The Norwegian Government and our money: The oil fund

Before we, the Norwegians, found oil in the Norwegian sea and the North sea, we were one of the poorest countries in Europe.

That changed fairly quickly. We were quite clever, so 85 % of the profit remains in the coffers of the Norwegian state; as direct money earned through ownership in the oil and gas companies or through the tax system.

So, what do we do with all this money?

We put it in a fund ( the “oil fund”) so that we can care for the elderly that is a growing group in Norway. What an empathic and noble reasoning. BUT, is it necessary?? Let’s do the math. We are only just above 5 million people and we are actually growing fast. But, the oil fund is growing faster.

The government has a rule, called “handlingsregel”, which means “rule for action”. It states that the Norwegian state cannot use more than 4 % of the oil fund every year.

BUT, as the oil fund is growing (passing 3.500 billion NOK despite the crisis in the world economy),

I will spell it so there is no misunderstanding: The oil fund is now three thousand five hundred billion NOK.

Norway has a number of serious challenges that the state do very little about. The key word is the economy of the Communes (Municipal areas). The state has more than enough money, but the Communes are almost all struggling. The main reason is that the state is giving them more responsibilities, but to not follow up with the necessary funds. This, of course is a simplification of the situation, but is at the hart of the matter.

So, Norway, one of the richest countries in the world, has a long and difficult backlog when it comes to maintenance of public buildings (most important schools), caring for the elderly sick that cannot care for themselves, the road system, public transport, innovation, land based industry (in a long term perspective), the quality of our school system…………..the list is long.

Don’t misunderstand me. We are quite well off and I do understand that we cannot overuse money, but we are on the positive side when it comes to the state’s budget and foreign trade, and substantially so.

We have MORE than enough money, and we are underusing them. — An example. Last year, 2011, the states budget showed that we had an added profit of 29 billion NOK. Money that was not in the government’s calculations. So, what do we do? We put them in the oil fund.

Why don’t we use this money to fix our schools, take care of those who need it, upgrade our road system, expand and streamline public transport and all the other major tasks that has been neglected for so long.

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