, and they're covering deficits now so they don't end up under deficit-recovery procedures by the end of next year. But a pretty large share of municipalities are really—
—really squeezed right now. And let's take Vantaa as an example again: over the summer, a roughly 100-million-euro fiscal adjustment program was put together for Vantaa — meaning annual income and expenses need to be balanced out by around 100 million euros. And then, at the same time, you bring in this huge tram project, which was decided on back when the economy was doing well. But then, if this kind of—
—urban development is nonetheless part of it, since tens of thousands of residents have been zoned into these vibrant areas along the line. So, looking at it with a Helsinki-and-Tampere kind of eye, if you go from Tikkurila, past Heureka, Mika Häkkinen Square, Kuusijärvi, and then of course that 'Northern Finland resort' Flamingo, and on, dry-shod, all the way to the airport — well, that covers—
—basically all of Vantaa's notable landmarks, and then housing starts springing up around them. Sounds like you've clearly been to more places than just Flamingo, given how smoothly that rolled off the tongue. But seriously, Vantaa does have an insane number of really great spots — you listed some of them, like Kuusijärvi and all that, and then on the other hand, Hakunila — a fantastic sports park, the best in southern Finland. So, in a way, around that—
—you should now build a detached-house area suited to families with an active, sports-oriented lifestyle — something like an 'Ylästö 2' or a 'Kartanonkoski 2.' And I'm absolutely certain that a place with fantastic terrain, swimming halls, all the sports fields—
—every kind of amenity, would attract people and families with an active lifestyle if you built exactly that 'Ylästö 2' or 'Kartanonkoski 2.' That'd be entirely in Vantaa's own hands. But, still under the sway of my little rail fetish here — when you go somewhere like Pori on some tour bus or by car, it's just one of those things you don't feel like doing again. But when you go to the Nokia Arena in Tampere, dry-shod, all the way there—
—from Helsinki, it's the kind of thing you want more of — there's something psychological about that permanence which a bus or a car just doesn't offer. So maybe — I don't know if this generalizes, but I'd certainly like to hear more about it — whether the research actually backs this up, that when you build bigger transit infrastructure, like a tram or a metro, it really does have a big effect on that sense of permanence and—
—that villagey character it has, or whether this is a thing of the past, since everything's remote now anyway. I'd say the problem here is that these plans, from the start, of course promised a huge number of new jobs. But jobs get created inside companies — a company has work to do, so it hires people, a huge number of people, actually. But something's been nagging at me the whole time, and I just can't quite bring myself to believe that—
—all of this actually materializes on this timeline. The tram line itself is actually quite long. Might it actually be better to focus on somewhere like Hakunila, given what you just said, Petri, about image and identity, and build something with real substance there? When we spread it along the whole line, I suspect the new development will mostly cluster around Tikkurila. If we think about urban development on a somewhat longer horizon — and I'm exaggerating a bit here — but if we made—
—a choice to lean more into Vantaa's nature-related assets and build these 'Ylästö 2s' and 'Kartanonkoski 2s' and so on, they'd become genuinely attractive areas that draw people in. But I do see a bit of a risk here — if we keep going down the path that's currently been proposed, it's entirely possible that—
—along the tram line you get more state-subsidized rental housing, which is perfectly fine, but it's not necessarily the kind of development that strengthens the city's finances, or its image, its desirability, and so on. There would be a fantastic opportunity here to seize on this space, this nature, this active-lifestyle angle, all of—
—things that people, in the end, actually value a lot. Because here's the thing: if you ask Finns what kind of environment they'd like to live in — the Housing Fair does an annual survey on this — as I recall, a bit over 70% said they'd like to live in a comfortable, detached-house-style setting, ideally by a lake, but still close to the city center.
But the end result is that roughly a million Finns end up living contrary to their ideal. And in a way, this is exactly where Vantaa could step up, because Vantaa has the space, it has the nature.
