7 May 2003

NOK 1.8 billion cut in public spending needed (Aftenposten)

Finance Minister Per-Kristian Foss is probably dreaming wistfully of last year, when he did not have to cut public spending by so much as a kroner; in fact, he was able to increase the budget by several extra billions after additional tax revenues flowed into the Government’s coffers. This year, the situation is reversed. Tax revenues have fallen by around NOK 5 billion, and the opposition parties have pushed through measures that will increase public spending by around NOK 1 billion. The ruling coalition parties have themselves contributed with increases in payments to the unemployed and those who are struggling to pay their electricity bills. The Government must cut public spending by NOK 1.8 billion when the revised national budget is announced on Thursday next week.

When the Christian Democrats and Liberals sat down to negotiate the coalition government’s joint policy platform, they promised NOK 31 billion in tax cuts by 2005. The Christian Democratic Party leadership has now made it clear that it does not matter much if this promise is not kept, because, as party chairwoman Valgerd Svarstad Haugland says, the Christian Democrats have already done more than they promised at the last election. “The size and speed of implementation must be adjusted to fit the economic situation,” she added.

According to the Christian Democrats, foreign aid, scientific research, public transport and local government funding should come before new tax cuts, which impatient Conservative voters are waiting for. From now on, setting government priorities is going to be tough. Christian Democratic Party chairwoman Valgerd Svarstad Haugland said yesterday that fulfilling the Government’s pledge on tax cuts must be balanced against other promises included in the coalition’s joint political programme. The coalition government has implemented NOK 20 billion of its promised NOK 31 billion in tax cuts.

Einar Steensnæs, deputy leader of the Christian Democratic Party and Minister for Petroleum and Energy, has declined to instruct his party’s representatives on the Oslo City Council to block the council’s sale of its shares in the electricity company, Hafslund, but he hopes that Oslo’s Christian Democrats will help ensure the company stays in Norwegian hands. “National ownership is not the same as state-ownership. There are other solutions,” he said. Mr Steensnæs also made it clear that the Government has not made up its mind about either the creation of a state-financed structural fund or the purchase of Hafslund shares by the state. However, several Conservative ministers have come out strongly against any state intervention in the sale of Hafslund.

If you become ill, but have the possibility of eventually returning to work, you should not be declared permanently disabled. Instead you should receive a temporary incapacity benefit, says the Government. For this reason, the Government last year proposed the creation of a new and time-limited incapacity benefit to exist side-by-side with the permanent incapacity benefit, which would only be granted to those who it is certain will never be able to return to work. The Government has won the parliamentary majority’s support for such a scheme. However, neither the Socialist Left Party, Labour Party or Progress Party is willing to approve the Government’s proposal to cut the amount of the temporary incapacity benefit. Those receiving incapacity benefit will also in future be able to earn around NOK 54,000 a year without a pro-rata reduction in their benefit entitlement.

The planned relocation of the Civil Aviation Authority to Bodø is a threat to the Norwegian air travel industry, according to the authority’s chief executive. His views are supported by the Norwegian Airline Pilots’ Association and the airlines. An impact assessment concludes that relocating the authority will cost NOK 340 million. And it will also be more expensive for the authority to do its job from Bodø. This extra cost will be passed on to the airlines in the form of higher fees. In their turn, the airlines will be forced to pass the bill on to passengers in the form of higher fares.

After a dispute lasting 66 years, the Norwegian Confederation of Trade Unions (LO) has finally given in. Its own employees will finally have the right to go on strike for higher wages. “This is a historic decision. We have been fighting for this since 1937,” said Karin Solum, of the Norwegian Union of Commercial and Office Employees. Up until now, the more than 1,000 people employed by the LO, 27 LO-affiliated unions, the Labour Party, the Workers’ Education Association in Norway (AOF) and the Norwegian People’s Relief Organization have not had the right to take strike action. The Labour Movement’s Employers’ Association has now given in to the demand from the Norwegian Union of Commercial and Office Employees, which is negotiating on behalf of trade union staff.

Local Government and Regional Affairs Minister Erna Solberg wants to put the situation facing the country’s major cities on the political agenda, and on Friday will present the Government’s report on the subject. “Norway has not had a conscious policy with regard to its major cities, which have special social problems, particularly in the areas of drug abuse and mental health. On the positive side, they are the most dynamic factor in the country’s regional development. These are the most important challenges for a new policy on the major cities,” said Ms Solberg. It seems likely that the Government will propose a boost in funding for Norway’s major cities as early as next week.

