Fiscal Council Adjustment Act 2021 under review

Sept 8, 2021 Benn-Ibler Rechtsanwälte

With the submitted bill on the Fiscal Council Adjustment Act 2021 (Fiskalratsanpassungsgesetz, FRAG 2021), the government intends to comply with the EU Council Recommendation 2016/C 349/01 by creating an Austrian Productivity Council. The amendment is under review until 14.09.2021.

The need for national productivity councils results from economic concerns. The Council of the EU states in its recommendation that in order to restore economic growth in the Member States (Mitgliedstaaten, MS) of the EU, it is necessary, in particular, to support innovation, the development of skills, flexibility in labor and production markets, and a better allocation of resources. This productivity and competitiveness is to be promoted by productivity councils. In this regard, the Council hopes to promote ownership of the necessary measures and reforms at the national level and to improve the knowledge base for Union-wide economic policy coordination.

At the same time, the introduction of a productivity council in the individual MS is intended to meet the requirements of monetary union. Since MS of the monetary union have problems with the rebalancing of macroeconomic imbalances in the absence of flexible nominal exchange rates, productivity councils are intended to help with supervision. Thus, the introduction of such measures also serves the stability of the euro zone and financial market stability.

In its recommendation, the Council of the EU does not make any specific requirements for the institutional integration of the Productivity Council in the individual MS. The councils should only be functionally independent from authorities responsible for the design and implementation of productivity and competitiveness policies, so that they are able to provide independent analyses within their scope of work.

The Austrian government plans to embed it in the secretariat of the Austrian Fiscal Council. This is an independent body composed of 15 members who are not subject to directives, all of them experts in the field of finance and budgeting. However, the current tasks of the Fiscal Council remain unaffected by the incorporation of the Productivity Council.

Ministerialentwurf 141/ME XXVII. GP (23.08.2021)