Tax cuts and US$17 billion infrastructure fund
Norway’s new government has vowed to cut income taxes, sell state owned assets (both listed and unlisted) and further establish a 100 billion NOK (US$17 billion) fund to aid the construction of roads and other infrastructure projects in a program aimed at boosting private enterprise through trimming taxes and bureaucracy. The infrastructure fund will be built over five years, using money from the Global Government Pension Fund (please click here to read our earlier report on the fund).
The new government
The Conservatives were the biggest winners in the September 9 election, after pledging to cut income and wealth taxes, boost investments and ease mortgage lending regulations. The Progress Party, historically an outsider in Norwegian politics, is entering government for the first time since being formed as an anti-tax movement in 1973. They will be backed by the smaller Christian Democrats and Liberal Party in the parliament.
The two-party coalition got the go ahead to form a minority government after reaching an accord with its two smaller opposition partners. The parties also promised to stick to a rule that caps oil money spending at 4 percent of the US$ 780 billion global pension fund and to refrain from oil exploration in certain areas as mentioned below.
Shift in focus from consumption to investment
According to Solberg, infrastructure investments are as important as the fiscal rule and it’s important for the government to strengthen Norway’s competitiveness and secure Norwegian employment.
Norway’s oil wealth shall be turned towards investment in knowledge and infrastructure and growth-enhancing tax cuts, according to the joint platform agreed by the two ruling parties.
Attracting foreign entrepreneurs to Norwegian infrastructure projects
The coalition’s ambitions to improve infrastructure includes:
- A higher share of the proceeds from the Government Pension Fund Global to be invested in infrastructure such as roads and railway and other infrastructure.
- A state owned limited company will be established for more efficient road construction.
- Increased use of Public Private Partnerships for financing of road building.
- A written goal for the new government to make it more attractive for large international entrepreneurs to participate in tenders for Norwegian infrastructure projects.
New investment strategy of the Government Pension Fund Global
The government aims to establish an investment program in the Global Government Pension Fund with the objective to invest in sustainable companies and projects in developing countries and emerging markets, according to the platform. The new government also considers investing in renewable energy. This is in line with our previous forecast (which can be read by clicking here) regarding the Government Pension Fund Global.
Private companies to secure health care
According to the platform, the new government will increase purchases of private healthcare in order to reduce health service waiting lists.
Oil exploration – environmental issues
In a compromise to receive support from the Christian Democrats and Liberal Party in the parliament, the coalition has vowed to refrain from taking initial steps to open for oil exploration off the Lofoten islands, Vesterålen and Senja and also not to start oil exploration off the Jan Mayen, ice edge, Skagerak and the Møre fields in the four year period until next election due to environmental reasons.
The political platform can be found here (in Norwegian): http://www.hoyre.no/filestore/Filer/Politikkdokumenter/plattform.pdf
For further information on any of these subjects, please contact:
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Martin Brox (Senior Associate)
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