Federal budget 2024: The cabinet decided on these savings

According to information from government circles, the federal cabinet passed the draft budget for 2024 and the financial planning for the following years on Wednesday. Significant savings are planned, and new borrowing is to be limited to EUR 16.6 billion next year. The medium-term financial planning up to 2027 provides for some hard savings over the coming years, from which only the defense budget is excluded. Federal spending is to be reduced significantly to EUR 445.7 billion after EUR 476.3 billion this year.

With new debt of 16.6 billion euros, Lindner wants to comply with the debt brake anchored in the Basic Law for the second year in a row after years of exceptions caused by the crisis. There are cuts, especially in the federal grants for social security. The subsidy for long-term care insurance should be completely eliminated. There is still heated debate about the abolition of parental allowance for households with higher incomes. The financing of the basic child security planned from 2025 has not yet been fully clarified. These are the previously known plans of the federal ministries:

work and social affairs

As every year, by far the most money is moved in the budget of the Ministry of Labor and Social Affairs. Almost 172 billion euros are to be made available for this in 2024, after a good 166 billion this year. That’s more than a third of the entire budget. According to the draft, 127 billion euros in taxpayers’ money will be made available for pension insurance alone, after 121 billion this year – the federal government pays subsidies to the pension fund and also covers contributions for the period of raising children. “The subsidies, contributions and reimbursements are justified, among other things, by the fact that the statutory pension insurance takes on tasks for society as a whole,” says the Ministry of Labor. 24.3 billion euros are earmarked for citizen income in the social budget for next year, after 23.8 billion this year.

Family

The Family Ministry will have to make do with almost 218 million euros less in the coming year. The estimated total expenditure is around 13.5 billion euros. The largest item in the ministry, parental allowance, will be eliminated. The wage replacement benefit that the state pays when parents stay at home after the birth of their children should no longer be paid to top earners, but only to parents who together earn no more than 150,000 euros a year. Previously, this limit was 300,000 euros. Expenditure on parental allowance has risen from 7.6 billion last year to 8.3 billion euros this year, and the cut is intended to save 290 million euros. There has been severe criticism of the plans for parental allowance.

From 2025, basic child security is to replace various benefits such as child benefit and child supplement and be more easily accessible. This should result in more beneficiaries actually receiving the relevant money. Federal Family Minister Lisa Paus (Greens) also believes that increases are necessary and has meanwhile announced an additional requirement of twelve billion euros, which met with sharp opposition from the FDP. Finally, the Greens cabinet members made their approval of the 2024 draft budget dependent on an agreement in principle on basic child security. In the planning of Federal Finance Minister Christian Lindner (FDP), two billion euros are earmarked annually for basic child security from 2025. But that was just a “note item,” emphasized Paus. The final amount will be in your bill. “There will be no effective fight against child poverty for two billion euros,” she told RTL/ntv.

Additional expenditure is planned for the child supplement that families with low incomes receive. Here the costs will increase from 1.9 billion to an estimated 2.2 billion euros in the next year.

Education

The budget of the Ministry of Education and Research will shrink from 21.5 billion euros in 2023 to 20.3 billion euros in the coming year. A large part of this has to do with the fact that the 200-euro energy price flat rate, which was imposed once this year for students and technical students and has a total volume of 700 million euros, will no longer apply next year.

But less expenditure is also expected in the area of ​​student loans: almost 1.4 billion euros for students are estimated, after 1.8 billion this year; for student loans 551 million after 763 million this year. The education and science union criticized: The traffic light coalition is systematically starving out student loans if they don’t adjust the rates to the galloping inflation and price explosion on the housing market.

In the 2024 federal budget, EUR 500 million is a particularly important educational policy project, the so-called Start Chances program: This is intended to provide special support to 4,000 schools nationwide “with a high proportion of socially disadvantaged students” – with money, but also with additional social workers. It is scheduled to start in the 2024/2025 school year.

Health and care

After the end of the acute corona crisis, the budget of Health Minister Karl Lauterbach (SPD) is shrinking. Expenditure of 16.2 billion euros is still possible – 14.5 billion of this alone is already tied to statutory health insurance as a normal subsidy. A subsidy of one billion euros for long-term care insurance, which was only introduced in 2022, will no longer be used as a savings contribution to household restructuring. However, Lauterbach immediately made it clear that there would be no cuts in benefits as a result.

Specifically, the sum should not flow into a care provision fund as a buffer for future times. The background is also a reform that has just come into force, which is intended to mobilize 6.6 billion euros more annually for care – through higher contributions that have been due since July 1st. However, this should also finance relief for those in need of care in the home and at home from the beginning of 2024. In the case of the SPD and the Greens, that was not enough for many. Without the prospect of more money from the budget, however, the chances of further improvements dwindle. And with the refusal to cut back on benefits, the next increases in contributions for care and for the statutory health insurance funds are becoming more likely.

defense

With an increase of 1.7 billion euros to around 51.8 billion euros, the defense budget stands out in the midst of the cuts. However, Minister Boris Pistorius (SPD) cannot be happy about a real increase for 2024, because the amount pretty much only covers the need that is necessary due to tariff increases. In the meantime, over 10 billion more had been discussed for the Bundeswehr.

The promise of a fully equipped and operational Bundeswehr must now be financed all the more from the 100 billion pot (“special fund”) that is planned for large armament projects such as the F-35 stealth jet, more modern armored personnel carriers or secure communication channels, but does not cover ongoing maintenance. In the coming year, 19.2 billion euros are to be invested from this pot. For the first time, the government also wants to meet NATO’s goal of two percent of gross domestic product for defense.

rail

According to the draft, the focus of investments in the transport budget is on the rails – the rail network is partly dilapidated and should be renovated more quickly. The heads of the coalition had determined at the end of March that the state-owned Deutsche Bahn would need around 45 billion euros to cover the investment needs by 2027. This need should be covered “as far as financially feasible”, essentially from truck toll revenues.

According to coalition circles, these 45 billion euros will not be reached. There was talk of up to 34 billion euros by 2027 – but that was significantly more than originally planned. The Federal Government also wants to examine whether and to what extent the Climate and Transformation Fund (KTF) – a special fund in addition to the budget – can make a contribution of 15 billion euros over the next two years to cover investment needs.

Billions in government revenue from emissions trading and CO2 pricing flow into the fund. However, numerous other projects are also financed from the KTF – for example, funding for the replacement of the heating system. Negotiations are still ongoing on the fund’s business plan.

The Greens expert Matthias Gastel said that the funding backlog at the railways had to be tackled even more actively. The railway industry association criticized the start for the rails. Significantly fewer investment funds were set aside for the modernization of the railways than the leaders of the coalition had agreed.

roads and bike lanes

Around 12.8 billion euros are planned for federal trunk roads, i.e. motorways and federal roads, slightly more than this year. Of this, around 11.5 billion are to go into the planning, construction, maintenance and operation of federal trunk roads. The federal government intends to spend around 263 million euros on promoting cycling and walking – around 150 million euros less than in 2023. Cuts are to be made, for example, in the construction of cycle expressways.

Reside

Social housing is to be strengthened, 3.15 billion euros are planned and thus more than originally planned. There are also funds for urban development funding, for example.

Regional economic development

There had been a lot of excitement about possible cuts in regional economic development – ​​especially in the east. The aim of the “joint task to improve the regional economic structure” is to support structurally weak regions and set incentives to create jobs. Funds of 679 million euros are now planned for 2024, which is even 32 million more than in 2023. This will be achieved through reallocations.

tkr
DPA
AFP