—and that's just sitting there unused right now. Yeah, speaking of the 'Nurmijärvi phenomenon' — I actually go to Nurmijärvi pretty often myself, because it has what's said to be Finland's cleanest summer lake. For some reason it stays free of algae, so it's really nice to go there. And there could well be similar attractions elsewhere too — this is revealing some entirely new sides of our die-hard downtown-Helsinki investment banker here—
—new sides indeed. Yeah. I wouldn't go there with you, but you could definitely make a good Vantaa resident out of him. There's a little Vantaa resident living in each of us — he already knows the songs and everything. Yeah. Yeah yeah, but a curmudgeon moving out to Kartanonkoski — that's a whole thing, even though it wouldn't concern me directly, except for the few million euros' worth I'd end up sponsoring as a Helsinki resident, plus maybe something through the state. This does sound like—
—it does sound like extra time is needed here — I certainly wouldn't put my own money into it on those specs, at least not yet. I don't know if you can comment on how public these figures are, but I certainly wasn't convinced that this was some kind of investment-banker's Excel showpiece, done with real discount rates, residual values, return calculations, costs and expenses all properly worked out. Mostly it just seems like a rough picture of, roughly, this much money—
—would go out, roughly. Yeah yeah yeah. It certainly wouldn't hold up in one of those investment-banker spreadsheets at all — this calculation doesn't even factor in a discount rate. For instance, it treats a euro of revenue in the year 2060 as exactly as valuable as a euro of expense today. Inflation and required rates of return simply aren't part of this calculation, and honestly—
—that's the situation. But of course, all of these are just approximations too, and then there's also the question of what actually counts as a benefit — how do you even assess the benefits of urban development? How do you evaluate someone building houses somewhere? Where do the jobs come from, as Jouko put it here? Because, as I understand it, jobs don't just—
—come from a company wanting to grow, an owner willing to take risk and invest, and people actually demanding whatever product is being made. I myself have created something like several hundred person-years of jobs, but I've never once, not even for half a second, thought about public transit while creating those jobs — I've thought about customers, financing, sales, and—
—sometimes even discount rates. And I'm genuinely happy that I get to walk to and from work, and I'm quite content doing it rather than always ending up working from home. Anyway, an entrepreneur once approached me about this — he asked me, 'Hey Petri, now that you're making this tram decision — 750 million, which just gets you the tracks — have you considered—
—instead putting 100 million into a Vantaa growth fund and investing that in Vantaa growth companies? Which one would generate more vitality?' That was his question. Yeah. And I think that's actually a pretty good question — 750 million into rails, or 100 million into a growth fund. If you—
—put those two side by side and ask which generates more vitality, more growth — my gut strongly says it's the growth-fund route, or alternatively, don't put in anything and drop the tax rate toward Helsinki's level, let citizens invest the money themselves — though that's pure fantasy, of course. Maybe a bit more on urban structure though: Helsinki and Tampere both have a clear center. Helsinki's center, around here on Kalevankatu—
—around Kamppi where I'm based, has cheerfully shifted from that stuffy old Kaisaniemenkatu or wherever, toward the Jätkäsaari complex, and maybe there'll even be a grand tunnel built underground there too, with all the trimmings, so it doesn't disturb ship traffic. But then Vantaa, and Espoo too — Espoo's 'center' is still something of a joke, frankly. And then—
—would it be, then — since the Mika Häkkinen roundabout apparently doesn't earn any respect — would Tikkurila still be some kind of answer? Could you actually build a metropolitan core there, or, if we set the whole tram question aside entirely, where would it make sense to concentrate that mass of development? Is this really Vantaa's growth story here—
—when Petri just made the case for Kartanonkoski 2, Ylästö 2, and a third one — why would you need to make Tikkurila into something even bigger? Well, Tikkurila is the old center of Vantaa, and just recently the Tikkurila renewal project was quietly completed, so it's more or less finished now, in a sense — Tikkurila is Tikkurila. But then, if we ask where Vantaa's dynamo actually is,
—where the pulse is, what actually generates prosperity — that's clearly the airport, the Aviapolis area, which is one of the biggest job centers in all of Finland. There's also that 'Silicon Valley' feel there with the data centers and so on. That whole area is being studied and considered from the angle that, at some point, quite a lot of it got zoned for housing, but on the other hand, right now there's a genuine shortage of business plots, to put it plainly—
—so now perhaps the thinking is about how to make the Aviapolis area an even stronger draw as a business district — Vantaa's dynamo and growth engine, tied to the aviation world and everything around it. But then, on the housing side, I think that's exactly where the Ylästö 2, Kartanonkoski 2, nature-focused—
—themes come in, and those are cards Vantaa is actually holding that are, on a national scale, really strong.
