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Budget set for rough ride in parliament

The federal budget 2006, all 1.8 kilos and 644 pages of it

A hot topic will dominate the winter session of parliament: the federal budget for 2006, which is under attack from the political left and right.

Opposition to the government’s budget plan is so great that Finance Minister Hans-Rudolf Merz has warned of the consequences if it is rejected.

The cabinet is proposing a budget of around SFr53 billion ($40 billion) resulting in a deficit of SFr697 million.

Through a series of public-spending cuts the government has been trying to reduce the federal deficit, and to that end has just announced plans to sell off its majority stake in telecommunications firm Swisscom.

For some centre-right parliamentarians the planned cuts do not go far enough, while centre-left politicians fear they are too drastic.

The budget will go before the Senate on Tuesday, with the House of Representatives debating the spending plan from Thursday.

It is already clear that the subject will spark fierce debate between left and right in both chambers. Analysts say there is a real possibility that the budget for next year will be turned down and that it will be back to the drawing board.

This is what worries Merz, who told the Berner Zeitung newspaper that starting again from scratch could mean funding for certain projects being held back.

“Parliament won’t be doing itself any favours if it says no to this budget plan,” Merz told the paper.

Federal spending cuts

The government, which has to present its budget plan to parliament every year, says that were it not for the federal savings programmes already being implemented, the country could be facing a deficit of several billion francs.

In the summer session, parliament finalised a third savings package aimed at saving SFr4.8 billion between 2006 and 2008 – mainly in social welfare, transport, education and research, and foreign aid.

But next year’s expected deficit of SFr697 million is still too high for some in parliament.

Ahead of the winter session, the Senate’s finance committee pushed for the deficit to be reduced by a further SFr80 million to SFr617 million. A House of Representatives committee then drove it down by another SFr72 million, to SFr545 million.

Balancing the budget

But the proposals on lowering the federal deficit have divided parliament.

The centre-right Christian Democrats and Radicals, as well as the rightwing People’s Party want to balance the federal budget in 2006, a year ahead of the government’s timeframe.

This would require savings of SFr700 million next year, on top of the billion-franc savings being made through implementation of the public-spending programmes.

The People’s Party has come up with some ideas for making the savings, but has ruled out tax increases.

The centre left and Greens are dead against further cuts. For them the committee proposals are madness and totally unjustified.

The Social Democrats have said they will only approve the budget if the latest proposals are withdrawn. They see the savings proposals as a direct swipe at their party.

The centre-left party says its two portfolios in government – the foreign ministry and the environment and transport ministry – would suffer more than any of the five other ministries if the proposed cuts go ahead.

Foreign Minister Micheline Calmy-Rey has intimated that the work of her department would be seriously compromised if it were hit by further cuts.

One area that would suffer would be the issuing of Swiss visas by consulates abroad.

Calmy-Rey said that with no money to employ more Swiss staff at embassies, there could be an increased risk of further visa scandals.

The Federal Criminal Court on Monday handed down a nine-month suspended prison sentence to a former Swiss honorary consul in Oman for fraud.

Officials at four foreign missions – in Peru, Russia, Nigeria and Serbia – are still being investigated for corruption over the alleged issuing of fraudulent visas mainly in return for bribes.


Government budget proposal 2006:
Income: SFr52.157 billion.
Expenditure: SFr52.854 billion.
Deficit: SFr697 million.

The federal budget for 2006 is expected to trigger a difficult debate in parliament, which could result in it being rejected and sent back to the government for reworking.

The political left rejects further spending cuts, while the rightwing People’s Party wants to balance the budget by force.

The government aims to balance the budget by 2007.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR