The State’s Money Machine

The State’s Money Machine

- in Analysis
Photo: Joel Jeffels

The state corporation Akademiska hus earns billions by owning the properties of the universities. The tenants are now fed up.

Text: Oskar Madunic Olsson – Translation: Rebecka McKinnon Forsell

It is 1993. The winds of change are blowing in Sweden. For the second time since the 1930s the country has a conservative government, and deregulations are forming. The state-owned Post Office, SJ (the state-owned passenger train operator) and Televerket (telecommunication corporation) are all losing monopoly. Sweden gets commercial radio, tv-commercials and publicly financed private schools. Soon, Sweden will also become a member of the European Free Trade Association.
The post-war era, which has been given the nickname DDR-Sweden by its slanderers, is slowly coming to its end.
1993 is also the fateful year of the economy of the Swedish seats of learning. The state authority Byggnadsstyrelsen, is reorganized into a new authority, Statens fastighetsverk, but also to a number of new state corporations – among them Akademiska hus, with the task of owning, maintaining and developing facilities to the universities and colleges in the country. The idea is that the seats of learning should focus on education and research rather than property management. But it is also a way to make the universities’ property support into competition.
And so, Lund University is changing from landlord into tenant. And quite soon, a schism is appearing around the rent levels in Akademiska hus, one which still stirs up bad blood in the academic world of Sweden today.

We are setting the clock forward approximately two decades. In September 2015, Akademiska hus makes the announcement that it is yielding a dividend of 6.5 billion Swedish kronor to its shareholder, the state. This is excluding the regular dividend of 1.5 billion kronor which is yielded annually from the corporation. The reactions were immediate. The vice chancellors of 30 colleges and universities, among them Lund University’s vice chancellor Torbjörn von Schantz, formed a collective counter attack in Dagens Industri (15/10 2015). They thought it was unreasonable that the state financed seats of learning should pay rents adjusted to conditions on the market to the state corporation Akademiska hus which later yielded dividends to the state.

The Swedish National Union of Students chimed in with the criticism and so did Karin Åmossa, investigator at The Swedish Association of University Teachers and Researchers (SULF).
For once, the entire world of academia seemed to agree – the system for the property support of the seats of learning needs to change.
There is still no reformation in sight. The owner of Akademiska hus, the government, has in fact no plans of letting go of their cash cow.
“We have no suggestions of how to change the existing order at this point, but naturally, today’s system is not perfect,” writes Isabell Ekvall, press secretary at Socialdemokraterna, in a mail to Lundagård.

The effects of the billion yield from 2015 was not the first time that criticism was directed at Akademiska hus. As early as in 2008, the government’s investigator Daniel Tarschys, expert on political science at Stockholm university, suggested that the seats of learning should take ownership of Akademiska hus through a collective holding company: the suggestion was a part of the so-called autonomy investigations (SOU 2008:104).
The government chose not to take the suggestion further – partly because the department of finance expressed unwillingness to relinquish control over state resources. But even the seats of learning had a hand in the fact that the investigation did not lead to any larger changes.
“The investigation was led by the universities and the colleges themselves but the enthusiasm eventually declined in some places,” says Daniel Tarschys.

Akademiska hus has a market share of around 60% in renting properties to universities and colleges. If Akademiska hus was permitted to lower the rents it could warp the competition – which the government would not hesitate to point out when the corporation’s rent levels faced criticism.
The current position of Akademiska hus is not entirely unproblematic in regard of competition. The Supreme Administrative Court of Sweden said in a decision from 2016 that Akademiska hus cannot be expected to act according to regular conditions adjusted to the market since the market for renting properties to the universities don’t have a developed competition. According to the court, Akademiska hus has a large possession of properties at the country’s campus areas which gives the corporation a special position. Adding to this, the seats of learning are also exceptionally stable tenants.
“In theory, the rent levels could make out a misuse of dominant position, but it is very difficult to prove. You would have to prove that Akademiska hus does not have coverage of their costs or that their analysis of the price adjusted to the conditions of the market is incorrect”, says Vladimir Bastidas, lecturer in competition law at Uppsala University.

Today, state corporations, with universities included, are not permitted to own properties if their activity is not mainly made out of property management. Within the university, it is believed to remain that way.
“It is not plausible that we would be permitted to own our properties at this point. We are counting on the state to continue owning the university properties in some way. Since it currently is not i interest to change the system, we haven’t decided how good or bad other suggestions would be,” says Susanne Kristensson, head of administration at Lund University.
Vice chancellor Torbjörn von Schantz thinks that Akademiska hus will have a sustainable and reasonable rent regulation for the universities and colleges of the country, but is not taking the question to the government right now.

One of few politicians who has taken a stand in the issue of the property support of the seats of learning is Benny Lindholm (Liberals), member of the local council in Uppsala. Just like the vice chancellors, he reacted to the vicious circle of resources between the state, the universities and Akademiska hus.
“I don’t mind solutions for the market, but this is not a real solution. In realiy, Uppsala university can not choose to just rent other properties,” says Benny Lindholm.
Just like Daniel Tarschys, Benny Lindholm suggests that the seats of learning should take ownership of Akademiska hus, for example through a collective ownership board. In that case, the money that the government give to education and research could go to just that and the seats of learning would not have to put energy and resources into maintaining the properties.
“I think the current system is very unfortunate. Politicians representing all kinds of political color are tooting their own horn when they are ‘investing in the universities’. But the voters don’t know that a large part of the money goes back to the state,” says Benny Lindholm.

Lundagård has reached out to the Minister for Higher Education and Research, Helene Hellmark Knutsson for a comment but without result.


Manager of Akademiska Hus under investigation for financial crimes

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