The first Cabinet meeting of Austria’s new government brought several decisions aimed at budget consolidation. Among the measures were a banking levy and the abolition of the educational leave program, which are set to be presented in the National Council later this week, according to government coordinators Alexander Pröll (ÖVP) and Michaela Schmidt (SPÖ) after the meeting. A rent price freeze in certain areas was also agreed upon. The budget is expected to be passed by the end of April or early May.
Schmidt emphasized that the rent price freeze would apply to old buildings as well as municipal and cooperative housing. Without this measure, rents would have risen by an average of 3% starting in April. The rent freeze is expected to save 140 million euros in rental costs. Schmidt assured that a solution for new buildings would also be found, although this would be more legally complex. Pröll described the freeze as a major and significant step.
The Workers’ Chamber (AK) promptly called for the inclusion of privately financed apartments, as rents there are particularly high. The FPÖ criticized the rent freeze, arguing that it only locks in rents at an already high level.
Support for the rent freeze came from the Austrian Tenants’ Association (MVÖ), which called it a “relief for hundreds of thousands of households in Austria.” However, the Austrian House and Property Owners’ Association (ÖHGB) expressed concern that the measure could lead to a halt in renovation and new construction projects. Landlords also criticized the rushed process in parliament.
Banking Levy and Other Measures to Be Presented in National Council
This week, the National Council is expected to decide on several measures already factored into the budget for April, according to Schmidt. These include the abolition of the educational leave program, an increase in the banking levy, continuation of the energy company contribution, a four-year extension of the increased top tax rate, the elimination of VAT exemptions for photovoltaic systems, the inclusion of electric vehicles in the motor vehicle tax, an increase in tobacco taxes, and an increase in betting fees to 5%.
Regarding the educational leave program, the abolition is temporary, with Pröll and Schmidt assuring that a new model will be developed. “The current system will be abolished, and a new system is being considered,” they said, with details to follow.
Budget Approval Under Time Pressure
The government representatives acknowledged that there is pressure to approve the budget quickly. The aim is to implement budget-effective measures, such as the end of the educational leave program, as soon as possible to remain a “reliable partner at the EU level,” Pröll stated.
The budget is expected to be approved within two months: “We anticipate that the budget will be passed in April/May, and we expect the consolidation plan to hold,” Schmidt added.
Other Cabinet Assignments
In today’s Cabinet meeting, it was also decided which areas Chancellor’s Minister Claudia Plakolm (ÖVP) will oversee. These areas range widely from Europe to integration, family, youth, education, ethnic groups, and civil service. Green Party parliamentary leader Sigrid Maurer criticized the fact that the new Federal Ministries Act will only come into effect in April: “Now is not the time for a break. I urge the government to speed up and finally get to work.”
