ECPRD Seminar
“N ew Fiscal Framew orks”
Fiscal Governance in Austria
Vienna, 20/21 June 2013
Helmut Berger
CON TEN T
• Changes and new elements in the Austrian Fiscal Framework
• The Austrian Federal Budget Law Reform
• The Austrian Stability Pact
• Fiscal Institutions
• Challenges for Parliament
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M AJOR CHAN GES AN D N EW ELEMEN TS IN
A USTRIAN FISCAL FRAMEWORK
THE
• Medium-Term Expenditure Framework (MTEF): Legally binding for four
years (since 2009)
• New rules for reserves and introduction of the possibility to carry forward
any unused funds at the end of the fiscal year as an unearmarked reserve
(since 2009)
• Accrual accounting and budgeting on the federal level (since 2013)
• Performance budgeting and result-oriented management of administrative
units (since 2013)
• Long-term projections covering a period of 30 years (since 2013)
• Fiscal rules: Federal and sub-national debt brake rule (since May 2012)
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THE A USTRIAN FED ERAL BUD GET LAW REFORM
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REFORM OF THE FED ERAL BUD GET LAW
• Vision: to improve budgetary decision-making
• Legal basis of the framework: Budget law reform in two stages (2009 and
2013) Unanimous decisions in Parliament
• Reform addresses weaknesses of the traditional system



No binding medium-term perspective
Prevailing focus on inputs
Monopoly of cash-perspective
• Objective: design of the federal budget as a comprehensive steering
instrument for resources, outputs and outcomes
• Permanent involvement of Parliament and the Austrian Court of Audit in the
reform process by establishing a parliamentary advisory board
.
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PRIN CIPLES OF THE N EW
FED ERAL O RGAN IC BUD GET A CT
Source: MoF
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BUD GETARY CYCLE
Spring
• Federal Medium-Term Expenditure Framework Act (binding expenditure
ceilings for four years at the level of the five main budgetary headings)
together with the strategy report
• Stability program and national reform program
Autumn
• Federal Finance Act together with the budget statement und personnel plan
Once within the financial year
• Reports on budget controlling, outcome controlling, investments and financial
controlling subsidies, on reserves, on receivables etc.
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M ED IUM -TERM EXPEN D ITURE FRAMEWORK
(MTEF)
Rubrics (= five main budgetary headings)
n+1 n+2 n+3 n+4
1 General Government Affairs, Court and Security
2 Employment, Social Services, Health and Family
3 Education, Research, Art & Culture
4 Economic Affairs, Infrastructure and Environment
5 Financial Management and Interest
Budgetary discipline and planning:
Binding MTEF & strategy report which explains the ceilings of the MTEF
but not individual appropriations.
Source: MoF
M ED IUM -TERM EXPEN D ITURE FRAMEWORK
(MTEF)
• MTEF law sets legally binding expenditure ceilings



For 4 years in advance on a rolling basis (n+4 is added annually)
For 5 main headings (cover several ministries) and
30 budget chapters (ministry specific)
• MTEF = binding for budget planning and execution


Main heading level: n+1 to n+4
Budget chapter level: n+1 (&n+2)
• Two kinds of expenditure ceilings


Nominally fixed: 75 % of expenditure
Variable: 25 % of expenditure according to sensitivity to the business cycle
• MTEF sets ceilings for staff capacity for each line ministry
• Parliament debates MTEF every year (amendment for the year n+4) and may
also modify expenditure ceilings
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IMPACT ON FISCAL G OVERN AN CE
• The MTEF is in force since 2009, and constituted the first part of a
comprehensive budget law reform.
• It seems that the framework contributed to a general government deficit
lower than anticipated during the last couple of years, it helped to introduce
a longer-term oriented policy debate.
• The MTEF was an important step to make the budgetary process more
predictable and to foster fiscal discipline.
• The MTEF has been adapted several times especially in the first periods
and has now become a more stable instrument
• Ministries have extensively used the new carry forward opportunities for
reserves. The size of the reserves may cause some risk in the future as
reserves are only financed if they are actually needed.
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THE A USTRIAN S TABILITY PACT
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THE A USTRIAN POLITICAL
AN D FISCAL S YSTEM
The Austrian political and fiscal system
• Federal state, consisting of 9 federal states called Länder
• Legislative and fiscal powers are highly centralised
• Taxes are practically raised only on the federal level and revenue offices are managed
solely by the federal level
• Länder and municipalities depend to a high degree on fiscal transfers and fiscal
equalisation negotiated in a fiscal equalisation scheme (usually for three years)
• National budgetary coordination between the Federal Government, the Länder and the
municipalities is regulated in the Austrian Stability Pact
• Intrastate treaty introduced in 1999, so far adopted for a period of four years
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REFORM OF THE A USTRIAN S TABILITY PACT
(ASP) 2012
• Reform of EU budgetary surveillance and implementation of the Treaty on
Stability, Coordination and Governance in the Economic and Monetary
Union (TSCG) require a reform of the ASP
• ASP 2012 is in force without time limitation and defines a number of fiscal
rules on the federal and sub-national level:






