A day after its official announcement, Austria’s incoming government has drawn ire from across the political spectrum.
Following the news of a coalition pact on February 27, Conservatives, libertarians and right-wingers seemed equally shocked by what popular pro-business commentator Gerald Markel called “the biggest betrayal of the voters’ will in the history of the republic”.
Two-thirds of the electorate had cast their vote in favour of right-wing, Conservative or libertarian policies, Markel continued, but were now getting “a retro-Socialism unprecedented in its radicalism”.
Pundits closely associated with the Conservative People’s Party (ÖVP) were also critical. Wolfgang Rosam, a PR professional advising the party, accused it of falling asleep at the wheel and wrote on X on February 27 that he gave the new coalition administration two years before its break-up.
That was after the leaders of the ÖVP, the Social Democrats (SPÖ) and the small Liberal Neos party had presented their coalition pact to the public.
The agreement came following almost five months of negotiations after the general election of September 29, 2024.
The previous negotiations by the ÖVP, SPÖ and Neos had collapsed in early January 2025, reportedly over the SPÖ’s unwillingness to compromise.
The ÖVP then entered into talks for a right-wing coalition with the Freedom Party (FPÖ) under Herbert Kickl who had won the September elections with 29 per cent of the voted but had previously been shunned by the other parties.
Those negotiations were soon marred by leaks of confidential material and heckling from key ÖVP members who demanded an end to the talks and accused Kickl of “power frenzy” and right-wing extremism.
Many commentators then accused the ÖVP of negotiating in name only while working on an agreement with the SPÖ behind Kickl’s back.
Those accusations gained further momentum just days later after the ÖVP-FPÖ talks collapsed in mid-February and the ÖVP announced it was returning to the SPÖ.
The new coalition pact has appeared to be dominated by the SPÖ’s demands.
Stated intentions to reduce the crushing tax burden and improve civil liberties were scant.
“The parties were quick to agree on new burdens but everything relating to cutting state expenditures only comes in vague declarations of intent”, said Franz Schellhorn, head of the libertarian think-tank Agenda Austria.
The new Austrian government said it aimed to counter raising energy prices by introducing price controls in combination with higher subsidies for enterprises – even though State coffers are empty.
At the behest of the SPÖ, stricter rent controls will be introduced. Rents in older buildings will be frozen despite inflation picking up. The minimum period for rental contracts will be extended from three to five years.
Experts said they thought that would further reduce the stock of available rentals as the new measures made investments in rental apartments unattractive.
The government said it would also levy a new tax on banks amounting to €500 million a year – which was expected to be passed on to consumers.
Furthermore, the inflation adjustment of personal income tax brackets would be reduced, amounting to what was described as a hidden tax increase for all Austrians who pay income tax.
The country’s creaking pension system – deemed by experts to be the least sustainable in all of the European Union – will hardly be touched.
Instead, the new coalition said it planned to subsidise employers for hiring older employees.
In keeping with the tradition of the SPÖ of buying the affection of the media with State-paid advertisements, the new coalition will also allot €30 million annually for “free” newspaper subscriptions for young people.
Despite Austria’s economic crisis and the ballooning budget deficit, the ranks of government officials have been greatly expanded.
The new administration will comprise 21 ministers and secretaries of State – each drawing a salary of at least €200,000 a year. That is around 25 per cent more than all previous governments.
The last time there was a bigger government was in 1986, also during an SPÖ-ÖVP coalition.
The government bench in the main chamber of Austria’s newly renovated parliament is too small for all the new coalition hierarchy as it only comprised 18 seats for ministers and secretaries of State.
On March 2, Neos will put the coalition pact to the vote in its general members’ assembly. If fewer than one third of Neos members vote against the agreement, Austria’s new leftist government will have cleared its final hurdle before taking power.
