Fekter: Largest package of reforms in modern Austrian history
"Putting Austria back on a firm footing – through sustainable structural reform and targeted action for the future."
Press Release, 10 February 2012
"I am pleased that together we have succeeded to come up with the largest package of reforms in modern Austrian history. Between now and 2016, we will manage to save a total of EUR 26.457 billion", Austrian Finance Minister Dr. Maria Fekter announced on Friday evening. 76 per cent of these savings are on the expenditures side, and 24 per cent will be achieved by closing tax loopholes. "These ratios send a clear message about our intent to consolidate", Fekter said. "By taking these decisions, we have resolved to embark on a course of sustainable austerity, by which we will manage to incrementally pare down our deficit", Fekter went on to say. "Despite the large volume of cuts, we have managed to structure our measures in such a way that we will not be putting the brakes on growth and investment and, in particular, will not be putting jobs at risk" the Finance Minister emphasised. Dr. Fekter also stated that she was pleased with the agreement reached with the Austrian Federal Länder: "We will renegotiate the Austrian 'stability pact' so that the Austrian Länder and municipalities will be contributing approx. EUR 5.2 billion by 2016", Fekter stated.
Reform for Austria
"We're starting with the largest expenditure items – early retirement pensions, Austrian Federal Railways, the health-care sector and the Federal administration – and are implementing a package of structural reform for Austria", Fekter explained. "The measures we have agreed will aggressively curtail early retirement pensions. Rapid introduction of 'pension accounts' will be of substantial significance in our efforts to significantly raise the effective retirement age. In the retirement pension and employment sector alone, these measures will generate approx. 7.3 billion in savings by 2016", the Minister stated.
"And in particular, we managed to pull the emergency brake on the Austrian Federal Railways early retirement ‘gravy train’. By reducing early retirement pensions at ÖBB, we will save EUR 525 million between now and the year 2016. Over the next four years, we will need to save an additional 900 million on infrastructure, amounting to savings of over EUR 1.4 billion in this sector alone", Fekter announced.
"Through planning and goal-oriented management in the health-care sector, we will make approx. EUR 1.4 billion in social insurance cuts between now and 2016, sustainably modernising our system so that, whilst patients continue to receive the best available care, we are able to prevent any further cost explosions in this sector", Fekter confirmed with respect to the government’ s health-care sector austerity measures. The cost of health care should not increase any more rapidly than average GDP growth does, namely by 3.6 per cent. In this context, she stated, the Austrian Federal Länder will also be making substantial contributions towards consolidating expenditures.
"In the Austrian public administration, we have agreed to a hiring freeze in the Federal civil service up to 2014, one salary freeze period and one period with only moderate increases. We have also agreed to make cuts in the realm of public services law and by consolidating various administrative entities", Fekter reported. "For example, in the realm of civil service law, we have put together a 'mobility package', permitting more flexible assignments of public-sector workers amongst the individual ministries. The hiring freeze will not only reduce public-sector staffing levels, it will also enable us to save on rents and to help with cross-ministerial facilities management. In addition, we are working on implementing uniform IT standards across the entire Federal Government and cross-ministerial cooperation with respect to services, which is intended to make our public administration more efficient", Finance Minister Dr. Fekter explained. "One true innovation is the plan to reduce the number of MP's in the Lower House of Parliament from 183 to 165 and reduce the size of the Upper House by a third", Fekter emphasised with respect to planned reforms in the realm of public administration, intended to contribute a total of approx. EUR 2.5 billion in savings between now and 2016.
"We are reducing discretionary spending by the Federal Government and thus also reducing public subsidies. In future, we will operate a policy of systematic prevention of dual and multiple subsidies", Dr. Fekter announced. A targeted strategy for public funding will cut through the thicket of public subsidies; the transparency database will be the determinative tool in this regard. "Stricter spending discipline and reforms to our system of public subsidies will yield medium-term savings of approx. EUR one million between now and 2016", Finance Minister Dr. Fekter made clear.
Targeted action in future-oriented sectors
"As clear as we are about achieving structural reform in a host of sectors and systematically implementing austerity measures, it is also clear that campaigns to promote future-oriented sectors are equally important to us. By way of a 'structural fund', the universities will be receiving significantly greater funding in coming years, in exchange for implementing reforms", Dr. Fekter announced. "We are able to provide universities with additional funding of EUR 250 million per year, beginning in 2013, and will be able to furnish schools with average additional funding of approx. EUR 300 million per year, beginning in 2012. This targeted funding (EUR 80 million per year for each) we have already agreed for universities and full day care services will be continued, as will the EUR 100 million special funding to promote research and thermal rehabilitation", Austrian Finance Minister Dr. Fekter stated. The long-term care fund, too, will be placed on a firm financial footing up to 2016. "It was important to us that there should be no cuts in the realm of education and families. We would otherwise be depriving future generations of their own prospects for the future, and that is something we cannot allow to happen", Dr. Fekter emphasised.
Closing tax loopholes
In closing, Austrian Finance Minister Dr. Fekter made clear: "It was important to me in particular to close loopholes in the Tax Code whilst taking special care to protect the middle class. What this means is: No annual wealth tax on assets, no reintroduction of the estate and gift tax and no increase in the top rate of tax, because 50 per cent is enough", Dr. Fekter stated. "I am proud to be able to say that we have managed to adopt this package of reforms at a ratio of 76/24 – 76 per cent of the savings are on the expenditure side, 24 per cent of the savings are achieved by closing tax loopholes. This is a unique achievement in terms of expenditure consolidation anywhere in Europe, and our best result in 25 years. This package of reforms will provide us with needed breathing space, take the burden off our children’s backs and make Austria fit for the future", Finance Minister Dr. Fekter stated in closing.