Budget conference tougher than usual

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They were all smiles on Sunday, as Norway’s 19 government ministers gathered in rural Hadeland, just north of Oslo, for their annual budget conference. They all face tough negotiations over the next two days, though, which have been known to leave some ministers angry or even in tears.

All of Norway's 19 government ministers made a point of dressing casually before they posed on the steps of the Thorbjørnrud Hotel in Hadeland on Sunday and then got down to work on next year's state budget. Prime Minister Jens Stoltenberg was still flanked by Center Party leader Liv Signe Navarsete (wearing a green fleece) and Kristin Halvorsen (in denim jacket) even though Halvorsen had just stepped down as leader of the the Socialist Left party (SV). Her successor Audun Lysbakken had to resign as a minister last week, and is therefore excluded from the conference. PHOTO: Statsministerenskontor

This year’s conference, which marks the formal launch of work on next year’s state budget, was expected to be tougher than usual even though 2013 is an election year, and even though Norway’s economy is still strong with oil revenues pouring in. Prime Minister Jens Stoltenberg and Finance Minister Sigbjørn Johnsen of the Labour Party both want to restrict use of Norway’s oil revenues. Meanwhile, Stoltenberg warned that the rising cost of elder care makes it more difficult to find funds for new initiatives.

Johnsen won’t reveal just how much more difficult it will be, in terms of actual numbers, but he noted that the costs of caring for an ageing population are accounting for more than half of the state’s growth in total costs this year. Next year the elder care costs will be higher, and that trend is likely to continue.

“We’re all living longer, and that’s very nice,” Stoltenberg told Norwegian Broadcasting (NRK) on Sunday evening. But it costs a lot in terms of health care and, not least, the need for more nursing homes and welfare assistance for those who stay in their own homes.

Johnsen confirmed that Norway’s demographics hit an important turning point last year, telling newspaper Aftenposten on Monday that there are now more retirees for every active worker. Given a need to keep Norway’s strong economy from overheating, Johnsen said that use of oil revenues next year will be much lower than what’s allowed under the rule called handlingsregelen. It allows the government to spend 4 percent of the size of Norway’s huge sovereign wealth fund, popularly called the “oil fund” and where oil revenues are invested and saved for future generations.

Leaders of the two other parties with which Labour shares government power want to finance new projects like transport improvements and environmental initiatives outside the state budget. Stoltenberg won’t go along, saying Norway has won praise for its prudent management of its oil wealth, and that’s tied to what he calls “clear and tidy” state budgets.

“It’s always tempting to avoid having to make choices, or set priorities,” Stoltenberg told Aftenposten. “We have rejected such ideas (as funding projects outside the budget) before, also because it’s important to be open and honest about what we’re using money for.”

Views and News from Norway/Nina Berglund

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