Norwegian students spend over NOK 2 billion abroad each year. Education has become a significant international trading commodity, according to a report by Norwegian Agency for Development Cooperation (NORAD). A large part of the money Norwegian students abroad receive from the State Educational Loan Fund ends up in Australia. NORAD feels the money should be channelled to countries that need it more, and points to South Africa as a case in point. Tove Strand, the head of NORAD, says she will not be pursuing this advice because she does not want to get involved in the universities’ competition to attract students. But she does point out that education has become an important commodity, and that NORAD would like to see the money Norway spends on its international students being spread more widely.

300 local and county authorities own power stations worth a total of NOK 130 billion. A power industry expert has warned local councils not to sell off these assets right now. He believes they could shortly double in value.
(Nationen)




A confidential e-mail from Hafslund chairman Bjørn Eidem to the rest of the board on the day before the company’s dramatic annual general meeting reveals the bitter power struggle that has been going on in the battle to secure control of the company.
(Dagens Næringsliv)




According to Erling Lae (Con), chairman of Oslo’s Municipal Executive Board, the Labour Party and Rune Gerhardsen are responsible for a campaign of deliberate misinformation regarding the proposed sale of the council’s shares in Hafslund. Rune Gerhardsen himself was responsible for selling off energy company shares during his term as chairman of Oslo’s Municipal Executive Board.
(Dagsavisen)




While the sale of the Oslo City Council’s shares in Hafslund is the subject of intense political dispute, Labour and Government Administration Minister Victor D. Norman has issued compulsory sale orders on Norwegian power stations worth three times as much. Some of them are now being offered to foreign investors. Regional power utilities would rather spend their billions to snap up the power stations Mr Norman has put up for compulsory sale, and are not interested in Hafslund.
(Aftenposten)




Yesterday, Save the Children Fund published its fourth mothers’ index, which compares 117 countries to find out where mothers and children have the best chance of a good life. Among other things, mothers’ good health, low infant mortality and, not least, the length of parental leave puts Sweden at the top of the list, while Norway, Denmark and Switzerland follow close behind.
(Dagsavisen)




Young people from the higher social strata gain a head-start to power through their participation in the political parties’ youth wings. This is one of the conclusions in the new book “Power and Democracy in Norway”.
(Klassekampen)




In a extraordinary letter to Trade and Industry Minister Ansgar Gabrielsen, senior union representative Kjell Kvinge, who represents around 4,600 Norsk Hydro employees, has described the company’s board of directors as an “exclusive gentlemen’s club”. Mr Kvinge says in the letter that he hopes the state, as the company’s largest shareholder, will do something about this situation at today’s annual general meeting. (Dagbladet)




Aker Kværner’s shareholders paid tribute to former board member Tore Tønne at yesterday’s annual general meeting, and voted to increase his remuneration for 2002 by NOK 500,000. Before company chairman Kjell Inge Røkke addressed the AGM, he asked his fellow shareholders to stand and honour the late Mr Tønne with a minute’s silence.
(Aftenposten)




“No proposals are leprous, even if they do come from the Progress Party. The proposal to create a state fund is sensible and a tool to address a market system that has gone completely haywire,” said Stein Studig, a union representative at Orkla.
(Klassekampen)




The inhabitants of Årdal in Sogn and Fjordane County have Norway’s best drinking water. The ground water Årdalstangen Vassverk supplies to customers won a nationwide competition to find the waterworks with the best drinking water. Ådalstangen Vassverk will take part in the finals of the competition to find Europe’s best drinking water, to be held in Brussels on 5 June.
(NTB)

The most common justification for state-ownership today is the need to ensure that a company and its production remain in Norway. In the case of Hafslund, the argumentation is the opposite. No matter who owns Hafslund, the waterfalls and power stations that produce the electricity, and the network of power lines that distributes it cannot be moved abroad. The people who are now demanding that the state buys the Oslo City Council’s shares in Hafslund, or that Oslo does not sell its shares at all, argue that since the waterfalls, power stations and power lines are located in Norway, they must also be owned by Norwegians. It seems that it is quite alright for a private investor to own the company, provided that the investor in question is Norwegian. A substantial political majority has spent more than 10 years liberalizing the power utility market. The objective has been to create competition in order to give Norwegian private consumers and companies access to electricity that was as cheap as possible – after the state had taken its cut in the form of public charges and indirect taxes. Statkraft, the state-owned power company, is not a not-for-profit enterprise. Its task is to make money. Just like its competitors. The important thing is for the country’s resources to be used in the best possible way. And the best instrument with which to achieve that, is competition. Competition requires there to be more than one player in the market, and thereby more owners than the state itself. Selling Hafslund is a sensible project. But not at any price – only a good price.