VIENNA (Reuters) - Austria's new Chancellor Christian Kern on Thursday proposed a 'New Deal' to boost private-public investment in the country, which is struggling to keep within EU deficit limits while economic growth remains sluggish.
Kern, a Social Democrat and former head of Austria's state-owned railways, became chancellor on Tuesday after his predecessor Werner Faymann resigned amid a party revolt triggered by an embarrassing defeat in presidential elections.
"We simply cannot afford no economic growth, even more unemployment, even more debt. That's why I propose to our (conservative) partners in the government that we create a project that one could describe as a 'New Deal'," Kern said during his inaugural address to parliament.
"A decisive (element is) to boost in the short term the will of private investors and entrepreneurs to invest," Kern said without giving specifics. Joining up private and public investments was crucial, he added.
Kern singled out the machinery, automotive and energy sectors as Austria's best bets for generating growth.
"We need as much market as possible and as much state as necessary. We know that the idea of free entrepreneurship, which based on ingenuity creates products that get developed as if by magic, is of course a complete illusion."
Kern's People Party coalition partners have made it a condition for the survival of the government to weed through Austria's sprawling bureaucracy, make working hours regulations more flexible and stick to a tough line on migrants.
Some Austrian entrepreneurs, including the chief executive of steel group Voestalpine, Wolfgang Eder, have for years moaned about the lack of incentives for companies like his to keep investing in Austria and Europe.
Kern said there was little point in creating jobs that do not pay a living wage, but he had no interest in jeopardizing the coalition as snap elections would most likely propel the far-right Freedom Party (FPO) into the chancellery.
FPO presidential candidate Norbert Hofer is close to victory over his independent rival in Sunday's run-off vote, which would make him the first far-right head of state elected by a European Union country.
Austria, a country of 8.7 million people in which 90,000 asylum claims were made last year, plans to use an exemption for migrant-related costs this year to make sure it stays within EU budget deficit limits.
(Reporting by Shadia Nasralla; Editing by Catherine Evans)