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Thursday, June 20, 2024

Government geared for budget debate

NEWS ANALYSIS: Finance Minister Siv Jensen was ready on Wednesday to roll out her first state budget to Parliament on behalf of Norway’s still-new conservative government. Leaks have been few, but the budget is bound to give the Members of Parliament a lot to argue about throughout the autumn, not least looming tax breaks.

Finance Minister Siv Jensen has been busy preparing her government's first state budget. PHOTO: Finansdepartementet
Finance Minister Siv Jensen was heading down to the Parliament on Wednesday to present her first state budget. PHOTO: Finansdepartementet

That’s what they thrive on. They all reconvened just last week for the 159th session of Parliament and the state budget is at the heart and soul of all they do. The new government, which pretty much inherited last year’s budget that was presented by the left-center coalition that preceded them, is now keen to put its mark on the budget in terms of spending levels and priorities. Many think Jensen is intent on pushing through substantial budget reform.

One of the toughest jobs for Jensen has likely been trying to first satisfy her own fellow government ministers, before needing to prevail over all the MPs in opposition. Everyone wants the most for their own ministries and projects. Finance ministers from all political parties have a tough time clarifying to their own party fellows or coalition partners why they can’t spend all the money they want to.

In Jensen’s case, she’s from a party (the Progress Party, Fremskrittspartiet) that’s never held government power before, so she’s likely even more anxious than her finance minister predecessors to make a bold first impression. Last week she won a major victory when her coalition partner, the Conservatives, voted against proposing a state guarantee to finance a Winter Olympics in 2022. Jensen and her party were firmly against spending billions of taxpayers’ kroner on an Olympics that they felt could be better spent on nursing homes, schools, road improvements and other needed projects. They had the majority of Norwegians with them, and in the end, the Conservatives decided against sending an Olympics proposal to Parliament.

That doesn’t necessarily mean they now have billions extra to work with. What they do have, to the envy of other finance ministers, governments and parliaments around the world, are billions of oil revenues that they can use. Jensen argued during her years in opposition for using much more of the oil revenues than Norwegian governments normally have. Now she may need to show uncharacteristic restraint given how the size of the oil fund where the revenues are stashed has grown. Governments generally are allowed to spend as much as 4 percent of the size of the fund. That’s become the equivalent of so much money, though, that even Jensen may fear that spending it would set off inflation. Most think she’ll only pump around 2.8 percent of the fund into her budget, which would amount to NOK 155 billion.

Hardly any leaks
The only budget leaks from Jensen and her government colleagues so far have been an allocation of NOK 350 million in additional funding for the police, and a promise of NOK 605 million to help fund construction of the new Munch Museum. The latter would be spread over several years. Some government MPs also proposed a reduction in the annual fee all Norwegians must pay to cover the costs of operating the state-controlled Norwegian Broadcasting (NRK). Some propose simultaneously imposing a separate user fee for NRK’s website,, to quiet complaints from private media that as a solid newssite free of charge unduly competes with their own websites that are increasingly carrying subscription fees.

Commentators otherwise expect Jensen to “put the state on a diet,” as newspaper Aftenposten put it on Tuesday. State welfare agency NAV, the tax offices, the military and the hospitals may well be told to do more at less cost. Jensen wants state bureaucrats to “think new” and spend less.

“As politicians we are responsible for managing folks’ money,” Jensen told Aftenposten on Tuesday. “The least they can expect from us is that we use the least amount possible on bureaucracy and the most possible on services. I want to cut bureaucracy and make the state more efficient.” Jensen has also been a vocal champion of tax relief and last winter she and Prime Minister Erna Solberg from the Conservatives cut inheritance taxes. Cutting Norway’s controversial formueskatt (the tax all must pay on net worth, year after year) has been high on her list.

She’s been warned it will be “very difficult” to get a lot of reform through Parliament, since the minority government must secure support from parties in opposition, especially its two so-called “support parties” that are demanding Jensen and Solberg deliver on promises. Three months of quarreling lie ahead, but Jensen may relish the budget battle of her political life. ( will cover specific budget proposals and debate throughout the autumn.) Berglund



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