AUSTRIA - Austrian voters will have to choose a new government as the coalition between the SPÖ and ÖVP parties has broken over pension, health and EU issues.

The first sign of a major rift within the coalition governmentwas the withdrawal of the Social Democrats' (SPÖ) support for a pension agreement containing measures to ensure sustainability of state pensions. (See earlier IPE article: Pension deal might break coalition)

A u-turn on the SPÖ's stance concerning referendums for EU treaties, which so far have not been required in Austria, followed in quick succession as well as a failure to close a deal on the reform of the health system.

This eventually led to the break-up of the government which is only 18 months old.

"It's enough," Wilhelm Molterer, vice chancellor and ÖVP head, told journalists in Vienna yesterday.

He said the SPÖ was "headless and unable to make a decision" and argued early elections were the only way to bring about "clarity and stability" in the government.

Molterer called for new elections "as soon as possible" and initial procedures to set up an early poll are currently under way.

No date has been set yet but September 21 is the earliest - and so far most likely - possible date for a general election.

"The ÖVP was an obstacle on the way to realising a more socially-fair Austria," said Alfred Gusenbauer, Austrian premier and former SPÖ-head, in response to Molterer's statement.

The Social Democrats had opposed automatic increases to the retirement age and contributions to the state retirement system in situations where there were jumps in longevity figures, and as demanded by the Conservatives.

Gusenbauer had been ousted as leader by his own party for being too lenient in his dealings with the ÖVP and caving in to their demands too readily.

One example cited by party colleagues was the pension deal which in the end was a true compromise between SPÖ and ÖVP demands.

The ÖVP, on the other hand, will have a tough election campaign to fight with their unpopular stand on pensions and health, as this requires the party to point out the cost explosion to state systems, as well as EU policies in which the party does not want to hold referendums.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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