Streamlining Austria’s federation: Comprehensive reform after nearly a century?

The Austrian government described the recently proposed amendments to the country’s federal system as the most far-reaching constitutional reform since 1929. Yet, they are better understood as first steps towards the government’s declared aim of disentangling the responsibilities and veto powers of the federal and Länder governments. While the reform project points towards (slightly) more separation between government levels, Austria remains overall, and in line with international trends, a classic example of cooperative federalism – writes Dr Kössler

Introduction: An old idea in a new political context 

Debate about a reform of the federal system is increasingly taking center stage in Austria’s political arena. To be sure, this is nothing new in a country that is famous for the frequent emergence of such debates and attempts of comprehensive reform (most recently, a Constitutional Convention in place from 2003 to 2005), but equally famous for the repeated failure of such attempts.

What is new, however, is the political context. First, the issue of amending the federal system resurfaced, in particular, after the two powerful long-time Governors of the Länder (states) Lower Austria and Upper Austria stepped down in April 2017. Secondly, after the parliamentary election in October of the same year, the new government formed by the conservative Austrian People's Party (ÖVP) and the right-wing populist Freedom Party (FPÖ) presented a programme calling for a ‘modern federal state’. While the programmatic definition of the essentials of such a state fitted onto merely one page, the time has now come, one year later, to put flesh on the bones of these announcements. This article assesses whether the recent steps taken by the Austrian Government actually meet the high expectations that it had raised and whether or not they are in line with comparative reform trends in other federal countries.

What are the (legal) requirements for the current reform project?

The year 2018 represents the centenary of the republican form of government in Austria, but not of its federal system. For the latter to take shape, another two years were needed to agree upon the Constitution of 1920 which was inspired by ideas of Hans Kelsen but reflected, as federal constitutions usually do, a package deal between political parties, as well as between the national government and subnational entities. At the time, many regarded this delicate compromise solution as a temporary arrangement. Yet, it has endured until this day, albeit with numerous amendments.

Austria’s federal arrangement, initially considered as a delicate temporary compromise, has endured.  

Understanding this past development and the stakes for the current reform project requires some knowledge about how amendments work under the Austrian Constitution. While the latter foresees concerning specific cases a mandatory national referendum or the involvement of the second chamber of parliament (Bundesrat) with special quorums and majorities, the normal amendment procedure is quite straightforward. The normal procedure, which would be applicable to the current reform proposal, merely requires the approval by the first chamber (Nationalrat) with the presence of at least half of its members and a two-thirds majority of the votes cast. From 1945 to 1966 and 1986 to 2000, Austria’s coalition governments were broad enough to command such constitutional majorities, which made it easy for them to ensure the passage of amendments. This has changed since then and the current government will need some support from opposition parties to pass the proposed amendments.

The government will need some support from opposition parties to pass the proposed amendments.

For this exact reason, the composition of a Working Group, entrusted by the Austrian Minister of Justice with preparing the current reform project, is of crucial importance. This group includes representatives from both the federal and Länder governments and among the latter, importantly, also the Governors of Vienna and Burgenland, both of whom are members of the main opposition party, the Social Democrats. The two influential politicians publicly endorsed the first draft amendments that the Council of Ministers approved on 17 October and vowed to promote it among their party’s MPs. This support is crucial for the government to have the necessary votes for getting the reform through parliament.

Why reforms? Streamlining responsibilities and reducing mutual veto powers

The first of two interconnected aims of the proposed amendments, which now make their way from the government to parliament, concerns the disentanglement of responsibilities between the federal government and Länder. This is to be achieved by transferring several subject matters for which the federal parliament is currently authorized to pass framework legislation under Article 12 to the exclusive legislative powers of either the federal or Länder parliaments.

The vertical sharing of legislative power through ‘framework’ legislation has increasingly become unpopular for entangling government responsibilities and blurring lines of accountability.

From a comparative perspective, it is important to note that similar examples of national framework laws and specifying legislation by subnational parliaments have come under fire in other countries. Insofar, Austria appears to follow a more general international trend. German framework legislation under Article 75 of the 1949 Basic Law was first limited by the Federal Constitutional Court and then repealed with the Federalism Reform 2006. In Spain, the limitation of the national parliament to regulating only the ‘basic norms’ of certain matters under Article 149(1) of the Constitution has long been criticized as ineffective because of the Constitutional Court’s tendency to an extensive interpretation of what is ‘basic’. This delicate question of how detailed a national ‘framework’ should be has made such sharing of legislative power increasingly unpopular in several countries.

