New austerity threatens rail investments

Social Democratic (SPÖ) Traffic Minister Doris Bures may be forced to pull the plug on an extensive railway infrastructure project.

Bures said in September that 100 train stations all over Austria would be renovated by 2014. The infrastructure minister also presented plans to improve the country’s railroad network in the coming years. The People’s Party (ÖVP) criticised Bures over her ambitions. The conservative coalition partner of the SPÖ made clear it was in favour of a reduction of subsidies for loss-making Federal Railways (ÖBB).

The traffic minister’s plans appear more uncertain than ever before after the SPÖ-ÖVP coalition agreed on a debt limit. The bill should become constitutional, SPÖ boss Werner Faymann and ÖVP chief Michael Spindelegger said last week. The government needs the backing of either the Greens, the Freedom Party (FPÖ) or the Alliance for the Future of Austria (BZÖ) to achieve this. A regular majority instead of a two-third majority would be enough to pass the regulation as a common law.

The debt limit will force all ministers to reduce spending. ÖVP Finance Minister Maria Fekter is pressurised to disclose details of the planned reform. The government is controversially calling on the opposition to give the thumbs up to the debt limit plan, claiming that details could be debated later on. SPÖ and ÖVP are understood to be trying to convince the financial markets and credit rating agencies of their determination to lower the state debt and the budget deficit with their attempts to pass the bill as soon as possible.

ÖBB has debts of 20 billion Euros. The railroad firm sustained a loss of 330 million Euros in 2010 but company chief Christian Kern claimed it would do better in the coming years due to various internal cost-cutting measures and successful efficiency measures. He recently asked SPÖ and ÖVP for a capital injection of 400 million Euros to no avail. Bures said in September the ongoing infrastructure activities meant that there could be 9,000 trains on rails in Austria a day by 2025. ÖBB operates 7,000 trains per day at the moment.

Meanwhile, chances that the Green Party will support the debt brake draft bill are reportedly waning. The party told the government it wanted a tax on assets meaning extra earnings of four billion Euros a year. Green Party MP Werner Kogler said people possessing more than 500,000 Euros should be affected. The SPÖ is in favour of higher taxes on assets itself but the sum is allegedly too low for Faymann to justify it in front of voters. He called for a tax on assets which affected the 90,000 richest households of the country. The Social Democrats suggested charging the extra tax on people owning one million Euros and more. The ÖVP generally rejected such measures.

The ÖVP rubbished the SPÖ’s claims that a tax on assets increase could mean additional revenue of 500 million to two billion Euros as “illusionary”. ÖVP General Secretary Johannes Rauch said there were too few millionaires in the country to create a workable tax on assets. He concluded that the charge might eventually be expanded by the SPÖ to the middle class. The Greens made clear they would only pass the debt brake bill if Austria’s rich had to face a significant tax increase.