ÖVP plans drastic spending cuts

People’s Party (ÖVP) chief Michael Spindelegger has pointed out that his party wants to restore the country’s public budget without tax increases.

The foreign minister, who took over when Josef Pröll resigned as ÖVP chief in April 2011, said yesterday (Thurs) his faction found that the state debt could be lowered significantly by austerity measures. Spindelegger said raising taxes would not be necessary if various subsidies were reduced to a reasonable level.

Austria spends more than 15 billion Euros in subsidies on public and private institutions a year. Some of these investments are under close scrutiny. The ÖVP is especially keen on slashing the budget of Federal Railways (ÖBB). The company, which has 42,000 employees, is deep in the red. The ÖBB board expects this year’s performance to be better despite operations of new private rival Westbahn. The company has offered several daily connections between Vienna and Salzburg since December. Westbahn is willing to expand its portfolio of services but depends on the verdict of railroad traffic regulators considering concessions.

Spindelegger said subsidies could be reduced by 15 per cent altogether a year. The vice chancellor stressed that his party wanted to start doing so as soon as possible. He appealed to the Social Democrats (SPÖ) to stop calling for higher taxes. The ÖVP chief warned ÖBB may be forced to spend less on all of its current infrastructure projects such as tunnel constructions and the renovation of hundreds of stations across the country.

The ÖVP chief risked a rift with fellow party members by warning that Austria’s agriculture enterprises might get less financial support in the coming years. Spindelegger pointed out that his party’s concept included only minor reductions of subsidies for farmers. The announcement is nevertheless certain to cause a stir at the Farmers’ Chamber, an institution dominated by ÖVP officials. SPÖ General Secretary Günther Kräuter had angered the chamber previously by suggesting a drastic reduction of financial transactions of the state to agricultural companies.

Spindelegger announced yesterday he was optimistic that the government coalition – which consists of this party and the SPÖ – managed to agree with health sector representatives on a substantial reform of the sector throughout this year. The ÖVP leader also claimed that the so-called transparency database would be launched later this year. Little has happened since Pröll presented the concept around two years ago.

The database is supposed to give an overview about what kind of subsidies citizens and firms receive. It is considered by the ÖVP as an important part of the current efficiency attempts. Consumer protection organisations expressed data protection concerns while the government is still at odds which private institutions should be considered by the database.

The ÖVP boss made clear that road maintenance and motorway infrastructure projects would be examined as well in the coming months. State-owned firm Asfinag is in charge of such measures. Spindelegger explained his party wanted to check whether the volume of spending on these activities was justified and where cuts could be made.

Another key aspect of the conservative party’s suggested savings package is the plan to increase the average pension age by four years by 2020. Austrian men are forced to work until 65 by law while women are allowed to retire five years earlier. However, male workers retire already at 58.9 years these days, according to statistics. Research shows that women employed by Austrian companies quit when they reach an average age of 57.7.