2023-12-28 04:12:37
The President of the Industrial Association (IV), Georg Knill, speaks of “definitely difficult times” in which the economy, Austria and Europe find themselves. In the APA interview, he criticizes Austria’s decline in competitiveness, the high tax burden, creeping deindustrialization, the federal government’s lack of willingness to reform and also warns of tax gifts in connection with the upcoming National Council elections in 2024.
“We won’t be able to continue with the ‘not that bad anyway’ attitude,” said Knill. “The competitiveness as an export country is massively challenged – it has also fallen massively,” the industrialist (Knill Group) referred to the IMD ranking, in which “we are no longer even in the top third but are now only in 24th place.” Here you don’t have to focus on the average and take appropriate measures, but rather at the top. This ranking includes Denmark, which is comparable in size.
“An average maxim is not enough, especially when we are at the forefront when it comes to spending,” Knill referred to the problem of high pension costs in Austria that, from the IV’s point of view, has not been solved. There is a “permanent sugarcoating” here, but there is a “massive need for action”. The standard retirement age must become the starting age. It is also necessary to respond to higher life expectancies. At the moment, one cannot assume a sustainable system, the entrepreneur and business representative referred to comparisons among OECD countries.
Knill also formulates other key demands for the next federal government. This must urgently reduce the tax burden – from the current 43.5 percent to under 40 percent. However, several governments have already had this goal. Knill said that people should not lose faith, that the demand is aimed at all parties and all governments: “Down with the burden rate.”
In any case, the IV boss calculates that the total of all taxes currently amounts to 200 billion euros. By 2030 it would be 270 billion euros. “The path of increase must be stopped now. If the tax rate falls below 40 percent, the taxes will still amount to 250 million euros in 2030, but it would still be a massive relief,” demands Knill.
Inflation in Austria also needs to be brought under better control, the IV President recalled, pointing out that inflation in this country is always, and sometimes quite significantly, above the Eurozone average. On the one hand, there is a “price-wage-price spiral” here, which is due to the very high wage agreements in recent years. This is driving unit labor costs, which, according to Knill, citing Wifo data, are expected to rise by 11.5 percent this year and by 7.9 percent next year. “That’s almost 20 percent within two years,” he emphasized.
Domestic competitiveness also suffers from energy costs. “These are significantly above the pre-pandemic value and three times as high as in the USA. These are issues that need to be addressed,” said Knill to political leaders.
Because there is no agreement in the EU, the merit order that determines the electricity price remains. “The consequence is not a pan-European electricity market policy but rather a national electricity market policy,” Knill regretted. Here, industrial companies are looking with concern at other EU states that are putting together specific packages for their companies that are also permitted by the EU. The German plan was only postponed, not canceled, because of the budget difficulties there, warned Knill.
“As soon as this came up, we warned the federal government: We as Austria have to follow suit, otherwise there will be distortions and disadvantages within Europe, which we are already making worse by separating electricity price zones,” explains Knill. This means that 2 billion euros per year would have to be invested in network infrastructure projects, because the lack of infrastructure would result in additional costs of this amount. You pay 30 euros more per megawatt hour in Austria than in Germany. At around 70 terawatt hours, that’s 2 billion per year.
Since 2013, the electricity price compensation model has given EU states the opportunity to reimburse companies for part of the politically caused indirect CO2 costs. This should ensure comparable competitive conditions with non-European competitors.
The announced German cap under the SAG should be 7 cents per KWh. “That would mean almost halving the price of electricity in Austria,” said Knill. More than a dozen EU states already have or are planning similar regulations, including France. The EU is initially allowing such measures until 2030. Knill: “We need comparable measures in order not to experience any competitive disadvantages.”
The approval procedures, which take far too long in Austria, especially from the industry’s point of view, are also a long-running issue. This poses great dangers in achieving the climate goals, which, according to Knill, the IV absolutely supports. Here too, politicians must act quickly if the Austro climate targets are not to be missed, even though projects are in the public interest. This also worked in Germany with Green government participation, said Knill, referring to LNG terminals and pipelines that were quickly built during the energy crisis.
There, priority was given in the procedures between climate, environmental and species protection. “In Austria, everything has to be brought together.” The Location Development Act actually offers the possibility of quicker procedures, but these are just not being used. This is covered by the climate goals for 2030, it is about achieving important intermediate goals that immediately need faster procedures on the way to climate neutrality.
“We are extremely concerned that the goals cannot be achieved due to the time factor,” said Knill. “But that is due to politicians not taking action and not the industry.” This is also one of the many points on which the IV president warns of creeping deindustrialization in his conversation with the APA. Because this doesn’t happen with a single bang.
(The interview was conducted by Philip Stotter/APA)
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