"Didn't Do Anything Seriously Wrong": IHS Chief Comments on Government Program

With their government program presented on Thursday, ÖVP, SPÖ, and NEOS "did not do anything grossly wrong" - this is the overall assessment of IHS head Holger Bonin. It is positive that "they do not promise too much." The focus on the topic of work is also a good emphasis. Climate protection, on the other hand, is "a gap, as they have rather agreed on the minimum consensus," Bonin said to APA on Friday. Wifo head Gabriel Felbermayr advocated for advance trust in the government.

The government program exudes realism because much is subject to financing conditions. Things that have not been negotiated have been left open. It is apparent that all parties involved "had to swallow some bitter pills."

Labor Market and Climate Protection

Bonin positively evaluates the attention given to the labor market topic. The focus is on the supply of skilled workers, employment of older people, and women, although more concrete measures could have been desired regarding childcare. It is good that the AMS funds for integration policy are not to be cut. Also, educational leave will not be completely abolished but will be more precisely targeted.

The topic of climate protection, however, has been little elaborated in the government program and clearly does not have high priority - "a gap," says the director of the Institute for Advanced Studies. "They have rather agreed on the minimum consensus to follow European goals. That is at least something, which might have been imagined differently in the other coalition." A particularly proactive policy is not visible in this area, Bonin notes, pointing to the expansion of the motor vehicle insurance tax to e-cars or the early abolition of the VAT zero rate for PV systems.

Another "Gap"

As a "second gap," Bonin identifies "everything that goes in the direction of federalism reform, also ultimately a sustainable reform in the healthcare system." At least initial steps have been taken in pension reform. Among other things, an increase in the access age for the corridor pension and the required insurance periods is planned. Here, the IHS head considers the corridor pension more important than the tax incentives for people who work beyond the regular retirement age. "Because, one must first reach the regular retirement age." However, the coalition lacked the courage for a longer-term perspective on pensions. They did not dare to say "what happens if we still do not have finances under control in the 2030s?"

Regarding budget consolidation, the numbers reported to Brussels have essentially been adopted. However, the medium-term perspective for the next five to seven years is missing. Although there are now also burdens for the energy industry and banks to increase revenue, "but otherwise these are all rather burdens that will fall on private households." For example, the climate bonus will be abolished. On the other hand, there are relatively few reliefs, such as the tax exemption for bonuses up to 1,000 euros.

For the elimination of the climate bonus, there is a certain compensation for commuters, which is not socially targeted. While the climate bonus was intended as relief for lower-income households, commuter households tend to be not the poorer households.

Poorer households could benefit from the rent price cap - which is no longer as effective as it would have been during the high inflation phase. Instead of intervening in prices, it would be better to support the tenants themselves, says the IHS chief.

"Rationally Inexplicable"

The bank and energy levy are "popular, but rationally inexplicable," according to Bonin. It is "tax policy based on the state of the treasury" - banks are burdened because they have made high profits in recent years. "If that is the only argument, it is not very consistent."

The rent price cap will lead to slightly lower inflation, said Wifo chief Gabriel Felbermayr on Friday in ORF's "ZiB 2". However, it has negative side effects for the rental market. The economist recommended a modernization of rental law. He also criticized that the upcoming government is "at least partially dismantling" the abolition of cold progression.

However, Felbermayr advocated giving the government the benefit of the doubt. It has shown that it is still possible to reach compromises. Moreover, it has attempted to design the savings package in a socially balanced way, the economist said, referring to the bank levy and rent price cap.

Felbermayr was rather pessimistic about the economic outlook. For the current year 2025, Wifo currently expects a growth rate of +0.6 percent. "Now it looks like we have to revise downwards," said Felbermayr. News about tariffs or escalations in the Ukraine issue are not good news in this regard. In addition, Austria is dependent on the German economy - "if it doesn't pick up, it is also difficult for Austria." If a larger savings package is necessary than planned, the economist advises accepting an EU deficit procedure.

(APA/Red)

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