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Debt brake rule: upper limits for deficits of Federal Government, Länder and
municipalities
Expenditure rule: limiting annual expenditure growth of all levels of government
Rule on reducing the government debt ratio
Upper limits on contingent liabilities
Rules on improvements of budgetary coordination
Rules on enforcement of regulations
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FISCAL RULES IN THE ASP
• Debt brake rule: the Austrian budget has to be structurally balanced by
2017, the structural deficit of


Federal level < 0.35% and
States and municipalities < 0.1% of nominal GDP
• Expenditure rule: annual expenditure growth of all governments must not
exceed a rate below a reference medium-term rate of potential GDP growth,
and an appropriate adjustment towards the medium-term objective must be
ensured unless the excess is matched by discretionary revenue measures.
• Reduction of the government debt level: federal and sub-national
governments will reduce gap between Austria's debt level and the 60 %
reference by 1/20th annually (on average over three years).
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G EN ERAL G OVERN MEN T BUD GET
D EVELOPMEN T
Gesamtstaatliche Entwicklung
in % des BIP
Maastricht-Defizit - Gesamtstaat
Strukturelles-Defizit - Gesamtstaat
Öffentliche Verschuldung - Gesamtstaat
Primärsaldo - Gesamtstaat
2009
2010
2011 2012 2013 2014 2015 2016 2017
-4,1
-4,5
-2,5
-2,5
-2,3
-1,5
-0,6
0,0
0,2
-2,8
-3,4
-2,2
-1,4
-1,8
-1,3
-0,8
-0,5 -0,45
69,2
72,0
72,5 73,4
73,6
73,0
71,3
69,3
67,0
-1,3
-1,8
0,2
0,1
0,3
1,1
1,9
2,4
2,7
Quellen: BRA, BMF Strategiebericht 2013, Stabilitätsprogramm 2012-2017
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A USTRIAN BUD GET D EFICIT D EVELOPMEN T
1,00
in % des BIP
0,00
-1,00
-2,00
-3,00
-4,00
-5,00
Maastricht Defizit - Gesamt
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2009
2010
2011
2012
2013
2014
2015
2016
2017
-4,10
-4,49
-2,46
-2,48
-2,33
-1,50
-0,60
0,0
0,20
Strukturelles Defizit - Gesamt
-2,8
-3,4
-2,2
-1,4
-1,8
-1,3
-0,8
-0,5
-0,45
Bundessektor *)
-3,17
-3,46
-2,39
-2,62
-1,96
-1,30
-0,60
-0,2
0,00
Gemeindeebene (einschl. Wien)
-0,28
-0,43
-0,04
0,08
-0,07
-0,10
0,00
0,0
0,00
Landesebene (ohne Wien)
-0,72
-0,79
-0,23
-0,08
-0,35
-0,20
-0,10
0,0
0,05
Sozialversicherungsträger
0,07
0,19
0,20
0,14
0,05
0,1
0,1
0,1
0,15
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IMPROVEMEN TS OF BUD GETARY
COORD IN ATION
• MTEF concerns only the federal government expenditure (about 50 % of
total general government expenditure)
• Extension of medium-term budgetary planning to sub-national governments
by ASP 2011 and ASP 2012
• ASP 2011 aimed at further improvements of budget coordination between
different government levels and specified reporting obligations on
medium‐term budgetary strategy
• ASP 2012 further specifies and standardizes the required information on
medium-term budgetary strategies of the sub-national governments
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COORD IN ATION COMMITTEES
• The ASP 2012 provides for the setup of Committees for Coordination:


An Austrian Coordination Committee (Representatives of the Ministry of
Finance, the Länder and the associations of municipalities and cities)
A coordination committee for each State (consultation between a Land and its
municipalities)
• Mandate of the Austrian Coordination Committee