Austria’s Constitutional Court has tried to find a balance regarding this question. It has traditionally ruled that framework legislation must leave to the Länder a certain scope to make their own specifying laws. At the same time, the Court has also emphasized that this Länder legislation must not contradict the national framework laws or impede their effectiveness. Yet, the new government program foresees its complete abolition because it is seen as entangling the responsibilities of the federal and Länder governments, thereby blurring lines of accountability, without any need or added value.

However, the proposed reforms do not foresee a wholesale repeal of framework legislation.

However, in contrast to this announcement (and the above-mention German case), the current draft amendments do not foresee a wholesale repeal of framework legislation. First, they only provide for a transfer of some matters under Article 12 either to the Länder (e.g. child and youth welfare) or the federal government (e.g. population policy). The proposed amendments do not (yet) cover three controversial matters (hospitals and nursing homes, electricity industry and social welfare). For these, the above-mentioned working group is expected to find a solution until spring 2019. Secondly, the new government recently used its jurisdiction over social welfare precisely under Article 12(1) of the Constitution for regulating the so-called ‘minimum income’, a social safety net that has come under fire especially since 2015 in the context of the European migration crisis. For decades, the federal government did not pass any framework legislation. Instead, it left the harmonization of minimum income schemes of the Länder to an intergovernmental agreement with them, which was not renewed in 2016 due to a lack of agreement. The new government, however, plans to use its legislative power to draft a framework law regarding the ‘minimum income’. Its approach to such kind of legislation is thus in reality quite pragmatic and selective so that Article 12 is (for the time being) still alive.

The second segment of the proposed reforms concerns the elimination of certain provisions that require the consent of either the federal government or the Länder.

The second aim of the proposed constitutional amendments is similarly linked to the idea of disentanglement and expected efficiency gains, as it concerns the elimination of certain provisions that require the consent of either the federal government or the Länder. For instance, changes in the territorial jurisdiction of district courts shall now be made by the federal government. The consent of the respective Land would not be needed anymore, although such decisions must still be made in due consideration of its interests. In the past, the Austrian government has repeatedly complained about this seemingly not so important veto power because Länder faced pressure from local interest groups to withhold their consent to the merging of district courts and thus ‘obstructed’ federal attempts to restructure the court system.

In exchange, the federal government would lose, according to the draft amendments, its veto power regarding the organization of the administrative office of each Land government and the appointment of its highest-ranking civil servant. This power of the Länder to autonomously decide about questions of internal organization is a significant step, also symbolically, away from unnecessary federal supervision and as such a positive novelty.

Concluding remarks: A great leap or merely first steps?

At the press conference presenting the resolution of the Council of Ministers on 17 October, the government touted the envisaged amendments as a major step forward. The Minister of Justice enthused about what he called a very far-reaching reform. Chancellor Kurz claimed that after decades of failure to modernize the federal system the greatest constitutional reform since 1929 was now under way. This ostentatious display of enthusiasm certainly has an important political dimension in order to put pressure on the Länder and the opposition parties for future negotiations and to gain momentum for further reforms.

The involvement of key politicians from the opposition Social Democrats in the working group preparing the reforms enhances the chances of approval.

More interesting is, however, from a legal point of view the question about the substance and novelty of what is currently on the table. First, it needs to be emphasized that the government still needs to get its draft amendments through parliament. In light of the support needed from opposition MPs, the involvement of key politicians from the Social Democrats in the working group preparing the reform is certainly critical. However, they still have to convince several of their party colleagues who voiced concern regarding the reform proposal. Secondly, even if the proposal receives the necessary two-thirds majority, the current amendments still lag behind the announcements made in the government program and may thus be seen merely as first steps. In particular, efforts to streamline federal and Länder responsibilities have been successful concerning some matters under Article 12 of the Constitution. But a solution for the three most cost-intensive and therefore politically most salient issues (hospitals and nursing homes, electricity industry and social welfare) needed to be postponed to future negotiations.

Given the cooperative nature of Austria’s federalism, the entanglement of responsibilities between the federal and Länder governments is unlikely to wane.

Together with the reduction of double consent requirements, the envisaged streamlining of responsibilities may well contribute to achieving the proclaimed aim of disentangling the federal and Länder governments. From a comparative perspective, it is worth recognizing that there is a general international trend from dual federalism, with each government level having powers as separate as ‘watertight compartments’ to cooperative federalism. Even if the current draft amendments point towards more dualism and separation, Austria cannot really be considered as an exception to this trend because it remains through other key characteristics a classic example of cooperative federalism. Outstanding examples are the central role of the Conference of Land Governors and the increasing importance over the last years of intergovernmental agreements. Overall, the entanglement of responsibilities between the federal and Länder governments is, therefore, unlikely to wane, at least not for the near future.

Karl Kössler is Senior Researcher at the Institute for Comparative Federalism of Eurac Research, Bolzano/Bozen, Italy.