Norway's govt to up welfare, freeze privatisation

Norway's govt to up welfare, freeze privatisation
13 Oct 2005 16:31:12 GMT
Source: Reuters
By Alister Doyle

OSLO, Oct 13 (Reuters) - Norway's incoming Labour-led government pledged on Thursday to raise welfare spending, freeze privatisation of major companies and permit oil drilling in the Arctic.

"This is an historic day," incoming Labour Prime Minister Jens Stoltenberg told a news conference where he presented a 73-page policy platform outlining goals like greater equality between Norwegians and an end to poverty.

The three-party coalition said it would raise spending on health, education and care for the elderly while respecting limits on spending of vast oil wealth in Norway, the world's number three oil exporter.

The left-of-centre coalition, which won an election on Sept. 10 to oust the tax-cutting centre-right coalition, will take power on Monday after spending a month working out policies.

Outgoing centrist Prime Minister Kjell Magne Bondevik says that the new "Red-Green" coalition will drive up interest rates by over-spending Norway's vast oil wealth, meant to be saved in a $185 billion fund for future generations.

The alliance of Stoltenberg's Labour Party, the Socialist Left and the Centre Party would halt sales of stakes in major state-held companies. Norway has lagged many western nations in privatisation.

"The government will ensure a strong public and national ownership," it said.

It would maintain the existing 71 percent state stake in oil firm Statoil <STL.OL>, 44 percent in energy and aluminium group Norsk Hydro <NHY.OL>, 54 percent in telecom operator Telenor <TEL.OL> and 34 percent in DnB NOR <DNBNOR.OL> bank.

ARCTIC DRILLING

Norway would permit continued drilling for oil and gas in the Arctic Barents Sea under tight controls even though the Socialists had been bitterly opposed, fearing damage to the fragile environment.

Meanwhile, drilling would be banned until 2009 off the scenic Lofoten islands on the fringe of the Arctic Circle.

"All three are winners," Stoltenberg said of the compromises made by the three parties. "There are no losers."

The new government said it would stick to existing rules for fiscal and monetary policy, including guidelines limiting spending of oil cash. The current rule limits spending of money to four percent annually of the oil fund.

The crown was little moved by the widely anticipated policy platform, trading at 7.8288 per euro <EURNOK=> at 1550 GMT.

The new government said it would raise taxes slightly, back to 2004 levels, and maintain that level until the next election in 2009. Among promises, spending by local governments would rise by 5.4 billion crowns in 2006.

It reiterated a pledge to pull Norwegian troops out of Iraq. Norway would step up participation in the main NATO-led operation in Afghanistan while quitting a U.S.-led Enduring Freedom operation.

"The main lines of foreign policy will continue," it said, even though the Socialist Party brands the United States the main threat to world peace. Norway would stay out of the European Union after "No" votes in 1994 and 1972 referendums.

Under a shareout of seats in the new cabinet to be presented on Monday, the Labour Party would have 10 seats, the Socialists five and the Centre Party four. Socialist Party leader Kristin Halvorsen is widely tipped to be finance minister.

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