Now it's really just a question of whether Vantaa knows how, and dares, to play them.
Yeah. And, coming back to my little preference-ranking fetish here, and how these modes of transport stack up — the car might actually rise in the ranking there too, thanks to AI, since self-driving is coming, even in our icy conditions. And with electric vehicles, that could bring down the cost of rubber-tire transport quite a—
—lot, so it might well turn out that good old rail isn't even all that cost-competitive per rider anymore. Yeah, yeah, that's probably right. And Vantaa would have the chance to build what I'd call — you can get almost anywhere by car within fifteen minutes. That's actually a huge deal — if you're taking your kids to a hockey rink somewhere, you might otherwise have to set aside three or four quarter-hours for—
—that trip. Vantaa would have the opportunity for that kind of smooth car traffic, with the concept just described — that could be a pretty big advantage. And when it comes to climate efforts, I don't think you should ever underestimate the ability of a global industry like the auto industry to reinvent itself — it'll produce the kind of vehicles that are needed. Yeah, and when you look at what's happening in the States, things like Waymo rides out in Silicon Valley and elsewhere—
—people there are starting to feel like the ride itself feels almost like a tram or train, like the robot car is running on rails, so to speak. So — and I keep coming back to this — there's some kind of mental block at play here, and it would actually be perfectly fine not to lock yourself into fixed rails, and instead go with a nimble transport solution involving robotics, AI, and self-driving cars — that might actually—
—work out really well — everyone could live, say, in their own detached house by a lake, and still get to work with almost rail-like comfort, laptop in hand. Yes, exactly. And then there's also this question of space — these modes of transport you just described can travel mixed in with all other traffic. They don't need their own dedicated lanes. So if you ask how much space—
—something like this tram takes up, and what its opportunity cost would be. Right — if all the space it occupies could instead be zoned for housing, that would carry enormous value in itself. That's exactly why these flexibility elements matter so much, in my opinion.
Yeah. Yeah. Well, let's wrap this up — so, on the 750 million, plus the vehicles on top of that — thumbs up or thumbs down? Or 'let's study it more'? Thumbs down, more study needed at this stage — I mean, we're not the ones actually deciding this—
—let's study it calmly a bit more, take some extra time, and see what happens.
No, no, there's no need to rush and slap the money down on the table right now — but with this particular spreadsheet, you definitely shouldn't lock in that spending. So yeah, I'd say at the very least, let's study it more. If I answer Sami's question about the spreadsheet — with the numbers as they currently stand, not a single company would get a single euro of loan from a bank on this.
A public body with the power to tax the future gets it a bit too easily, of course — and naturally you buffer it first with debt, since it doesn't hit current residents right away.
Yeah, sounds good. My guests today have been Petri Roininen and Jouko Jääskeläinen, and I'd suggest we move over to the Inner Circle segment. We could keep going with all kinds of Vantaa musings, or even go back to Jouko's parliamentary years, but there's actually an interesting angle here on coalition politics. The Christian Democrats have been on the show twice now, and we've had some really good conversations, and Petri's been on many times, and yet—
—as a Centre Party representative, you two aren't actually in government together right now, even though it's supposedly some kind of right-leaning coalition. So I'd like to explore whether you might actually be in a bit of a kingmaker position in the next coalition government, since the media narrative has settled into this idea that the Social Democrats will dominate and then get to pick, say, between a red-earth coalition and a blue-red one, or maybe even both. So I'd suggest we discuss—
—this topic over on the Inner Circle side. Does that work? Let's do that.