SPÖ Minister Marterbauer: “We have to reach for the ceiling”

DELIVERY MAN: Austria was on the right track with inflation, but then came the oil price shock. How can we become more independent of energy imports?

Markus Marterbauer: We actually had inflation at or just above two percent in January and February. In March, April and May, we are over three percent. And the difference is purely fuel prices, i.e. Trumpflation due to the war against Iran. But this shows us that the crucial lesson from these experiences must be that we have to get away from fossil fuels. It’s not easy, but the key is to get more energy from renewable energy sources.

What will happen to inflation in the next few months?

This is largely trumpflation and in that sense it is difficult to predict. We don’t know what is happening in Iran. I’m afraid Mr. Trump doesn’t know what to do next either. This is even more disturbing. What we can do in Austria is the smaller part. But the federal government does it. We try to intervene in prices very specifically and strategically. We stopped the rent. We intervene in electricity prices. And we have a reduction in VAT from July 1st. The IHS says all of this will reduce Austria’s inflation rate by about three-quarters of a percentage point. That’s what we can do.

The tax cut on certain foodstuffs was passed in the National Council this week and costs 400 million euros. Is it really worth the money that will only end up costing around 100 euros per household per year?

If it were just this single measure, I would also be a bit skeptical. But it’s the combination with the electricity price cuts, the rent freeze, and of course the fuel price cap. And that all in all pays off. That’s a few hundred, almost thousand euros per household. And I admit, one could wish for more, but we just have to reach for the ceiling. I don’t have the money in the budget and that’s why the tax cut on basic foods is very concentrated on rice, flour, bread, vegetables, fruit and so on, because otherwise it would have been too expensive.

For example, how often do you buy quinces a year?

Rarely, but apples or pears very often.

This also relieves the burden on higher earners. Sensible?

We have selected basic foods that are consumed by everyone, but play a major role in relation to income, especially in the lower income bracket. The same applies to rents and household energy. And in that sense it is very targeted.

If you were to specifically give this money to the lowest-income people, then you would tend to help them more.

Basically yes, but you would have to know exactly how high the household income is. And that’s where things start to get difficult. We know individual incomes, but we don’t know household incomes well. And they would actually be relevant in order to provide such targeted help. That’s why I’m very skeptical, because it quickly becomes complicated and we end up spending more money on administration than people really care about.

Let’s move on to counter-financing. There is supposed to be a parcel drop off, there is a lot of excitement about it. Ultimately, isn’t this a zero-sum game, both in terms of relief for the population and inflation?

It has to be a zero-sum game for the budget. I have to get the money back somewhere. And if you take into account the reduction in VAT and the increase in parcel fees, then perhaps 0.1 percent inflation dampening remains. Not dramatically much. But the distributional effect is completely different. The staples play a much bigger role downstairs than the packages.

But for the people who shop at Temu because it is very cheap, that may not be true at all.

Yes, but we don’t want the EU to receive 4.5 billion packages from China every year, some of which contain products that are hazardous to health. In Austria we do not have the option to levy a tax specifically on China parcels. That’s what we originally wanted, but it’s not possible for European law reasons. Now we have this at European level.

There would actually be no need for an additional Austrian levy, except for the budget.

This is of course not entirely wrong. But without counter-financing we would not be able to afford a reduction in VAT.

Do you think this will even hold up legally? Lawsuits have already been announced.

We are sure that it will last.

Inflation is rising, growth remains low. The EU expects only 0.6 percent for 2026. Why are we at the bottom?

Here, too, we are dependent on international developments and things were actually looking very good until a few weeks ago. We not only had the turnaround in inflation, but we also had it in economic development.

What can we do?

Trying to give people a certain level of security. Over the last two or three years we have observed a phenomenon called fear saving. Households have withheld an ever-increasing portion of their disposable income because they thought, maybe unemployment will hit me too, or who knows what will happen to prices.

How do you actually save? How do you take care of yourself?

I have been working continuously for almost 40 years. That means my most important retirement provision is the statutory pension insurance. I will get the maximum pension, which is now 4,500 euros. I think I’d be fine with that. The most important old-age insurance is the statutory pension insurance.

And outside of the pension, if you say you want to go on vacation?

Luckily, my income is high enough that I can save it during the year.

That means you leave it in the account. Despite the poor interest rates.

My savings account is Bundesschatz.at. A kind of savings account of the republic.

And what do you think about securities in general?

In this sense, I hold securities indirectly through the pension fund. A little bit comes together with the contributions from employers and employees. The assessment is very conservative due to the law. We will now make one or two changes. But the actually more important point is why only a quarter of employees have entitlements to company pension schemes. Why not 100 percent?

And private pension security, are there any plans for that too? The previous government had already planned a retirement account with securities.

I never announced this and there is no money for it in the budget at the moment.

But pensions are under quite a bit of pressure. If we add civil servant pensions, we are well over 30 billion in budget subsidies.

That’s a lot of money and is causing us problems at the moment because the pension system is coming under pressure for two reasons. One thing is that we are getting older as a society. And in the 1960s we had birth rates of over 120,000 per year. They are now retiring. This means that we have a lot of payouts and at the same time there has been one economic crisis after another in recent years, which has led to weak employment development and therefore fewer people paying into the pension system.

So the starting age must be increased.

There is a certain level of trust here. This could perhaps be done from 2035. But it doesn’t help me to finance my current pensions. It quickly helps if people don’t retire at 62, but at 65 and are healthy and have a job by then. But it is interesting that in the last 20 years the effective starting age has increased by more than two and a half years. Economic researchers say the most important reason for this is higher levels of education.