This is how budget growth can be slowed

Government spending in Norway is growing rapidly. We have had a fivefold increase in annual oil spending over the past twenty years.

Each new state budget includes new billions in policy measures, while growth in the mainland economy slows. Our growing wealth is making it increasingly difficult for politicians to say no.

Unstable majorities in Parliament, with the prospect that it could get even worse in the next four years, also make budget negotiations increasingly costly. Many want more of their own.

A evaluation of the state budget process; conducted by DFØ last year (Directorate for Management and Financial Management), finds that politicians need help. Although the process is essentially judged to work well, they find that holistic, long-term and strategic thinking is hard to come by.

Pressure from special interests, tactical play and internal competition between ministers contribute to the lack of priorities.

Last week the government had budget conference, where it finalised final proposals for next year's state budget. There I hope they did things differently than in previous years.

The evaluation from DFØ points to several weaknesses in the government's budget process, but also suggestions for improvements. One is to introduce a clearer gatekeeper role. Too many ideas get far in the process, without anyone asking the uncomfortable questions.

The members of the government should preferably have done the job themselves, but unfortunately DFØ finds signs that “the ministers themselves show a lack of loyalty to their own leaders”. Norway should therefore do like Sweden and Denmark and give the Ministry of Finance a mandate to be the gatekeeper. That should include rejecting proposals that are not in line with the government's overall priorities -- until they reach the government table.

Another suggestion is to introduce multiannual budgets. In a recent evaluation by the OECD The organisation points out that Norway's one-year budgeting makes long-term planning more difficult. They believe Norway could benefit from introducing multi-annual spending frameworks, as Sweden has among others. They set spending limits three years ahead in time.

The OECD also proposes supplementing the rule of action with a rule of expenditure growthThat is, the spending cap. It should apply regardless of where the money comes from, oil money use or not.

A third proposal from the OECD is to provide expanded mandate and resources to the government's fiscal selection. They could, for example, be given responsibility for being the watchdog of the Perspective Report, to ensure that changes in annual budgets help solve long-term challenges for the Norwegian economy. Today, there is far too little to trace of the Perspective message in the annual budgets.

Short-term political priorities damage the livelihoods and welfare of both our own and future generations. Politicians need to be helped to think long-term, and to prioritize strategically. DFØ and the OECD have pointed to several proposals that could contribute.

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