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Coordinates the budgetary affairs among the federal government, the Länder
and municipalities,
Organizes the necessary information exchange on budgetary developments
Discusses and enacts new fiscal rules
Presents recommendations on corrective actions to the government body
concerned (in case of signs for deviance of the fiscal rules) and
Is responsible to present steps to comply with EU obligations
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M ON ITORIN G AN D EN FORCEMEN T
• Control accounts: Deviations (positive or negative) from the structural
balance of ‐0.35 % of GDP at the federal level and/or ‐0.1 % of GDP at the
state and local level are registered
• If accumulated deviations on control accounts reach certain limits a
business cycle‐compliant deficit reduction has to be initiated
• Austrian Statistical Office provides relevant fiscal data and
• Court of Auditors provides an expert opinion in case of non-compliance
• Arbitration panel requires government body in non-compliance to present
corrective measures within a limited period of time
• In case of progressive non-compliance the panel can impose sanctions
provided for in the Austrian Stability Pact
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IMPACT ON FISCAL G OVERN AN CE
Basic concept of the ASP
• Involves all levels of government in the consolidation of public finances
• Provides for legally enshrined budgetary commitments across various
government levels
However, due to financial crisis previous targets were revised and not
achieved, sanctions were never used
Revision of ASP 2012
• Sets more ambitious targets and strengthens the enforcement mechanism



Attaining budgetary goals in individual years
Enhancing the role of the Court of Audit
Making the launch of the sanctions procedures automatic
In the last two years fiscal rules in the ASP contributed to a general
government deficit lower than anticipated
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FISCAL IN STITUTION S
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G OVERN MEN T D EBT COMMITTEE(GD C)
• Established already in 1970
• Analyses public finances and presents recommendations on the fiscal
policy
• Analyses sustainability and quality of budgetary policy of public budgets
• Annual presentation of a report on the recommendations made to the
Federal Minister of Finance, which the Federal Minister of Finance is to
present to the National Council and Federal Government
• The GDC will be reorganized as an independent body and will act as the
fiscal council according to the provisions of the two-pack
A USTRIAN IN STITUTE OF ECON OMIC RESEARCH
• Independent research council
• Prepares economic projections and underlying assumptions for budgetary
laws (MTEF, Federal Finance Act)
• Analyses economic developments in Austria and abroad and is renowned
for high-quality economic research based on the latest empirical
methodologies and a solid knowledge of institutional and political structures
CHALLEN GES FOR PARLIAMEN T (N ATION AL
COUN CIL)
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ROLE OF PARLIAMEN T (N ATION AL COUN CIL)
• Parliament approves the Austrian Stability Pact, the Medium-Term
Expenditure Framework and yearly Federal Budget
• Parliament exercises permanent budgetary control on the implementation of
the Federal Budget in the course of the fiscal year
• Parliament is informed by different reports on the fiscal performance of the
sub-national governments
• Parliament discusses the Stability Program and the National Reform
Program after submission to the European Commission
• Parliament deals with the recommendations of the European Commission
and the European Council
• Parliament is not directly involved in the implementation and control of the
fiscal rules
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CHALLEN GES FOR PARLIAMEN T (N ATION AL
COUN CIL):
N EW AN D COMPLEX REGULATION S
• Completely new budgetary structure and performance budgeting changes
parliamentary possibilities of steering and controlling the budgetary process
• New budget law confers former Parliament’s rights in budgetary matters to a
higher level of aggregation (70 global budgets instead of more than 1000
individual budget lines)
• New budget rules confer additional powers to government and administration
• The new European fiscal governance framework with the European Semester
influences procedures and limits national budgetary scopes
• Federal budget reform envisages a central role for parliament
However,


Budget process is a highly complex mechanism
Large information asymmetries between government and parliament
Need to realign budget procedures and budget control in parliament
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CHALLEN GES FOR PARLIAMEN T (N ATION AL
COUN CIL):
M AIN TAIN IN G THE O VERVIEW
A series of strategic documents outlines government objectives, planned
measures and performance indicators:
• Federal Finance Act with the explanatory Budget Statement (Budgetbericht)
• Federal Medium-Term Expenditure Framework Act with the Strategy
Report (Strategiebericht)
• Government Program
• Austrian Stability Pact
• Stability Program
• National Reform Program
• Consolidation Package
Fragmentation of information makes it difficult to get a sufficient
overview and to combine and cross-check documents
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PARLIAMEN TARY BUD GET O FFICE
• Long-term aims to provide independent expertise directly to Parliament
• New budget law confers former Parliament’s rights in budgetary matters to a
higher level of aggregation (70 global budgets instead of more than 1000
individual budget lines)
• Need to realign budgetary procedures and strengthen budget control of
government expenditure
• Establishment of a new, independent Parliamentary Budget Office
To provide independent and objective analysis
To support Parliament, in particular the budget committee in
budgetary matters
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THAN K YOU FOR YOUR A TTEN TION
Contacts:
Helmut Berger
Head of the Parliamentary Budget Office
Parliament, A-1017 Wien, Dr. Karl Renner-Ring 3
Tel. +43 1 40 110-2889; +43 676 8900-2889
E-mail: [email protected]
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