Fekter under fire for fiscal warning

The Social Democrats (SPÖ) and regional power brokers have attacked Maria Fekter.

The People’s Party (ÖVP) finance minister announced yesterday (Mon) she wanted to sanction provincial governments which breached the harsh new budget rules. Fekter said the agreement between the federal government and the provinces should not expire in 2017. The SPÖ-ÖVP coalition wants to erase the budget deficit by that year. Austria’s budget deficit shrank from 4.5 per cent in 2010 to 2.6 per cent in 2011. European Union (EU) regulations say that member states must not have a deficit higher than three per cent.

The finance minister will meet with representatives of the provinces in the coming days to negotiate various details of an envisaged fiscal agreement. She upset regional decision-makers by suggesting fines for loss-making provinces. Fekter said yesterday these regions could be charged 15 per cent of their deficits.

Upper Austrian ÖVP Governor Josef Pühringer announced today it was clear to all of the nine provinces that savings had to be made in the coming years. The governor signalised general agreement with the plan to tighten austerity to reduce the state debt. Pühringer and other representatives of the provinces criticised the finance minister for the plans to allow the state to make higher debts than the provincial governments. The ÖVP Upper Austria chief said he wanted to discuss the detailed aspects of the agreement between the federal government and the provincial parliaments but already stressed that “patronising behaviour is inappropriate”.

SPÖ General Secretary Günther Kräuter said the provinces should be allowed to invest more than agreed in certain situations. Kräuter told radio Ö1 today that economic growth must not be harmed by the new spending reduction strategy. He appealed to negotiators to consider possible exceptions – and criticised Fekter for addressing the media before informing his party and negotiators representing the provincial governments.

The discussions about budget details between SPÖ, ÖVP and provincial leaders were made necessary by the government’s recent decision to pass a 26.5-billion-Euro savings package. Now all political decision-makers must agree on how much the various institutions must contribute to the cost reduction programme.

Markus Marterbauer of the Labour Chamber (AK) warned that the savings package could cause a reduction of Austrians’ spending power. He said the various tax increases and plans to invest less might lead to a widespread belt-tightening. Negative effects on the economy could not be ruled out, Marterbauer said. Economy Chamber (WKO) President Christoph Leitl said none of the tax hikes were needed. He criticised the government for failing to agree on more significant bureaucracy reform measures.

Research group OGM found that nearly six in 10 Austrians think that the budget package – which includes a new tax on real estate sale profits and a temporary income tax hike for the rich – would cause too much pressure for people on comparably low salaries. Only one in four Austrians described the fiscal settlement between SPÖ and ÖVP as well-balanced.

ÖVP Vorarlberg head Markus Wallner said yesterday the austerity package must not include any kind of sanctions against the country’s provinces. This criticism comes shortly after Wallner claimed the government was engaged in a “politics of announcements”. He appealed to the coalition to reset its course. Wallner said the SPÖ-ÖVP government should cooperate with the provinces more closely from now on.