Austrian Government Narrowly Averts Collapse With New Plan

  • Fragile coalition holds together to prevent early election
  • Support for populist Freedom Party on the rise, polls show

Austria’s government coalition parties hammered out a new policy agenda for the next 18 months before the next scheduled election, averting the threat of a snap vote that could bring the populist right to power.

Chancellor Christian Kern of the center-left Social Democrats and Reinhold Mitterlehner of the conservative People’s Party said their plan’s concrete measures will boost employment, support Austria’s competitiveness and increase public security. All government ministers signed off on it, an important political symbol for a coalition prone to infighting.

Christian Kern, Austria's newly appointed chancellor, looks on during a parliament session in Vienna, Austria, on Thursday, May 19, 2016. Kern said he'll concentrate on winning back voters to the political center after the populist right won a surprise victory last month in the first round of the presidential election. Photographer: Lisi Niesner/Bloomberg *** Local Caption *** Christian Kern
Christian Kern.
Photographer: Lisi Niesner/Bloomberg

“It was necessary to make a clean sweep and for me and the vice chancellor to set a clear direction,” Kern said at a Monday press conference in Vienna. The new program is “the sum, the intersection of measures, which we’re convinced will advance Austria,” he said.

The coalition of Austria’s two main centrist parties, which has ruled the country in 42 of 72 years since World War II, has become increasingly fragile in the past decade. Disagreements on pensions, welfare, tax and security policies have bogged down the government, resulting in acrimony and bickering.

Still, neither party has much to gain from abandoning the coalition and triggering early elections because both have been losing support to the populist Freedom Party, which opinion polls show would get the most votes if elections were held now.

The government seeks to create 70,000 jobs with measures including tax relief for companies hiring new workers and keeping older employees on payrolls for longer. While middle-class earners will get relief by a removal of inflation-driven tax increases known as “bracket creep” and travelers will have plane-ticket levies cut in half, Austria will seek more taxes from international companies like Facebook Inc. and Alphabet Inc.’s Google, Kern said.

In a plan that could set the country on a collision course with the European Union, Austria will explore options to restrict labor immigration from eastern European members, according to the document outlining the measures. It is also introducing a second mandatory pre-school year, university tuition fees to improve funding and pledges to provide tablet or laptop computers to all students from fifth grade.

The plan includes measures to reduce the refugee inflow to Austria and tighter security measures to protect against terrorist attacks. Religious veils like burqas or niqabs that fully hide the face will be banned in public places. Measures to ensure the police, judges or prosecutors display “religious neutrality” will be discussed with religious communities, according to the plan.

Kern, the former chief executive officer of the state railway system, took office in May following the resignation of Werner Faymann, triggered the latest round of talks last week when he said that “there is no need for this government” if it couldn’t “put results on the table.”

    Before it's here, it's on the Bloomberg Terminal.