– One year, we got in March proposals for new initiatives in the state budget 70 billion.
According to former Finance Minister Kristin Halvorsen (SV) lacked not the ambition of the ministers in the coalition government. New initiatives in this scope is not trivial, even on a national budget that year has reached 1,100 billion.
Therefore it helps much that the Oil Fund catches on with new money each year. The 2015 budget is likely to 15-20 fresh, free billion into the state budget.
The money is free in the sense that they are not included as increased taxes on individuals and businesses in mainland Norway. No paid.
Wednesday adds Treasury Siv Jensen presented the state budget for 2015.
Slipper cuts with pain
Halvorsen has a mixed relationship with the fresh oil money.
– No one had the feeling that we were sitting there with shiny new dollars each year. There were huge expectations in all areas, and never enough oil money to all worthy causes, she said.
Although the new oil money is a bit dull in luster, so does the budget life easier.
– In other countries, the need for budget cuts have been much greater. We need not go further than Sweden and Denmark to see long lists cuts in state budgets. In Norway, we have been able to implement new initiatives without substantial and painful cuts in other good purposes, says Halvorsen.
Much new money in ten years
The oil money makes it difficult to cut in the minimum budget item.
– We got real opposition the times we actually moved money from one area to another. The need to downgrade some areas are difficult to defend with new oil money each year, says Halvorsen after four years as finance minister.
From 2005 until the 2014 budget, there have been nearly 70 billion in new free money the finance minister’s table. Including money coming on the table in the next budget year, it will probably end up with 85-90 new billion overall from 2005 to 2015, which is calculated in today’s money.
The new oil money in the last ten years is enough to pay:
- Two thirds of hospital budget this year .
- Twice as much as one year of spending on roads and railways.
- Two annual defense budgets.
- Half of retirement pension expenditure in 2014.
Finance Minister at rest
Sources who have helped to make budgets say it is just as hard to hold back, with and no more new oil money.
It varies between the ministries are there regardless of who has the government. It is the Minister of Finance to rest. The exception is the Prime Minister who must stay a little inside with everyone, but most of the Exchequer.
The supply of new oil revenue for 2015 is expected to be approximately the same as the 2014 estimate for the fund at the beginning of next year and withdrawal rate from the fund, determines this. Withdrawal rate this year is estimated at 2.8 per cent.
If the blue government adds only 0.1 percentage point higher, it means 6.5 billion extra into the state budget.
Worked for money
Although Jensen gets new free money in 2015 budget, they do not come by itself. Much research, advanced technology and large investments have been needed to get the oil up and out.
But the researchers, workers and oil companies get their payment for work and platforms first. Then the rest goes to the Treasury. The next condition is that politicians are saving up money in the Pension Fund.
And: The money is not free because they are endless. 1 billion more spent in 2015 means less money to spend in all future years, all else being equal.
The rule for oil money fade
State budgets are moving ever further away from guideline for using oil money.
The one who has a lot of money and endless needs need rules to stick to. In 2001, the guidelines for using oil money passed by Parliament.
The core of the rule is to use 4 percent of the fund, in accordance with the expected long-term real return on the Petroleum Fund.
This rule is abandoned recent years. Withdrawal rate has since the financial crisis remained far lower.
Petroleum Fund has grown too large and the guidelines for generous relative to the size of the Norwegian economy.
4 percent of the fund means a spending accelerating economy into soaring wage inflation. It will crack much of the industry.
– Difficult to use less than four percent
Sources who have helped to make budgets says the use of oil money is increasingly being driven out from the temperature of the economy. Withdrawal rate means less, as long as it is well below 4 percent.
Subdued wage growth and concern for industries that compete with foreign countries have taken over as the “rule”. As it was before 2001.
Kristin Halvorsen time as finance minister from 2005 to 2009 set the guidelines well in the memory of ministers.
– The expectation of being able to increase the budget equivalent to 4 percent real return is large both within government and in the public debate. To add considerably during this necessitated a compelling reason, she says.
The job took Halvorsen wearing.
– However, the proposed framework for the budget was never changed under government management in my time as Minister of Finance, she said.
In other words: The ministers are persuaded by her to suit money bag.
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