The Industrial Association (IV) is pushing for a comprehensive reform agenda and rapid implementation of consolidation measures in order to get the current budget situation back under control and get back on a sustainable budget path. Amid the current discussions about the extent of the budget deficit, IV President Georg Knill is calling on the next federal government to be courageous and seriously tackle structural problems instead of looking for short-term solutions. “Austria urgently needs a fitness treatment because the years of uncontrolled intake of ballast are over. We finally have to get our expenses under control instead of spending more and more and only solving challenges with money,” emphasized Knill.
Suggested savings potential – end of the “watering can principle”
The industry has already proposed several key measures to consolidate the federal budget on the expenditure side and achieve sustainable savings. This should be done, among other things, by ending the “watering can principle” and through structural measures.
In recent years, poorly targeted and inefficient measures have often been taken. An example of this is the climate bonus, which is budgeted at EUR 1.5 billion for 2024 and should urgently be abolished. The direct funding should also be checked for accuracy and effectiveness, because Austria, with a funding rate of 7.5% of GDP, is well above the EU average of 5.7%. A reduction to the EU average would create consolidation potential of EUR 8.5 billion with a GDP of EUR 473 billion. Educational leave burdens the budget with EUR 500 million annually. A targeted reform could counteract this.
Implement structural measures
In addition to the measures that can be implemented quickly, there are a number of structural reforms that are necessary for a sustainable budget in the future. According to a study by EcoAustria, there are significant efficiency deficits in areas such as administration, education and health. Duplication and mixed competencies could be reduced through a task and impact orientation. The savings potential is estimated at EUR 10.4 to 18.7 billion, equivalent to 2.1% to 3.8% of GDP.
The current pension system is unfair and is blocking the future for the next generations. By 2050, our pension system will burden the budget with a cumulative burden of one trillion euros if we do not carry out further reforms – a trillion euros that we could invest in education, infrastructure and our innovative strength. The pension and tax system must therefore reward older people for longer stays in working life with suitable incentives and the pension system must reflect the increased life expectancy. The OECD also recommends Austria reforms in the pension system such as avoiding early retirement and effective mechanisms to ensure sustainability. Increasing the statutory retirement age and reforms in the healthcare system could save an additional EUR 10 billion by 2029 (Agenda Austria).
Appeal to politicians: have the courage to reform, otherwise it will be too late
The IV calls on a future federal government to consistently use the savings potential shown. “It’s not just about filling short-term holes, but about making Austria fit for the future in a particularly threatening situation. The solutions are on the table, now political courage is required,” concluded Knill.