The country’s leading daily Helsingin Sanomat reports that the three S’s – government leaders Alexander Stubb, Juha Sipilä and Timo Soini – announced Tuesday night that their coalition had reached a consensus on a budget plan for 2017-2020. In addition to their four billion-euro adjustment goal, the three centre-right parties agreed on 400 million in additional cuts.
Finance Minister Stubb believes the plan will put an end to state debt by 2020, or 2021 at the latest. At a press conference at 9 pm yesterday evening, Prime Minister Juha Sipilä couldn’t help but boast about his coalition’s success.
“This government has pushed itself, and I am pleased with our performance,” HS quotes him as saying.
Low inflation has quashed the trios’ original plans to gain savings via index freezes, so Sipilä said the coalition will now resort to a ‘cheese cutter’ approach, a Finnish idiom that implies skimming off the top.
Additional savings have also proved necessary because some local governments have been stubborn in their implementation of government austerity measures, the paper writes, utilizing their constitutional right to self-determination to put 130 million euros in planned savings into question.
Education cuts go ahead, infrastructure investment
Stubb was happy to proclaim that no new cuts would be made to education or research, adding that 100 million euros more in financing had actually been allotted to these areas. He said an EU-torpedoed idea to create a higher tax on sweets will be replaced with a hiked petrol tax.
The populist Finns Party reluctantly agreed to a petrol tax bump, after its coalition partners promised not to raise the value-added tax. Foreign Minister Timo Soini said that his party insisted that a ceiling be appointed, in case the price of oil rose to over 80 dollars a barrel.
The government also gave the green light to several major infrastructure projects that Transport Minister Anne Berner says can begin already next year: the cross-town Raide-Jokeri public transport connection in the capital city region, a bypass around the city of Lahti, and improvement of the Luumäki-Imatra motorway in eastern Finland.
Education Minister Sanni Grahn-Laasonen says planned cuts to student aid will move forward as planned, although the budget negotiations deemed that the savings target would be reduced slightly, from 150 to 122 million. Student aid in Finland will also no longer be tied to parental earnings.
HS reports that Sipilä commented that now that the ‘painful decisions’ have been made, government can now turn its attention fully to resolving chronic unemployment. He announced Friday evening that the coalition would announce the specifics of its latest social and health care services reform deal on Wednesday at 9 am.
Criticism from the left and right
The Tampere-based Aamulehti compiles reactions to the new budget plan from several forums.
The Greens were the most strident in their condemnation of the proposed cuts, with party head Ville Niinistö saying the announcement was ‘the peak of their hardened values’. He criticizes cuts to development funds, benefits and the social welfare system, and says the government let the country’s schools and students down by not retracting its education cuts. He says the extra 100 million cash injection for young researchers and digital learning environments will not give any of the sacked university staff their jobs back.
Finn Church Aid bemoans 25 million euros more in development aid cuts, saying it is very short-sighted in light of the growing number of humanitarian crises in the world that require long-term commitments.
Aamulehti says the country’s leading business lobby EK is happy with government plans to invest in transport and education. They object to the petrol tax increase, however, saying that it will add to company expenses and eat up consumer purchasing power. EK reminds the coalition of the promise it once made not to raise employer costs any further.
The top political party in opposition, the Social Democrats, says the government has gone back on its word in another area, too: to improve employment prospects. SDP parliamentary committee chair Antti Lindtman says the Prime Minister himself said that the government would not meet its objective to create 110,000 new jobs before the end of the parliamentary term.
According to Aamulehti, Lindtman says government was already falling behind their target, but now they’ve moved the goalposts back even farther.
Purchasing power down
And the second of two major tabloids in Finland, Iltalehti, features an assessment from the Taxpayers Association in Finland that says that the new budget plan, combined with the changes from the so-called ‘competitiveness deal’ being negotiated at present, would result in a 230-euro reduction in earnings for the average wage earner in Finland next year.
The association predicts that someone earning 3,295 euros per month, for example, will see their tax percentage go up from 31.1 percent to 31.5 percent. At the same time, the group estimates that purchasing power will decrease by 0.8 percent.