Austria urges debate on refugee spending

Some economists argue that the increased number of refugees will lead to stronger domestic demand.

Hungarian police officers stand on guard in front of a metal gate at the closed M5 highway to block circulation of migrants at the Hungarian-Serbian border near Roszke station on 15 September, 2015, after the Hungarian government established a new border protection law. Picture: AFP.

BERLIN - The rising cost of looking after refugees may scupper the budget plans of some European governments, and Brussels should consider exemptions for such spending under its EU deficit rules, Austria's Finance Minister was quoted as saying.

"The short-term costs are high but predictable. More critical is the question of the longer-term effects (on the budgets)," Hans Joerg Schelling told German newspaper Welt am Sonntag in an interview published on Sunday.

He said a lot of refugees would stay in Europe, which meant governments had to build more houses and schools. "I have my doubts that the budgets that are being planned now will be sufficient," the minister said.

Some economists argue that the increased number of refugees will lead to stronger domestic demand and therefore higher tax revenues. "But you have to keep in mind that this growth push is financed with more spending and more debt," Schelling said.

The minister said the European Commission should think about not counting such spending as normal expenditure under its EU deficit rules.

"There should be a discussion about whether the high costs for countries such as Germany or Austria and others for the humanitarian measures should be viewed as extraordinary one-time effects," Schelling said.

German Finance Minister Wolfgang Schaeuble has said he still aimed to maintain a balanced budget next year. Some lawmakers have questioned whether that will be possible given the rising costs associated with the migrant crisis.