On 25 November 1998, the three parties in the Norwegian coalition government - comprising the Christian Democratic Party (Kristelig Folkeparti), the Centre Party (Senterpartiet), and the Liberal Party (Venstre) - managed to reach an agreement with the opposition Conservative Party (Høyre) and Progress Party (Fremskrittspartiet), on a new state Budget for 1999. A budget compromise was achieved after several weeks of negotiations, without the government managing to gain support for its budget proposal, either from the parties to the right or from the Labour Party (Arbeiderpartiet).
In November 1998, the Norwegian coalition government managed to reach an agreement with the opposition Conservative and Progress Parties on a new state Budget for 1999. The new agreement means that the government is abandoning earlier suggestions of tax and duty increases, along with controversial cuts in parental benefits and holiday entitlement.
On 25 November 1998, the three parties in the Norwegian coalition government - comprising the Christian Democratic Party (Kristelig Folkeparti), the Centre Party (Senterpartiet), and the Liberal Party (Venstre) - managed to reach an agreement with the opposition Conservative Party (Høyre) and Progress Party (Fremskrittspartiet), on a new state Budget for 1999. A budget compromise was achieved after several weeks of negotiations, without the government managing to gain support for its budget proposal, either from the parties to the right or from the Labour Party (Arbeiderpartiet).
In the budget compromise, the proposed tax and duty increases have been abandoned, which means that the Government has accepted a NOK 3,985 million reduction in revenues relative to its original budget plan (NO9807175F). The reductions in public sector revenue are partly offset by cuts in public sector expenditure. However, the cash benefit reform for parents with small children, which was the most controversial issue during the budget debate, remains in place (NO9807180N).
The budget compromise does not involve the eradication of an extra day's holiday, as originally proposed by the government (NO9810192N), nor will there be any changes to the present sickness benefit scheme. The latter point indicates that there will not be any reductions in compensation for employees or any extension to the period during which employers pay sickness benefit. However, the present arrangement for tax deductions in relation to trade union membership and membership of employers' organisations, will be reduced from NOK 1,800 to NOK 900 per year. There is also a proposal for the privatisation of some state-owned companies, and the proposed partial seltelecoml-off of the Norwegian telecom operator, Telenor, is particularly controversial.
The leader of the Norwegian Confederation of Trade Unions (Landsorganisasjonen i Norge, LO), Yngve Hågensen, expressed uncertainty about the effects of the Budget on the Norwegian economy, and the likelihood that it would lead to lower interest rates. Mr Hågensen also argued that the reduction in tax concessions for trade union membership was an infringement of basic union rights. However, the LO is still a firm supporter of the so-called "solidarity alternative" (the national understanding that employment should be promoted through wage moderation), and Mr Hågensen argues for the need to form a new solidarity pact, comprising all political parties and labour market organisations.
The Confederation of Norwegian Business and Industry (Næringslivets Hovedorganisasjon, NHO) was pleased that the proposed increases in tax and duty had been abandoned but was disappointed that the proposed cuts in the present sickness benefit scheme were not included in the budget compromise.
Eurofound recommends citing this publication in the following way.
Eurofound (1998), Compromise reached over 1999 state Budget, article.
