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This should “please stop throwing out the money”. Again and again too many measures were taken according to the watering can principle, one of them – the “much too large energy cost subsidy 2” – is still running. Badelt warns against spending more money on measures that get more people who don’t need it, he said in the “Ö1-Morgenjournal”.
He shares the warning from Wifo boss Gabriel Felbermayr that Austria and the “southern countries” of the euro zone could be affected by the high inflation and that prices could pull away. The Republic’s tax expert rejects a reduction in VAT, saying it would be “a really, really big watering can that costs an awful lot of money.” He spoke of around two billion euros and expressed his fear that no government would dare to take this back in better times.
Fee freeze would make sense
Badelt, on the other hand, advocated a social welfare-like structure for inflation support on Wednesday morning. Targeted help must be given to people who can no longer afford everyday life. This aid should be limited to several months and be lifted again when high inflation subsides. When it comes to unemployment benefits, you have to remember that although higher wages will increase them, this will only happen with a time lag. That would be intercepted with a measure similar to social assistance.
A fee freeze would also make sense, here the municipalities are particularly in demand. A price database, as envisaged by the government, has a lot going for it, but can only be part of an overall package.
Skeptical about government intervention in energy prices
Badelt is skeptical about state intervention in energy prices, because then the energy suppliers would have been subsidised, and in principle the government’s way of combating the consequences of inflation was the right one – “but one would have to be more careful with the causes of inflation, in particular an increase in demand should be, and at least it should be now – and please stop throwing away the money,” said the Fiscal Council of the Republic and former head of Wifo and ex-rector of Vienna University of Economics and Business.
The federal government will decide on a package against inflation today in the Council of Ministers. That was announced Tuesday evening from the coalition. The focus is on the areas of energy and food. Details are still being negotiated, said Social Affairs Minister Johannes Rauch yesterday in the ORF “Report”. Energy and food companies are to be held accountable.
As the German Federal Statistical Office announced today, the inflation rate in our northern neighbor fell to 7.2 percent in April. This is the lowest inflation rate since August 2022. In March it was 7.4 percent, in January and February it was 8.7 percent. For comparison Austria: In March inflation was 9.2 percent, in February it was 10.9 percent and in January 11.2 percent.
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