Norway Daily No. 206/99

The Royal Ministry of Foreign Affairs,
Oslo Press Division

Norway Daily No. 206/99

DATE: 26 October 1999

CHILD WELFARE EXPENDITURES SKYROCKETING

(Aftenposten)

The financial situation of Norway's child welfare services is out of control. A rapidly growing number of children with behavioural problems has led to an explosive 58 per cent increase in expenditures between 1994 and 1998. A number of counties have declared that the situation is acute. Akershus County has seen the greatest increase, with child welfare expenditures more than doubling during this period. This year's budget overrun is already NOK 56 million. Placements in institutions are the heaviest item of expenditure.

THE GOVERNMENT'S SECRET TAX PACKAGE

(Verdens Gang)

Verdens Gang has obtained the inside story on the main outlines of the comprehensive new tax package placed before Labour's negotiators last night. The major item in the package is a tax hike on capital income, from 28 to 29 per cent, which was previously rejected by Labour. What is new is that the Government proposes to apply this tax hike differently: a large part of the revenues, calculated at around NOK 6 billion, will be used to offset a special deduction for wage-earners. One of Labour's foremost demands, this is intended to get people now living on various pensions back to work.

CONSERVATIVES KEEPING THEIR DISTANCE

(Dagsavisen)

The Conservative's budget proposal contains NOK 9 billion in tax relief measures. The coalition parties have been given clear notice that they will have to go quite far to the right if they fail to reach a compromise with Labour this week. It is unlikely that this scenario will take place, however. Conservative Party chairman Jan Petersen seems to have given up his hopes for a budget collaboration with the Government. He finds it "very likely" that Labour and the Bondevik Government will reach agreement on the 2000 fiscal budget.

CHILD SUPPORT PROPOSAL UNCLEAR

(Dagsavisen)

Social security officials do not understand what Minister of Children and Family Affairs Valgerd Svarstad Haugland means with the new child support rules she has proposed. In its memo to the legislative consultations, the National Insurance Administration has asked Ms. Haugland to rescind her proposal. "These rules are not clear at all," says NIA Director General Arild Sundberg. Among other things, the new rules provide that both parents' incomes as well as the time the children spend with the non-custodial parent are to be considered in the establishment of child support payments.

TELIANOR WITH EUROPEAN MOBILE AMBITIONS

(Aftenposten)

One of Telia-Telenor's goals is to become one of Europe's biggest mobile phone companies. This will require the investment of NOK 100 to 300 billion over the next three years, a level previously unheard of in Norway. By comparison, Telia-Telenor's total investments last year amounted to around NOK 23 billion.

LABOUR DID NOT EXPECT A SALE

(Aftenposten)

Labour finance policy spokeswoman Hill-Marta Solberg does not expect the Government to propose any sale of state bank holdings. The Government Bank Investment Fund gave notice yesterday that it declined to sell its Kreditkassen holdings to MeritaNordbanken. The refusal was communicated after consultation with Finance Minister Gudmund Restad (Centre). Other finance policy politicians in the Storting viewed the refusal as a foretaste of Mr. Restad's intentions regarding the future management of state bank holdings. The conclusion is that he will let current policy, in which the state maintains a one-third interest in Kreditkassen and Den norske Bank, remain unchanged.

WILL NORWAY BE COMPELLED TO REDUCE FOOD PRICES?

(Verdens Gang)

Those who feel food is expensive in Norway have something to look forward to: if Finnish Minister of Foreign Trade Kimmo Sasi is right, Norwegian food prices will go down by an average of 14 per cent. Norwegian politicians will be forced to revise Norwegian agricultural policy drastically, according to Mr. Sasi, who will lead the EU's preparations for the upcoming world trade summit.

NEW CHANCE FOR GERMAN SHIPYARD

(Dagens Næringsliv)

In response to strong pressure from the Ministry of Foreign Affairs and senior members of the defence establishment, the Royal Navy Logistics Command (SFK) has called the German naval shipyard Blohm + Voss back for further frigate tender negotiations. The SFK had initially ruled the German shipbuilders out after the first round.

WORTH NOTING

• Telia-Telenor is buying 30 per cent of Malaysian telecoms company DiGi Swisscom Bhd. The acquisition will cost approximately NOK 1.6 billion and give the Scandinavian operator its first major foothold in Southeast Asia. (Aftenposten)
• Labour wants the credit policy paper to be presented by the Government on Friday to include a broad assessment of the structure of the banking industry. (Dagsavisen)
• Minister of Justice Odd Einar Dørum calls on the schools to aid in the effort to combat forced marriages by recruiting more teachers from immigrant minorities. He also wants newly married couples to attend a mandatory course before being granted residence in Norway. (Aftenposten)
• Internet shopping represents a major threat to the Norwegian postal service, which is now marshalling its resources to carve out a leading position in online shopping. The postal services' new Internet store will open on Monday. The IT investment alone cost over NOK 10 million. (Dagbladet)
• Every aspect of security in Oslo will undergo intense scrutiny by President Bill Clinton's security people before he arrives next Monday. They combed the city together with their Norwegian counterparts yesterday. (Dagsavisen)

TODAY'S COMMENT

The government's refusal yesterday to sell its stake in the Kreditkassen should surprise no one. When MeritaNordbanken first made its offer, Finance Minister Gudmund Restad was quick to point out that his scope of action was limited by legislation mandating a minimum one-third state ownership in Norway's two leading banks. The Government will soon be submitting a policy paper dealing with the structure of the Norwegian banking industry. It will then be up to the Storting to decide whether the guidelines require adjustment. Contrary to the accusations of market players and the political right, the Government cannot be accused of obstructionism in this matter. Speculators thought the politicians would give in when the offer came. They were wrong, but they have no cause for complaint: the market must recognize that politicians are here to stay. Kreditkassen stock is still much higher than it was before the MeritaNordbanken made its offer. If taxpayers have lost anything, as the Conservatives claim, it happened when the state sold down its bank stock at reduced rates last spring. But the final outcome of the current situation will not be decided by yesterday's refusal to sell. The fact that a new bank structure statement is once again required shows that the politicians are always one step behind. This was self-evident when Saga disappeared. But since Mr. Restad has promised a new finance policy report, it must be because he has something new to report. (Dagbladet)