– Vedum must be the worst finance minister ever.
That’s what shareholder manager Jan Petter Sissener says after seeing the figures presented by Nettavisen in this case.
When Finance Minister Trygve Slagsvold Vedum (Sp) presented the first national budget after prices began to rise alarmingly quickly, he had a very special recipe for solving the problem: Hold down spending.
This is how Vedum explained his plan when he presented the 2023 budget for the Storting:
“We have solved previous crises by spending more money. As we did after the financial crisis in 2008, after the drop in oil prices in 2014 and during the pandemic. That time is over. The situation we are in now cannot be solved with increased spending, but with less spending. Increased spending can actually create a crisis.”
But the result was something else. Vedum ended up increasing the state’s spending more than it did during the financial crisis, the oil crisis and the corona pandemic.
More than when Norway “pulled the gold card”
At first Vedum held back on spending, but in the spring of 2023 he fully compensated the public sector for the price increase. Then there was a record increase in the budget, despite the warnings a few months before.
Government expenditure grew from NOK 1,581 billion in 2022 to NOK 1,753 billion in 2023. A growth of 10.89 per cent.
During the financial crisis in 2008, it was said that Norway and Finance Minister Kristin Halvorsen (SV) “pulled the gold card”, among other things to support the banks with massive loans. But Halvorsen did not increase government spending by more than 9.11 per cent from the previous year.
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Also after the drop in oil prices in 2014 and during the corona pandemic, the increase in the budget was lower than when Vedum had to hold back on spending.
Halvorsen increased the use of oil money far beyond the so-called . Vedum stuck exactly to the rule of action, but increased taxes on business and the power industry, in addition to wealth tax.
– Sad
– This was sad reading, shares manager Sissener tells Nettavisen after going through the figures.
Sissener points out that the growth in the Oil Fund has made it possible to spend more and more oil kroner, without breaking the rules of action. It has gone beyond rock and stone, he believes.
– Had this been supported by healthy economic growth in the mainland economy and major productivity improvements, it would not have been a problem. That’s not how it is. It is the use of oil money that has created much of this cost growth, claims Sissener.
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– Not taken in by himself
Most of the years where government spending has been increased to solve a crisis, spending has not been reduced again later. The increases have become permanent, and the budgets thus increasingly larger, also adjusted for price growth.
2018 and 2022 are the only examples in 20 years where the state budget increased by less than the price increase, i.e. actually decreased. The reason in 2022 was pandemic schemes which were phased out.
Sissener believes that the large growth is due to the fact that the governing parties are afraid of making choices that will make them unpopular with the voters, and that they are more concerned with their own re-election.
– We have become very dependent on the Oil Fund, which is now at a record high of around NOK 16,000 billion. 70 per cent of the fund is invested in partly expensive shares. As things stand now, Norwegian government finances have become more dependent on developments in the stock market than the price of oil. Should something really bad happen to the stock market, the politicians will have much less money to spend. They have not taken that risk on themselves, says Sissener.
The government disagrees
Nettavisen has submitted the criticism from Sissener to the Ministry of Finance, and asked what Vedum now thinks about the distinction between his statements last autumn, and how the money was spent in the end.
State Secretary Erlend Grimstad (Sp) answers on behalf of Vedum. He believes the use of the money was correct, because it ensured good welfare services for people.
– The national budget must at all times be adapted to the times we live in. This government’s most important job is safe and responsible financial management. Many notice higher prices and interest rates in everyday life. We believe it is important to ensure good welfare services for everyone in Norway, and we will stand up for those who need it most.
Although in 2022 Vedum was concerned that Norwegian spending would affect price growth in Norway, Vedum’s state secretary is now focusing on the fact that it is mainly international unrest that affects price growth.
– To claim that it is the use of oil money that has created much of the cost growth is downright wrong. The fact is that the budget for 2024 has a roughly neutral effect on the Norwegian economy. It is international unrest that is the most important driver of price growth. Furthermore, both Statistics Norway, Norges Bank and the Ministry of Finance estimate that price growth is on the way down in Norway, just as we see in the Euro area, the USA, Sweden and the UK, he says.
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Follows the action rule
Grimstad points out that the government has stayed within the code of conduct.
– The use of oil money for next year results in a fund withdrawal of 2.7 per cent, i.e. well below the 3 per cent in the action rule. In this sense, account has been taken of the fact that the oil fund may fall. We never know when, or if, a large drop in the fund’s value will occur. But we have to take into account that a large drop in the fund’s value can occur.
The State Secretary disagrees with Sissener that Norway is not prepared for the oil fund to fall in value.
– In order to more easily smooth out the effects of falls in the fund’s value, and other unwanted events, it is wise to save a little extra when it is possible for us. An analysis in the National Budget indicates that such a buffer of up to three per cent, over time, enables us to adapt to changes in the fund’s value over several years.
2023-12-26 20:53:31
#Vedum #numbers #Sissener #stiff
