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Wednesday, February 8, 2023

Government avoids budget crisis

After weeks of intense negotiations, Norway’s Labour-led minority government finally won support for a state budget that will now take even more from the rich and give a little bit more to the poor. The Socialist Left Party (SV) exerted its influence and also won support for tougher climate measures including a moratorium on new oil exploration until after the next election in 2025.

Prime Minister Jonas Gahr Støre of the Labour Party (center) was visibly relieved that budget negotiations with SV leader Audun Lysbakken (left) were successful. At right, Finance Minister Trygve Slagsvold Vedum, leader of the Center Party. PHOTO: NRK screen grab

“I’m very satisfied with what SV got in place during negotiations with the government,” said SV leader Audun Lysbakken. He was smiling broadly when he, Prime Minister Jonas Gahr Støre and Finance Minister Trygve Slagsvold Vedum could announce their budget breakthrough in Parliament late Tuesday afternoon.

Lysbakken took credit for boosting various forms of social welfare payments to those struggling the most, and taxing the wealthy harder. Everyone with a home valued at more than NOK 10 million (USD 1 million), for example, will now have to pay more fortune tax, and a new tax will soon be assessed on those moving out of Norway to avoid that very controversial tax on net worth.

Those with the smallest state pensions, meanwhile, will get small raises of around NOK 400 a month, as will those receiving child welfare payments, housing support and social assistance. After-school activities will become free for second-graders and young Norwegians will be offered new dental care benefits.

Pause in oil exploration
SV also managed to get the government to halt the next few licensing rounds for new offshore oil and gas exploration. Oil companies will also face new restrictions on any drilling near the polar ice and “petroleum free zones” will be set up in various areas of Norway’s offshore territory in the Arctic.

Those measures set off immediate protests from the oil and gas industry, but Prime Minister Støre insisted Norway’s oil and gas production will continue at its currently brisk pace. That’s become especially important after Russia invaded Ukraine and set off an energy crisis. Norway suddenly emerged as an even more important supplier of gas to Europe, and Støre issued assurances Tuesday night that deliveries will continue at their present level.

Lysbakken said he was most proud of securing even more funding for Ukraine “to secure international solidarity.” More contributions than those already promised to Ukraine will also make up for a technical shortfall in Norway’s traditionally generous foreign aid: It wasn’t going to amount to 1 percent of gross national product like it has for years, but mostly because Norway’s GNP has grown. Now more funding to Ukraine will help meet the 1 percent goal after all.

SV had made a string of demands during its budget negotiations with Labour and the Center Party, mostly to improve climate measures, foreign aid and an attempted redistribution of wealth in Norway. The government had placed constraints on the budget, especially by reducing the use of oil revenues to balance it, in an effort to lower inflation and keep Norway’s economy from overheating.

Both Prime Minister Støre and Finance Minister Vedum claimed they were satisfied too, and that their first state budget is now better than it had been. Vedum stressed that taxes on electricity would also decline from January, more money has been allotted to defense and preparedness, and more emissions will now be cut.

All told, the three parties reshuffled around NOK 8 billion in the state budget by setting some new priorities, including restoration of a much-needed road improvement project on the E16 between Bergen and Voss. It’s been called the worst stretch of highway in Norway, regularly hit by landslides, and the government had withheld NOK 200 million in initial funding for it. That’s now been restored. SV thought the road project was much more important than construction of a controversial ship tunnel on the west coast, which SV was willing to scrap. That didn’t happen.

Now Støre’s hard-pressed government, which has been struggling over record-low standings in public opinion polls, may regain some popularity but early indications weren’t good. Representatives of several low-income groups claimed on Norwegian Broadcasting (NRK)’s debate program Debatten Tuesday night that they weren’t jubilant at all, while the ranks of those struggling to make ends meet keep growing. Opposition parties were predictably critical, too, with Conservatives leader and former prime minister Erna Solberg repeatedly warning that “we can’t tax our way out of a crisis.” Lysbakken has already noted that not only the Conservatives but also “those with large fortunes must accept the result of last year’s election.”

NewsinEnglish.no/Nina Berglund

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