2024-11-14 16:13:00
Due to the current domestic political situation, the September report on the development of the federal budget presented by Finance Minister Magnus Brunner took place today Budget Committee significantly more attention than usual. In addition, the Austrian economy is in recession this year for the second year in a row. While the Ministry of Finance now expects a Maastricht deficit of 3.3% of GDP (instead of 2.7%) for 2024, the Fiscal Council even fears a deterioration to 3.9%.
In view of the different assessments of the department and the individual economic research institutes, it would be all the more urgent to make a cash fall and to inform Parliament comprehensively, demanded, among others, FPÖ mandater Hubert Fuchs. Kai Jan Krainer (SPÖ), on the other hand, recalled that his party and NEOS in particular had campaigned for a cash collapse before the election; but not the Freedom Party.
During his last appearance in the Budget Committee, Brunner, who will soon move to Brussels as the designated EU Commissioner for Internal Affairs and Migration, argued that making forecasts was not so trivial. It is a standardized process that is always the same, regardless of whether elections take place or not. An earlier BMF forecast before the election would not have been possible due to data from Statistics Austria not yet available. A representative of the department also assumed that the deficit would remain at 20.9 billion Ꞓ, as not all budgeted disbursements will likely be made.
The starting point for the debate was not only two reports from the finance department, but also the report on impact orientation 2023 prepared by the Federal Minister for Art, Culture, Public Service and Sport. All three matters were assigned to the subcommittee on budget implementation.
Monthly report for September shows preliminary deficit of 15.4 billion Ꞓ
Specifically, according to the report, the federal government’s net financing balance (deficit) as of the end of September 2024 amounts to 15.4 billion Ꞓ. This is 7.9 billion Ꞓ worse than in the same period last year (3/BA). The main reasons for this are higher payments as part of the financial equalization (2.6 billion Ꞓ), economic and demographic-related effects (1.7 billion Ꞓ), inflation-related higher payments for federal staff and state teachers (1.2 billion Ꞓ) as well additional costs such as for the climate bonus and the “green transformation” (3.3 billion Ꞓ) are cited. However, the reduced spending on crisis measures had a positive effect (-1 billion Ꞓ).
Total spending by the end of September 2024 was Ꞓ87.4 billion, which is Ꞓ10.1 billion more than the previous year. Revenues increased by Ꞓ2.2 billion to Ꞓ72 billion, with Ꞓ1.8 billion more coming from public taxes.
According to the Ministry of Finance forecast at the end of September, the Maastricht balance will be -3.3% of GDP, 0.6% worse than expected at the time of the budget. The debt ratio will rise by 2.9% to 79.3% of GDP due to the lower nominal GDP.
Krainer cannot understand the share of the states and municipalities in the deficit
As far as the adjusted forecast is concerned, Kai Jan Krainer (SPÖ) doubted that the payments for flood damage would be so relevant, as they would only make up around 0.1% of the deficit. He was particularly interested in what share the states and municipalities have in the development of the deficit. Since he could not understand the BMF’s figures, which assume a share of 0.1%, he requested a precise list of the internal assessments in this area for the period June 2023 to October 2024.
FPÖ insists on comprehensive information for committee members
It was learned from the media that a group of experts on the budget was set up as part of the exploratory talks, explained MP Hubert Fuchs (FPÖ). He wonders whether the representatives of the SPÖ and NEOS now have an information advantage over the committee members.
Gerhard Kaniak (FPÖ) referred to statements made by Brunner and employees of the Ministry of Finance in the Budget Committee in September, according to which the budget deficit of 2.7% could be approximately maintained. His parliamentary group colleague Arnold Schiefer was of the opinion that, based on available data, it would have been entirely possible to revise the budget deficit forecast earlier. In contrast to Brunner, he also took the view that the ministry was not obliged to use Wifo forecasts.
Brunner: Figures from the Ministry of Finance were always the most accurate
The Finance Minister once again pointed out that the budget preparation process was strictly standardized and that the participation of all departments was always required. Parliament is also informed about the current status in regular reports. Due to the general economic conditions and additional expenses such as for the climate bonus or payments in connection with the flood disaster, the forecasts had to be revised downwards, noted Brunner.
Basically, the Finance Ministry’s figures were always the most accurate, said Brunner, which is what Fiscal Council boss Badelt once said. A conservative approach was also chosen when preparing the budget, while the economic research institutes were initially more optimistic. Since the European Commission’s autumn forecast has not yet been published, the new fiscal structure plan must be presented by the new federal government, the minister noted.
Regarding a question from MP Elisabeth Götze (Greens), Brunner explained that the expert group had received data to assess the budgetary situation. However, no employees of the Ministry of Finance would take part in the deliberations.
