VIENNA (Reuters) - Coalition talks between Austrian conservative Sebastian Kurz's party and the far-right Freedom Party began in earnest on Monday as they combed through the nation's finances in search of billions in savings to fund planned tax cuts.
Kurz, who is just 31, needs a coalition partner to form a stable government since his People's Party won this month's parliamentary election but fell well short of a majority. He started coalition talks with the third-placed Freedom Party last week.
Although both parties' similarly hard lines on immigration dominated the campaign, they have also promised billions in tax cuts and said much of the funding will come from greater efficiency in Austria's administration, which includes a generous welfare state.
Having laid out a roadmap for negotiations at their first round of talks on Wednesday, an overview of the country's finances was the main order of business at their second meeting, on Monday.
"What we can say today is that there is a significant potential for greater efficiency and that of course we will sound out in the coming days what can be done politically," Elisabeth Koestinger, chairwoman of Kurz's party and part of his negotiating team, told a news conference after Monday's talks.
Neither she nor the Freedom Party's envoy to the joint news conference would be drawn on where those savings would be found.
"We did not find any holes," the Freedom Party's deputy leader, Norbert Hofer, who came close to winning last year's presidential election, told the news conference.
"The issue will be better administering this state, reducing loss-causing inefficiencies and then making this released potential available through (tax) relief," he added.
Talks in the 10-person group that includes Kurz and Strache will continue through the week and negotiations in 20 more specialized groups will begin on Tuesday, Koestinger said.
"We had a rough overview (of the public finances) from civil servants in the Finance Ministry and we will go into more detail in the coming days," Koestinger said.
Little of substance has emerged from the talks so far. Kurz has said he hopes a deal can be reached before Christmas, and the atmosphere has appeared to be good. Freedom Party leader Heinz-Christian Strache said last week the talks made a "very, very good start".
Kurz said on Wednesday that he and Strache, 48, address each other with the informal German "du". Strache told tabloid daily Kronen Zeitung the same day that they are on first-name terms, adding: "He calls me HC."
(Reporting by Francois Murphy; Editing by Andrew Heavens)