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Finance Minister Karin Keller-Sutter (59) sees black. Even before the summer holidays, a huge financial hole loomed on the horizon: two billion francs for next year and even three billion from 2025. A financial hole means that structural expenditure is much greater than income, which would cause the federal government to build up debt. In normal years he is not allowed to do something like that – that is what the so-called debt brake requires. It was adopted by the people in 2001 with 85 percent yes votes. New debts are only allowed in an unforeseeable situation such as the pandemic.
Keller-Sutter’s prognosis has improved since then. The current budget forecast shows a red zero. All departments had to promise her that they would tighten their belts, especially the economics department. But the question is: will the new parliament elected in October play a role? The final budget will be adopted in December. By then, some National Council members will probably be rubbing their eyes at how small the federal government’s financial leeway has become.
Less and less room to play
According to the Minister of Finance, the biggest problem is the high share of tied expenditure. This includes subsidies for social services, rail infrastructure, road expansion, support for renewables and universities, and so on. The list is long and gets longer every year.
Committed spending has increased dramatically over the past two election periods. This is represented by the following set of numbers:
- From 2015 to 2019, this share increased from approximately 55 percent to 62 percent.
- When the current parliament took office so far in 2019, this share rose to 64.4 percent.
- And next year it will rise to 65.7 percent.
In other words, almost two-thirds of the 83 billion francs federal budget is heavily planned, and incurring debt is prohibited in normal years.
The AHV alone costs 10 billion
How is this increase explained? The AHV costs the most. The AHV Reform 21 will come into effect next year. The agreed additional tax revenue (plus 1.2 billion francs) will flow directly to the social security system. The federal government must make an additional 300 million available annually. The work, which would originally have been financed through wage contributions, now costs the federal government 10.3 billion francs annually. Increasing trend.
Disability insurance (+100 million) and federal premium reductions (+300 million) are also becoming increasingly expensive. The latter increase automatically and as a percentage of the health insurance premium. These fixed spending blocks cost between three and four billion francs annually. Spending pledged to promote sustainable energy and other climate projects is also growing rapidly, by almost 3 billion francs.
Parliament has put a number of fixed budget items in funds to remove them from the red pen of the Minister of Finance. If she wanted to cut these budget items, she would have to go to a referendum every time.
“More and more tasks of the devil”
What the Minister of Finance thinks about this obsession with spending, she recently said in an ‘NZZ’ interview: ‘The fact that more and more tasks are being decided, that more and more laws are being passed, which are constantly surpassing each other in terms of of complexity, that is the devil.”
The trend is ‘of the devil’ because it increasingly limits the scope of the Federal Council and Parliament. An example is armor. In the aftermath of the war in Ukraine, Parliament noted that the army had effectively been killed over the past twenty years. Ukraine’s begging for ammunition, missiles and aircraft also highlighted the gaps in this country.
This article first appeared in the Handelszeitung. You can find more exciting articles at www.handelszeitung.ch.
This article first appeared in the Handelszeitung. You can find more exciting articles at www.handelszeitung.ch.
That is why parliament decided to increase the army budget. Initially, 600 million francs should be added for the coming year. The intention was to increase this amount annually to 1.7 billion francs by 2030 – as one percent of gross domestic product, as others do.
But then Keller-Sutter came along and told supporters this wouldn’t work because of the debt brake. Restoring military readiness must be patient. Now it is only half of the promised money for the coming year and the same as before.
In the above-mentioned “NZZ” interview, she explained as follows why the civilian federal council member drove her civilian council colleagues into the parade: “I am now so realistic that I mainly fight against new tied expenditure.”
Childcare financing fallen out of favor
One of those battlegrounds will probably be the financing of the new childcare. There is little public disagreement on this issue – not even from Keller-Sutter – but this funding has no place in the federal budget. “People forget that this is a cantonal task,” she said.
The mistake happened in 2003. At that time, Parliament created temporary “seed funding” to create daycare centers. This has been extended several times and expires in 2024.
Now Parliament wants to convert this provisional arrangement – against the will of the Federal Council – into a permanent task. Costs: 800 million francs per year. The next parliament will decide whether this happens. It would be a new, hardcover edition. Keller-Sutter complains that parliament is allowing more and more costs to be transferred from the cantons to the federal government. Centralization of keywords. If childcare funding were added, the space for the new parliament would be even smaller. The financial deficit for 2025 currently stands at 1.2 billion francs.
This way you can outsmart the debt brake
The trend towards tied expenditure is causing Parliament to resort to shady tricks. One of those tricks is to label certain expenses as unpredictable. In this way, the debt brake can be undermined and debts can increase.
There are two current examples: the partial renovation of the SBB and the costs for Ukrainian refugees. Parliament recently gave the SBB 1.15 billion francs to reduce the 11 billion francs debt gap. A center-left majority declared spending “unpredictable and uncontrollable,” allowing them to bypass the debt brake.
The farmers’ lobby in parliament – about 35 people from all parties – said they agreed to the SBB deal as long as there were no cuts to the agricultural budget. The gun supporters reacted angrily. If the SBB’s debt repayments are described as ‘unpredictable and uncontrollable’, then the same must apply to rearmament, because the war in Ukraine was unpredictable.
However, they couldn’t get through. But the expenditure for the Ukrainian refugees (1.2 billion francs) was declared unforeseeable and thus bypassed the debt brakes.
Next year the debt will rise by 2.5 billion francs to 142.5 billion francs. If this continues, the next election cycle will likely be a wild ride in terms of financial policy. Keller-Sutter has every reason to view the situation in the dark.
Source:Blick
I am Liam Livingstone and I work in a news website. My main job is to write articles for the 24 Instant News. My specialty is covering politics and current affairs, which I’m passionate about. I have worked in this field for more than 5 years now and it’s been an amazing journey. With each passing day, my knowledge increases as well as my experience of the world we live in today.
