When will the third relief package come out? The question and the answers to it are this year’s political summer hit. At least that was the case until Friday – then the chancellor came. With the announcement of further relief by Chancellor Olaf Scholz (SPD) on Friday, the debate found a little more precision – it is not over. Because the three main points in his press conference – citizens’ allowance, housing benefit reform, cost moratorium – were not discussed in the coalition.
The traffic light coalition had actually agreed not to decide before September whether and in what form a third aid package should be given. The discussion probably picked up too much speed, Scholz
The third relief package to cushion the impact of high energy prices is also a question of money. This year the budget is well filled thanks to the currently good tax income and high credit authorizations. Everything that can be implemented quickly would therefore be easy to finance. In the coming year, on the other hand, at least the FDP around Finance Minister Christian Lindner wants to comply with the debt brake again, which will limit the scope for relief that will only take effect then.
One thing is clear: Three measures in the first package will only have an effect over time – the tax measures will, so to speak, follow suit. The higher employee allowance (1200 instead of 1000 euros), the increase in the basic allowance (10374 instead of 9744 euros) and the increased commuter allowance from the 21st kilometer will therefore usually only become virulent with the tax return in the coming year. The EEG surcharge on the electricity price was abolished on July 1st.
Targeted measures for the poor have usually already been paid out: Corona subsidy for basic security, immediate bonus for children, heating cost subsidy for housing benefit recipients and students. If you add help for companies, these measures add up to a financial volume of at least 15.3 billion euros, according to calculations by the German Institute for Economic Research.
The second relief package includes the taxable energy price flat rate of 300 euros for employees, which is paid out in September, the child bonus of 100 euros and the 200 euros for Hartz IV recipients. The fuel discount and nine-euro ticket started in June and will end in August – if there are no follow-up regulations.
The tank discount is still controversial, even if the fuel prices could be pushed down. The discounted ticket for local transport is at least one demand hit: almost 20 million were sold in June. Total costs of the second relief package: around 17 billion euros.
According to Scholz on Friday, citizen income should “definitely” come on January 1, 2023. Actually, the conversion of the previous Hartz IV system to citizen income is not about a current relief initiative, but a system change that the SPD has been preparing and driving for years, which the Greens can also gain a lot from.
The burdens of inflation and higher energy and food prices, especially for low-income groups, are another argument for the advocates of the reform to implement it now.
Minister of Labor Hubertus Heil (SPD) is primarily aiming for an increase in standard rates of 40 to 50 euros. The Ministry of Labor did not provide any information on the amount of possible costs. The SPD and the Greens are working closely together when it comes to the transition to basic income, while the Liberals are skeptical about the plans. There is “a proven procedure by which the standard rates are adjusted to price and salary developments,” said FDP leader Lindner: “We should stick to that.”
Another actor has to be involved: the government is dependent on the approval of the Federal Council and thus on the Union for the citizens’ income. The CDU and CSU criticize that the principle of “support and demand” will be abolished with the release of the sanctions.
Scholz has announced a “major housing benefit reform” – also for January 1, 2023. The group of beneficiaries is to be expanded, but Scholz did not give any specific figures for this That was almost 620,000 households in 2020. The federal and state governments paid 1.3 billion euros for this.
The relief aspect of this proposal lies above all in the flat-rate heating fee, which, according to Scholz, should be permanently included in the housing benefit. Since the current inflation is mainly due to higher energy prices, a dynamic flat rate would be a good way to react to this – also in the future.
Recently, for example, the Federal Association of Consumer Organizations called for this. Its board member Ramona Pop, previously a Greens politician in Berlin, said that a heating cost subsidy linked to price developments was of central importance for further relief measures.
In the event of a further escalation of the energy crisis, the Greens had suggested protecting citizens from electricity and gas blockages in the event of late payments. In such a crisis situation, nobody should have their electricity or gas cut off because they are in arrears with a bill, argued Consumer Protection Minister Steffi Lemke.
Despite initial resistance, the FDP also agreed to the promise to review previous protection against dismissal – not only for energy customers, but also for tenants.
Scholz announced this on Friday as a traffic light project – initially talking about “review”. Details are not yet clear.
As the “Bild” newspaper reported on Saturday, citing coalition circles, interest-free loans from the state-owned KfW bank could be offered to landlords if they pay their tenants’ gas bills. Alternatively, it is being discussed that tenants and owners who can no longer pay their gas bills can submit an application for direct financial aid to a government agency.
The fiercest dispute is currently building up over the future of the nine-euro ticket. Finance Minister Lindner pointed out that it was intended as a temporary measure and that no further funds were planned in the federal budget. That came across as a clear no. Greens leader Ricarda Lang countered that cutting subsidies that are harmful to the environment and the climate could create some leeway in the budget.
SPD leader Saskia Esken called on Transport Minister Volker Wissing (FDP) to quickly submit “a suitable proposal for the further development of the nine-euro ticket”. In contrast to the tank discount enforced by the FDP, the money used for this relief measure had “fully” reached the citizens, Esken told the Funke media.
In fact, the dispute is not so much about the question of whether some form of cheaper public transport will be continued, but about how and the usual question of who pays. Wissing just started talking about the states – which, together with the municipalities, are responsible for local transport offers.
The Association of German Transport Companies supports a follow-up regulation – but fears that things could fizzle out. The association therefore proposes an interim solution: extending the nine-euro ticket until October as a direct relief measure in order to use the time to find a follow-up arrangement for a cheaper offer afterwards – and a financing solution.
The nine-euro ticket is popular: in a recent survey, 80 percent of those surveyed said they were positive about it.
Lindner tweeted the proposal for a higher commuter allowance – probably a sign that he wanted to send a political message, but did not yet have a finished concept. Since the FDP boss does not name a number by which he wants to increase the commuter allowance, the costs for his household remain completely undetermined. If the FDP leader’s idea were to be implemented, commuters in particular would be relieved. The offer should also benefit cyclists.
The disadvantage of the proposal in times of climate change is that an increase rewards the consumption of environmentally harmful fossil fuels, provided no electric car is used. So it has no ecological control effect, quite the opposite. It is also not socially fair, as it relieves commuters regardless of their income.
Overall, the chances of the advance being implemented are not good. The SPD was open to this, but the Greens reject the concept as unecological. At most, the finance minister could push through his proposal in a political “tie-in deal”, in which the FDP accommodates the eco-party in another area.