The People’s Party (ÖVP), Social Democrats (SPÖ) and NEOS unveiled their policy programme on Thursday, following the announcement of their agreement to form Austria’s first-ever three-way coalition government.

The programme focuses on revitalising the economy, improving the labour market and addressing housing costs, while also introducing measures aimed at boosting tax revenues and tackling inflation.

Economic Strategy and Tax Increases

The programme highlights the significance of small and medium-sized enterprises (SMEs) and the export industry as the backbone of Austria’s economy. Measures to counter the recent economic slowdown will include efforts to boost tax revenues, particularly from the gambling and tobacco sectors.

By 2030, gambling is expected to contribute an additional €220 million, with the tobacco sector also generating increased revenues. E-cigarettes will now be taxed in the same way as traditional tobacco products.

“We will continue to strengthen the purchasing power of citizens and create a noticeable counterbalance to inflation,” the coalition states. “To prevent the outflow of economic performance and deindustrialisation, we are implementing measures to secure entrepreneurial freedom, innovation, value creation and jobs in and for Austria.”

Housing and Energy Costs

The minimum duration for rental contracts is set to increase to five years.

Category rents (Kategoriemietzins, or rents of housing category D), guideline rents (Richtwertmietzins, or rents with a fixed starting value) and rents in non-profit housing buildings will not rise this year. A rise of up to 1% will be allowed next year, with a maximum of 2% in 2027.

From 2028 onwards, a cap on rent increases of 3% per year will apply across the entire housing sector.

Asylum and Social Welfare

The planned changes include an immediate suspension of family reunification, at least temporarily, and a headscarf ban for minors under the age of 14.

In the area of social welfare, the government aims to address child poverty with the introduction of a “child basic income,” which is expected to halve child poverty by 2030. The current social assistance system will be replaced by a “New Social Assistance,” offering a unified daily allowance based on the supplementary social welfare guidelines.

Moreover, childcare facilities will provide free healthy snacks, while women’s hygiene and contraception products will be exempt from VAT.

Defence and ORF

The coalition also reaffirms Austria’s commitment to its military expansion plan and participation in the Sky Shield project. The ORF household fee (ORF Beitrag) will remain unchanged until 2029.

Labour Market Reforms

While the coalition does not intend to overhaul the labour market entirely, several individual measures are outlined, including stricter rules on supplementary income for those receiving unemployment benefits.

The existing model of educational leave (Bildungskarenz) will be abolished, with a more targeted replacement to take effect from January 2026.

For long-term unemployed individuals returning to work, a six-month limit on minor employment will be introduced, with special exceptions applying to older long-term unemployed individuals.

For those receiving genuine old-age pensions (not early retirement), a new supplementary income model will be developed in collaboration with social partners. The “Working in Retirement” scheme will include exemptions from social security contributions for employees, and supplementary income will be taxed at a flat rate of 25%. This measure is set to come into effect on 1 January 2026.

Transport and Mobility

In transport, the climate ticket (KlimaTicket) will remain, with the government pledging to improve public transport infrastructure and expand mobility options. The government has also made provisions to end the norm consumption tax (NoVA) on lorries under 3.5 tonnes by July 2025, addressing concerns from the transport sector.

The “diesel privilege,” which reduces the tax on diesel compared to petrol, is expected to remain untouched, alongside the tax breaks for agricultural diesel. There will be no tax change for electric cars.

CO2 Storage and Industrial Strategy

On environmental issues, the new government is committed to lifting the ban on CO2 storage, with plans to implement the “Carbon Management Strategy” approved earlier this year. The government aims to integrate captured emissions into the EU’s carbon pricing system and the Emissions Trading System (ETS).

Austria’s industrial strategy will focus on strengthening the country’s competitiveness and innovation. The programme reaffirms Austria’s status as an export-oriented industrial nation, with plans to evaluate structural strengths, challenges, and opportunities. This will form the basis for setting “sustainable, future-oriented, and strategic goals.”