Budgetary Giveaway

In 19 hours and 13 minutes, the Austrian parliament made the decision to ‘spend’ an additional 2.6 billion Euros to gain votes

In the Columbus Shopping Center in Favoritenstrasse on Saturday, Sept. 27, the late weekend shoppers were hurrying to get their groceries or a quick cup of coffee as a crowd of several dozen people, gathered around a small podium by the escalator. There were two presenters on stage, right in front of a wooden cow.

It was the end of the harvest season, the Erntedankfest; and wrapped baskets of organic goodies from local supermarket down below seemed to underline the seasonal festivities, with folk music playing raucously over the loudspeakers.

But actually that wasn’t it: it was a giant give away – hundreds of prizes, that could be won by answering simple questions. With a show of hands, or by phoning in, the winning customers could pick up his prize and continue shopping.

The questions were simple indeed, even subjective; and so were the answers: “Which is the most popular shopping center in Vienna?” When someone shouted “Donauzentrum,” the moderator was evidently disappointed. But luckily the person on the phone, an elderly lady “from the 10th district neighborhood,” made the right guess, and became the lucky winner of a coffee machine.

So, as the packed crowd followed each question with great excitement, some of the bystanders shaking their heads and murmuring that the questions were ridiculously simple as, of course, were the answers.

It was a lot like the Austrian election campaign. In the final days of September, the Austrian electorate has been presented with ‘giveaways’. The party activists of all political stripes were handing out goodies right and left, from cigarette lighters to pens and herb seeds, and, of course, balloons for the kids. The latter were also noticeable in the Columbus Center that Saturday afternoon as parties still were campaigning on the streets. It was, after all, one day before the snap elections, almost three months after parliament decided to hold general elections on Sept. 28.

But the goodies on the streets, along with leaflets, brochures and flyers, are peanuts in comparison to the ‘giveaways’ the Austrian parliamentarians have presented days before a record of Austrians (6.3 Mio) are eligible to vote.

In a marathon session of parliament on Wednesday, Sept. 24, which lasted for 19 hours and 13 minutes, the 183 members of parliament voted for 52 legislative initiatives, spending, according to APA, an additional estimated €2.6 billion every year.

The measures taken include the increase of pensions (by 3.4% including one-off payments), the introduction of a 13th month income support for children, as well as the abolition of tuition fees for public universities. The prestige project of the Social Democrats of cutting VAT rate for groceries from 10% by half to 5%, however, failed to gain enough support in parliament, as Jörg Haider’s BZÖ bailed out.

Forgotten were the words of caution and restraints in election promises and giveaways of tax money. Particularly of those voiced by the Conservative ÖVP.

“Election sweeteners must never be the backpack of young people,” party leader Wilhelm Molterer stated, defending the party position, “we have proposed on those measures of financial relief that we can uphold.”

A statement that should have been reiterated last week as the world economic situation worsens with the collapse of the stock market and large banks. Nevertheless, Werner Faymann, head of the Social Democrats, denied any serious impact of the US economic crisis for Europe, for a US $700 billion bail out, if it ever passes Congress. And he added in the TV debate that it was necessary to make all the parliamentary decisions now and deal with the budgetary implications later.

And so, not much surprise that in the last parliamentary session of Sept. 24 all parties represented came up with giveaways for their electorate. In majorities across the political spectrum, large-scale legislative decisions with long-term financial effects were taken with little preparation, despite an acting government for Social Democrats and Conservatives supported by a large parliamentary majority.

What was hailed by some commentators as ‘great moments of Austrian Parliamentarism’ would have been better described as a display of democratic immaturity. Short-term political gains put the economic and budgetary stability of Austria at risk.

On Monday, day one after the elections in Austria, the Austrian Stock Exchange lost dramatically 8.05 points – the second largest loss in the institution’s history following the news, that the US congress rejected the US $ 700 bn. rescue plan for the financial sector. This demonstrates clearly how fragile the current international economic situation is, also for Austria.

The election result – at the time of this writing – not surprisingly shows a blow for the two largest political parties in a historic defeat. Neither the Social Democrats (with just under 30% still remained Austria’s strongest party) nor the Conservatives (just under 26%) reached more than 30% of the votes, while the two far-right parties, FPÖ and BZÖ, together doubled their share of votes together to 29%. The Conservatives, meanwhile, have drawn the first conclusion by replacing their party leader Wilhelm Molterer with Josef Pröll.

The Austrian people may be able to pick up their financial goodies at the political party of parties, but this leaves virtually no room to manoeuvre in times of economic decline.

Unlike the Columbus Center, in real life, simple answers to simple questions do not always provide the best solutions for a country’s economic stability.

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