Weekly happenings in the German Federal Parliament (Bundestag)
The German government, during its 49th Session on September 6, 2022, unveiled its draft budget for 2023, focusing on investments in economic cooperation, climate and clean energy technologies, and targeted tax incentives for research and development (R&D).
Economic Cooperation and Development
The draft budget prioritises maintaining stable funding for the Ministry for Economic Cooperation and Development (BMZ), though with a downward trajectory over the midterm. The BMZ budget is set at €9.3 billion for 2023, slightly below pre-COVID-19 levels.
Clean Energy and Industrial Decarbonization
A significant allocation involves financing clean energy projects with tax incentives, such as a 30% investment tax credit under the 48C program for advanced energy projects that reduce greenhouse gas emissions and expand domestic clean energy supply chains. Part of this investment is reserved specifically for communities reliant on coal.
Fiscal Policy Actions
The budget sets a controlled trajectory for spending, particularly for development cooperation, maintaining fiscal discipline with reductions projected for the coming years. Broader fiscal measures to stimulate innovation include proposals for enhanced tax relief for R&D expenses and expanded expensing provisions, which encourage capital investment in research-intensive industries.
Social Security Reform and Healthcare
The citizen's income, a new social security system reform, will replace the current basic security from 2023. The pandemic has shown the importance of a stable, reliable, and solidarity-financed healthcare system. A deficit of 17 billion euros has accumulated in the statutory health insurance.
Parental Leave and Family Benefits
Parental leave takes up the largest share, around two-thirds of expenses, in the federal ministry of families' budget. Funds for this key family benefit are being increased to 8.3 billion euros.
Infrastructure and Energy
Infrastructure investments include funds to diversify energy supply, including 1.1 billion euros for leasing and operating floating gas terminals by 2026. The 2023 budget of the BMWK includes funds for maintaining the necessary equipment for the Bundeswehr's security policy tasks in Germany and within NATO.
International Aid and Alliances
Germany remains the second-largest donor nation behind the USA with over 22 billion euros in public spending on development cooperation (ODA spending). Germany and its international partners in the EU and NATO are supporting Ukraine militarily, financially, diplomatically, and humanitarianly. Putin is using energy policy as a weapon, and Germany must become independent from Russian energy as quickly as possible.
Pandemic Measures
The Covid-19 Protection Act is being supplemented with protection measures for fall and winter, including a mask requirement in long-distance traffic and a two-stage pandemic management by the federal states. Infection protection is strengthened in care and integration assistance facilities and companies.
Defence Spending
Germany will take on more responsibility and invest in its alliance and defense capabilities. A special fund for the Bundeswehr worth 100 billion euros has been initiated. The Bundestag will be involved in the distribution of funds for the Bundeswehr.
Promoting Diversity, Tolerance, and Democracy
Funds for promoting diversity, tolerance, and democracy are being increased to 200 million euros in 2023.
In summary, the draft budget combines steady investment in key development and clean energy fields with disciplined fiscal management and targeted incentives to spur innovation and industrial transformation, reflecting a balance between social priorities and economic prudence. The budget also addresses pandemic measures and international issues, particularly the ongoing crisis in Ukraine and the need for energy independence from Russia.