Finance Minister Siv Jensen unveiled the government’s enormous proposed state budget for next year, claiming it will “answer the challenges we face today.” She said the budget contains both short- and long-term measures for tackling Norway’s economic downturn, “securing jobs” and prodding the growth needed to maintain the country’s social welfare state.
The current “challenges” cited by Jensen, referring mostly to the economic downturn and global unrest that’s sparked a refugee crisis, “demand more of us than for many years,” she told reporters waiting outside her home early Wednesday morning. Jensen started her day at 6:30am, as she embarked on a marathon of not only presenting the government’s budget but also its proposals for sweeping tax reform.
Jensen predictably claimed she thought the government “had its priorities right.” She also said she thinks the minority conservative coalition’s two support parties, the Liberals and Christian Democrats, “will find many things they like” in the budget. The first budget she presented last year, after the coalition assumed power following the election in 2013, set off serious conflicts among the four parties involved. This time around, political commentators speculated that Jensen’s budget would be “less provocative” and take more of the support parties’ interests into consideration, for the sake of government unity and its survival.
Transport, health and education ‘big winners’
A series of orchestrated leaks in recent weeks revealed that the budget would tap into more oil revenues than it did last year to help fund projects like railroad improvements, hospital rehabilitation, renovation of tunnels around the country and new measures to tackle unemployment, especially among youth. The unexpected influx of refugees into Norway is also costing millions if not billions, and funding is also needed to offset more cuts in the Norway’s controversial tax on net worth and a reduction in income tax for both companies and individuals from 27 to 25 percent.
On Wednesday morning, the big winners in this year’s budget were said to be the health, transport and education ministries. Local governments will also get more funding to spend as they see fit.
The driving force behind the government’s budget proposal is Norway’s need to move away from reliance on its oil income and diversify the economy, a process known as omstilling in Norwegian. “We have, first and foremost, a need for long-term omstilling,” Jensen wrote in a commentary in newspaper Aftenposten on the eve of her budget presentation. “Oil and gas will continue to be important business for Norway for many years ahead, but it won’t yield the same contribution to economic growth that we’ve been used to. Portions of Norwegian busienss must turn towards new markets. What’s most important is that we remain competitive and lay a foundation for new job creation.”
That echoed what several economists and business leaders have been saying, and Jensen’s tax reform proposal due later in the day was also closely tied to budget issues. The budget will now be debated in parliament throughout the autumn, and Jensen herself said she was prepared that “some changes will be made.” One fo the two support parties, the Liberals, was already demanding some, right after the budget’s release. Debate on the tax reform proposals will likely begin after New Year.