2023-06-06 17:33:00
The Fiscal Council recommends that the government “implement a more ambitious budget path”. From the point of view of the committee, no budgetary funds are currently necessary to support economic development, explained Fiscal Council President Christoph Badelt on Tuesday at a press conference on the subject of “Austria’s medium-term budget path”. Among other things, it is necessary to increase cost efficiency in healthcare.
The temporary, crisis-related measures should expire as planned and all economic policy measures should be counter-financed within the framework of the current budget – the only exception to this should be “investments in the future”, for example in the area of climate protection.
In order to combat possible future crises and to meet the numerous challenges (economic, health, climate and social policy), it is essential to regain budgetary leeway – or to reduce the government debt ratio quickly and sustainably. “We need budgetary leeway,” says Badelt. As an example, the President cited climate protection-related risks – “be it just that you have to buy additional certificates”. Badelt also pointed out the demographic change that will be reflected in pensions, in care and in health care expenditure.
More efficiency in healthcare
In order to create this scope, an increase in cost efficiency in healthcare as part of the new financial equalization is a necessary contribution. But the Fiscal Council also sees an urgent need for action in other areas: the postponement of the fiscal equalization negotiations by two years has led to a reform backlog, particularly with regard to the unbundling of responsibilities and the financing structure of the federal, state, municipal and social insurance institutions.
The demographically caused, ongoing increases in government spending on care should be countered with improvements in the organization of care services and with a “sustainable financing model”. Personally – expressly not as the President of the Fiscal Council – Badelt is thinking of an asset and income-dependent deductible for those in need of care, as he said with reference to the abolition of care recourse in 2018.
In addition, the Fiscal Council speaks out once morest “extraordinary legal interventions” in the pension system, which would endanger the sustainability of the pension system and thus also that of public finances.
Measures for climate protection
The advisory body calls for further measures on the subject of climate. The scope of the measures adopted so far is not sufficient to meet Austria’s EU emission targets. Therefore, high costs for emission certificate purchases and penalties are to be expected. Due to climate change, other budgetary costs and risks are also to be expected – such as the economic impact of extreme weather events or investment costs to avoid them.
Therefore, climate protection measures that are already planned and the necessary legal basis for them must be implemented quickly. Specifically, the Fiscal Council is calling for rapid steps to be taken with regard to the Climate Protection Act, the Energy Efficiency Act and the Renewable Heat Act. However, an additional, broad package of measures is needed. Badelt emphasized that he was not saying this for political reasons: “I am not a representative of the Greens, but a representative of policy.”
Budget deficit decline “too slow”
According to the Fiscal Council forecast, Austria’s debt ratio will fall below 70 percent of GDP from 2026. This is largely due to the high growth in gross domestic product (GDP) – and thus to high inflation. At the same time, however, this means that the fall below the 70 percent mark can only be attributed to a small extent to economic policy. According to the Fiscal Council, the current budget deficits are preventing a stronger repatriation. In terms of the deficit, the Council expects a continuous decline in the budget deficit that is “too slow” from an economic point of view: starting from 3.2 percent of GDP in 2022 to 0.5 percent in 2027.
Badelt and the head of the Fiscal Council office, Bernhard Grossmann, emphasized that the Maastricht criteria are being met. But one shouldn’t draw the conclusion that everything is “wonderful,” Badelt warned, referring to the call for an “ambitious reduction in budget deficits.” The Fiscal Council did not want to get involved in concrete figures on how much the deficit should be reduced, but: At least the (somewhat more pessimistic) budget path forecast of the Ministry of Finance should be adjusted to that of the Fiscal Council, so the wish.
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