Lessons for our financial policies

Fifty years of Norwegian petroleum policy:
Lessons for our financial policies
Jon Gunnar Pedersen
April 2015
Finansdepartementet
Lesson # 1:
It looks easier in retrospect
Demand from oil and gas activity. Per cent of mainland Norway GDP
Use of oil revenues and expected petroleum fund return. Pct. of trend-GDP for
mainland Norway
16
16
14
14
12
12
10
10
8
8
6
6
4
4
2
2
0
0
-2
-2
-4
1970
1980
1990
2000
2010
2020
2030
-4
2040
Sources: Statistics Norway & Ministry of Finance.
2
Finansdepartementet
Lesson # 2:
Get by with a little help from friends
Terms of trade 1900-2013, Index 1990 = 100
280
280
230
230
180
180
130
130
80
1900
3
1915
1930
1945
1960
1975
1990
2005
80
2013
Finansdepartementet
Lesson # 3:
Max Weber rules, OK
Per cent of trend GDP for mainland Norway
25
Net oil
revenues
20
15
25
20
15
4% return on
fund
10
10
5
5
0
0
Structural budget deficit
-5
-5
1970
4
1985
2000
2015
2030
2045
2060
Finansdepartementet
Lesson # 4:
Stability and consensus helps
Foreign policy consensus
EEA agreement
Oil sector consensus
Pension reform consensus
Tax system consensus
Financial sector consensus
5
Finansdepartementet
Lesson # 5:
Trust us; we’re the government
Confidence in national authorities in OECD countries
Source: Ministry of Finance
6
Finansdepartementet
Lesson # 6:
Never forget the labor market
Wage costs per hour, industrial sector, 2013
Index. EU17 trading partners = 100. Common currency.
180
160
140
Wage level 2013 and exch. ratios 2 Dec 2014¹
Wage level and exch. ratios 2013
120
100
80
60
40
20
0
Source: Det tekniske beregningsutvalget for inntektsoppgjørene
7
Finansdepartementet
Lesson # 7:
Growth can be good for all
2012. Source: Eurostat
8
Finansdepartementet
Lesson # 8:
It’s all in the mind
4%
National wealth per capita
4%
11 %
Future economic rent
from petroleum
NPV of labor force
production
Real assets
Financial assets
81 %
Source: Statistics Norway and Ministry of Finance (PM13)
9
Finansdepartementet
Lesson # 9:
Productivity sclerosis
Gross product per hour, Index 1990 = 100
270
270
Construction
Bygg
og anlegg
Industri
Industry
240
240
Privat
tjensteyting
bank og forsikring)
Private
services(utenom
(excl. finance)
Bedrifter
Fastlands-Norge
Companies
in mainland Norway
210
210
Offentlig forvaltning
Central and local government administration
Varehandel
Retail trade
180
180
150
150
120
120
90
90
1990
1995
2000
2005
2010
2013
Source: Statistics Norway
10
Finansdepartementet
Lesson # 10:
Money isn’t always good for you
Cost estimate, NOK million
First estimate
Final cost
Rv. Ryfast
650
5 490
Rv. 13 Hardangerbroen
800
2 570
E18 Bjørvika project
Rv. 706 Northern bypass
Double railtracks Ski-Sandbukta
1 200
7 100
450
1 600
300
1 708
Double railtracks Sandvika-Asker
St. Olav’s Hospital
1 400
3 714
1 000
12 700
Skjold missile torpedo vessels
Navy frigates (5)
1 500
5 000
6 000
24 700
90
1 9271
750
4 356
40
1 820
Stad ship tunnell
National Opera
New Holmenkollen
1
Last estimate
Source: Concept project, NTNU
11
Finansdepartementet
Lesson # 11:
The danger of the non-wannabe
Percentage of students completing secondary education as scheduled
100
100
90
90
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
Source: OECD.
12
Finansdepartementet
Finland
Sverige
Danmark
Malta
Estland
Norge
Storbritannia
Kypros
Korea
Irland
Nederland
Latvia
Tsjekkia
Frankrike
Gjennomsnitt
Luxembourg
Slovakia
Østerrike
Kroatia
Tyskland
Belgia
Litauen
Portugal
Slovenia
Romania
Ungarn
Montenegro
Hellas
Spania
Italia
Bulgaria
Albania
Makedonia
Tyrkia
Polen
Lesson # 12:
Death makes all the difference
Percentage of employees who have reported substantial restructuring
or reorganisation within the last three years (2011)
60
50
40
30
20
10
0
Source: OECD.
13
Finansdepartementet
Lesson # 13:
Odd, and staying that way
The Kingdom doesn’t do deficits
Everyone should pay their taxes
Flexicurity
Save it, but stash it abroad
Keeping the Krone
Living well with the EU
Simple, transparent and small
14
Finansdepartementet