Austria’s proposed austerity measures under a potential FPÖ-ÖVP (far-right and centre-right parties) coalition aim to save €6.4 billion in 2025, sparking debates about their impact on daily life.
These measures, which could significantly affect households across the country, include abolishing the climate bonus (Klimabonus), increasing fees, and ending educational leave (Bildungskarenz).
Here’s a breakdown of what to expect.
What are the key changes in the austerity package?
Some of the most significant measures include:
- Abolition of the climate bonus (Klimabonus): This subsidy, introduced to offset costs from Austria’s CO2 tax, will no longer be paid out. Its removal is expected to save €1.96 billion annually.
- End of educational leave (Bildungskarenz): Discontinuing this programme, which allows workers to pursue further training while receiving financial support, will save €350 million in 2025.
- Higher taxes on tobacco and gambling: These measures aim to generate additional revenue.
- Valorisation of fees: Federal service fees, including those for driving licences and passports, will be adjusted for inflation.
- Cuts to environmental subsidies: A 20 percent reduction in funding for projects like boiler replacements and e-mobility initiatives is planned.
How will the abolition of the climate bonus affect people?
The climate bonus (Klimabonus) was introduced to compensate households for Austria’s CO2 tax and encourage eco-friendly behaviour.
Its removal means households will bear the full cost of the tax without any offsets. ÖVP parliamentary group chairman August Wöginger confirmed that “the climate bonus will no longer be paid out from this year,” as reported by Die Presse.
This change is likely to disproportionately affect lower-income households, who previously benefited the most from the subsidy.
A similar green measure, the Klimaticket, which allows people to travel through Austria’s public transport system for less than €5 a day, will not be cut. However, the free Klimaticket for 18-year-olds, will.
READ ALSO: Is Austria's budget plan a 'hidden tax' on residents?
What will the end of educational leave (Bildungskarenz) mean?
Educational leave, which has allowed employees to take time off for further training with financial support, is being abolished entirely.
FPÖ politician Arnold Schiefer justified the move by saying, “In good times, we could afford this. In bad times, we will have to tighten our belts”.
The programme’s elimination raises concerns about its broader impact.
Critics argue that educational leave helps companies avoid layoffs during economic downturns, as employees can take training instead of facing redundancy, Der Standard reported.
Without this option, the government could face increased costs for unemployment benefits, offsetting any intended savings.
READ ALSO: Bildungskarenz: What to know about Austria's paid leave for further education
How will increased fees impact residents?
Federal fees, which have not been adjusted since 2020, will now be updated to reflect inflation.
Costs for essential documents such as driving licences and passports are expected to rise, generating €65 million in additional revenue.
While these increases aim to balance government budgets, they could add to household expenses, particularly for families needing multiple documents.
How are environmental measures being scaled back?
The government plans to reduce environmental subsidies by 20 percent. This includes cuts to funding for boiler replacements and e-mobility projects.
While the general climate ticket will remain, the free version for under-18s will be abolished, saving €120 million annually. Wöginaid said these measures aim to “adjust environmental subsidies to a normal level,” but he didn't give further details.
What is the purpose of the austerity package?
The far-right FPÖ and centre-right ÖVP claim the budget measures are necessary to avoid an EU deficit procedure and stabilise Austria’s finances.
FPÖ finance spokesman Hubert Fuchs stated, “The mountain of debt in recent years has prompted us to intervene.” He also emphasised that the government is confident the savings plan will receive a positive response from Brussels. He added, “Without austerity measures, Austria would be patronised by the EU and also risk a lower rating on the financial markets,” he said at a press conference this Thursday.
How will these changes affect Austria’s economy?
Economic experts have expressed mixed opinions on the austerity measures.
While proponents argue that the cuts will ensure fiscal stability and prevent EU intervention, critics warn that the abrupt spending reductions could harm economic growth.
The Austrian Institute of Economic Research (WIFO) predicts that reducing the deficit to meet the EU’s three percent ceiling could dampen GDP growth by up to one percentage point, as ORF reported.
What’s next?
The FPÖ and the ÖVP are still in coalition talks, so the draft is not an official plan yet. However, they agreed to the points presented at the press conference. If they decide to form a coalition, many of these changes will need legal approvals, so it could take months before programs are cut and fees rise.
READ NEXT: What we know so far about Austria's budget cuts
Editor's note: This article was updated on January 17th to correct references of ÖVP as "centre-left" in the first paragraph - the party is centre-right, as correctly stated later in the story. We also corrected the reference to August Wöginger, who is the parliamentary leader of the ÖVP. Thank you to the reader who pointed out the mistakes.
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