Austrian coalition talks enter home stretch

VIENNA Thu Dec 12, 2013 4:59am EST

VIENNA Dec 12 (Reuters) - Austria's mainstream pro-Europe parties entered the final stretch of coalition negotiations, aiming to cap weeks of talks and announce a deal on Thursday to extend the government that has ruled since 2006, party sources said.

Last-minute haggling over privatisation policy and how to plug fiscal gaps in the prosperous euro zone country continued, but was not expected to scupper an accord between the centre-left Social Democrats (SPO) and conservative People's Party (OVP).

The goal was to have the new government sworn in on Monday and announce its official programme on Tuesday, one source close to the talks said.

Striking a deal on Thursday would avoid having the coalition come together on Friday the 13th, one source noted, an inauspicious start for a partnership that many Austrians have criticised for lacking the ambition to adopt radical reform.

"What can coalition negotiations bring when an impotent version of neoliberalism wrestles with a spineless version of socialism?" columnist Armin Thurnher asked in Falter magazine, a comment typical of scathing media coverage of the talks.

Voters punished the two heavyweights in September elections that bolstered the eurosceptic far right, giving historically low support to the parties that have dominated post-war politics.

That prompted both parties to promise a new, progressive approach to politics and a more constructive tone after years of squabbling and policy paralysis.

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

Details of the new political programme were still under wraps, but people familiar with the talks said the SPO, which campaigned as a defender of Austria's generous social safety net, had fended off an OVP push for aggressive pension reforms.

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, an SPO source said.

On the other hand, the SPO was unable to impose a new tax on millionaires. Instead, taxes are set to rise on tobacco, alcohol and new cars in what Finance Ministry State Secretary Reinhold Lopatka has said will cost Austrians 10 euros a month.

While most cabinet posts will not change, local media have speculated that OVP leader Michael Spindelegger, now foreign minister, may 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.

A Spindelegger move could pave the way for rising OVP star Sebastian Kurz, just 27, to take over as foreign minister. (Reporting by Michael Shields; Editing by Hugh Lawson)

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