Austrian centrist parties reach deal to govern without far right

By Francois Murphy

VIENNA (Reuters) - Austria's three main centrist parties in parliament reached a deal to form a coalition government without the far-right Freedom Party that won the last parliamentary election five months ago.

In a deal that should bring to a close Austria's longest wait for a new government since World War Two, the centre-right, liberal and centre-left parties unveiled a programme including tax rises on banks and energy companies, spending cuts and immigration curbs.

The three parties had already tried and failed to form a coalition, after which the eurosceptic, Russia-friendly FPO was given a chance to form a government but also failed.

"We have come through perhaps the most difficult talks on forming a government in our country's history," the leader of the conservative People's Party (OVP) and likely future chancellor, Christian Stocker, told a press conference with counterparts from the Social Democrats (SPO) and liberal Neos party.

They presented the roughly 200-page government programme that included policies to bring the budget deficit within the EU limit of 3% of economic output and avoid action by Brussels.

It would increase a tax on banks and extend taxes on windfall profits of power fossil-fuel companies, as well as scrapping environmental measures such as a value-added tax exemption for solar panels. Spending would be trimmed through pensions reform, and immigration curbed by halting family reunification visas for immediate relatives of refugees.

The three-party government, Austria's first since the late 1940s, is due to take office on Monday, provided all parties approve the deal, the chief hurdle being a vote of Neos members on Sunday requiring a two-thirds majority.

FPO leader Herbert Kickl has pilloried the tie-up as a "coalition of losers" and called for a snap election that opinion polls suggest would increase his party's share of the vote further from around 29% in September.

The coalition will be under pressure to deliver results and avoid the in-fighting that has felled previous governments.

"The first message this government has is 'We are not Herbert Kickl, we prevented Herbert Kickl" from becoming chancellor, political analyst Thomas Hofer said.

"That's something, but it isn't a forward-looking narrative," he said, adding that the programme was not particularly bold and the coalition would likely need to produce more to survive the five-year parliament.

ALMOST THERE

The FPO often likens the centrist effort to a three-party coalition in neighbouring Germany that collapsed last year.

"I don't think this has ever happened before: a so-called 'government programme' before a government has even been put together," FPO chief Kickl said on X.

The agreement spelled out how ministries would be carved up, with Stocker's OVP securing the defence and interior ministries. The SPO would control the finance ministry, long an OVP preserve, for the first time in 25 years as well as the justice ministry. The Neos would run education and the foreign ministry.

They have yet to name ministers, however, and different SPO factions are still squabbling over posts.

The three party leaders said everything was on track.

"I expect the three of us will be able to form a government on Monday," Stocker said.

(Reporting by Francois Murphy; Editing by Christina Fincher, Dave Graham, Peter Graff)