Big parties near Austrian coalition deal, avoid big changes

Tue Dec 10, 2013 8:13am EST

* Coalition accord set to be announced within days - sources

* No major changes planned by two big parties

* Still not clear who next finance minister will be

By Michael Shields

VIENNA, Dec 10 (Reuters) - The two big pro-Europe parties that have dominated post-war Austrian politics are closing in on a deal to extend their coalition government by eschewing major change in favour of largely staying the course.

Barring last-minute surprises, Chancellor Werner Faymann's centre-left Social Democrats (SPO) and their junior partners, the conservative People's Party (OVP), will unveil a deal in days to extend the coalition that has governed since 2006.

Voters punished the two heavyweights in September elections - which bolstered the eurosceptic far right - by giving them historically low support.

But they appeared set on a broad continuation of existing policy in the Alpine republic, one of the European Union's most affluent and stable member states - although not without a need for some reforms.

"There is no big Social Democrat or People's Party project that is going to be realised. In all the important political areas we met in the middle and found a compromise," one SPO source said, declining to be named as talks were continuing.

Critics say Austria needs to reform public finances and pensions and cut a swollen bureaucracy to ensure prosperity in a country with the EU's lowest jobless rate. Other sticking points have been education reform and child benefit.

Christoph Leitl, head of the influential Chamber of Commerce and an OVP negotiator, criticised the two parties for, as he put it, simply scratching together what they could to yield budgets for 2014-15 without taking a longer-term view.

"At the moment I don't get a sense of the fresh start that was promised. I don't see the earth-shaking reforms that this country would need," Leitl, who had sparked a pre-vote debate by complaining Austria was "going to the dogs", told ORF radio.

The SPO, which campaigned as a defender of Austria's generous social safety net, fended off an OVP push to start raising the official retirement age of 60 for women earlier than in 2024, as now planned. Instead the parties will focus on raising the actual average retirement age of around 58.5.

Despite OVP lobbying, the accord will not name companies like OMV, Telekom Austria or Austrian Post as candidates to have their state stakes reduced to blocking minorities, the SPO source said.

Instead the parties agreed to revamp the OeIAG state holding company and let it propose buying or selling stakes.

The parties still need to agree on cabinet posts. Local media have speculated that OVP leader Michael Spindelegger, now foreign minister, might switch to the finance ministry, replacing Maria Fekter.

Fekter had suggested last month that her days as finance minister were numbered, which would rob her euro zone peers of a plain-speaker who has stepped on many toes - including Faymann's.

The next finance minister faces a tough task in cutting state debt and deficits while still propping up ailing banks like nationalised Hypo Alpe Adria.

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