A representative of the Ministry of Finance also informed FPÖ mandater Fuchs that the group of experts in question had no other figures available than those available to MPs. As far as the future fund discussed by Karin Doppelbauer (NEOS) is concerned, there is currently no exact data on the use of funds. This would only be available during the evaluation in August 2028. More details are already known about the fourth community aid package, which MP Maximilian Linder (FPÖ) has inquired about. As of the end of September, 650 million Ꞓ had already been paid out; Around 350 million Ꞓ are therefore still open.
The head of the Parliamentary Budget Service, Kristina Fuchs, informed that she was invited by the budget expert group addressed by the FPÖ. She took part in the first meeting and presented the scenarios created by her service in connection with compliance with the new EU fiscal rules.
1.64 billion Ꞓ cost overruns in the third quarter
The report on the approval of overuse of funds was also assigned to the subcommittee. The promotion of the expansion of renewable energy and the increase of the climate bonus base amount to 145 Ꞓ represented the largest share at 1.37 billion Ꞓ. Overall, overuse of funds amounting to 1.64 billion Ꞓ was recorded in the third quarter of 2024. Furthermore, the corresponding report from the finance department refers to previous charges amounting to Ꞓ 567.8 million, with Ꞓ 154.2 million for the craftsmen’s bonus (for the years 2025 and 2026) and Ꞓ 298.4 million for military matters become(1/BA).
The committee also had the report on impact orientation 2023 (2/BA), which was published by the Federal Ministry for Art, Culture, Public Service and Sport (BMKÖS). It provides a view of the degree to which impact objectives set out in the federal budget have been achieved. Particular attention is paid to the question of equality, which is expressed in a separate supplementary report. In 2023, 73 of 120 impact goals (61%) were achieved above plan or in full, according to the report from 2023. For a further 32 goals, the planned impact was largely achieved, while for 14 impact goals the goals were not achieved or were only partially achieved . Of the 36 equality goals, 23 (64%) were achieved in full (or even beyond). (Final Budget Committee) sue
NOTE: The Parliamentary Budget Service offers economic analyzes of budget policy and templates from the Federal Ministry of Finance. All current data on budget implementation (monthly reports) can be found on the Ministry of Finance website.
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How does Finance Minister Magnus Brunner plan to address the concerns regarding the accuracy and timeliness of budget forecasts raised by some members of Parliament?
**Interview with Finance Minister Magnus Brunner: Insights into Austria’s Federal Budget Situation**
*Date: November 14, 2024*
**Interviewer:** Thank you for joining us today, Minister Brunner. Recently, your presentation to the Budget Committee received significant attention, particularly amidst the ongoing recession and the revised deficit forecasts. Can you explain why the recent budget report is more critical than usual?
**Magnus Brunner:** Thank you for having me. The heightened attention stems from the unique political climate and the second consecutive year of economic recession in Austria. This situation demands transparency and detailed communication with Parliament and the public regarding our financial forecasts and strategies.
**Interviewer:** You mentioned a Maastricht deficit projection of 3.3% of GDP for 2024, which the Fiscal Council suggests could worsen to 3.9%. What factors are contributing to this increased deficit?
**Magnus Brunner:** Several factors influence this outlook. Key reasons include rising payments due to financial equalization efforts, inflation-driven costs for state employees, and increased expenses linked to climate initiatives. However, we also saw some savings from reduced crisis measures, which provided a partial offset.
**Interviewer:** Despite these challenges, some members of Parliament have raised concerns about the accuracy and timeliness of the forecasts. What is your response to such criticisms?
**Magnus Brunner:** It’s important to recognize that budget forecasting is a methodical process. Critiques sometimes overlook that we rely on data from Statistics Austria, which was initially unavailable leading up to the elections. Our forecasts, while conservative, align closely with established practices and reflect the best available data at the time.
**Interviewer:** Kai Jan Krainer of the SPÖ has expressed confusion over the role of states and municipalities in the deficit. What insights can you provide regarding this particular aspect?
**Magnus Brunner:** He raises a valid point. The contribution of the states and municipalities to the deficit is complex and needs careful analysis. While Krainer questions the calculated share, our assessment is based on comprehensive evaluations. We will continue to communicate these figures transparently to clarify any misunderstandings.
**Interviewer:** Moving forward, what steps do you envision taking to address these challenges and reassure both Parliament and the public about the country’s financial health?
**Magnus Brunner:** We are committed to rigorous monitoring of the budget and will ensure regular updates to Parliament and the public. The establishment of a budget expert group will also enhance our ability to assess and adapt to changing economic conditions. We must work together with all parties to navigate this situation effectively.
**Interviewer:** Thank you, Minister Brunner. Your insights are invaluable as we continue to monitor Austria’s budgetary challenges in these turbulent times.
**Magnus Brunner:** Thank you for the opportunity to discuss these important issues. We remain focused on managing our fiscal responsibilities effectively.
