Prime Minister Jyrki Katainen presenting the Government statement to Parliament on the Government Programme
An open, fair and confident Finland
(subject to changes)
The Government aims at an open, fair and confident Finland. These words stand for the values and courses of action supported by the whole Government.
Open is the opposite of closed. Thanks to international trade and cooperation, Finland has become a country with one of the highest standards of welfare in the world. Finland has been the home to expertise, ideas and products. It has been profitable to work and employ others in Finland.
However, the past does not predict the future and therefore we must re-create our wellbeing anew every day.
All this is based on Finnish work. Education and expertise must flourish in Finland. We must build our country so that innovations can be refined into businesses and work in Finland. We must ensure that Finnish work remains competitive and that it always pays to work.
So far, we have gained from globalisation. Finland has thrived on the advancement of free trade and therefore the economic and political opening of the world has served Finlands interests.
There are those who say that we are independent only if we can decide all things for ourselves. Such thinking leads to detachment and isolation. It creates an illusion of power while in reality it leaves no possibility to work on matters that are important to us Finns.
Finland must have a seat and influence at the tables where decisions on issues that affect us are made. Isolation does not translate into independence. A Robinson Crusoe alone on his island may well take all decisions by himself. Only the scope of his decisions will eventually prove very limited indeed. The same will happen to his wellbeing and freedom.
I believe that the earlier generations those who safeguarded the freedom of our fatherland would have liked to see Finland as an independent and active player among other nations. Freedom and independence are words that speak about actions and cooperation not about passiveness or seclusion.
Open also means openness towards other people, cultures and difference not only abroad but in Finland, too. It does not mean only tolerance and acceptance. It means respect and nurturing. Difference sparks creativity, new ideas and new ways of acting.
This all starts with mutual respect for each other. The Government is committed to openness and cultural pluralism. We do not accept racism.
Our wellbeing depends on several factors: are we able to generate new ideas in Finland, does our society encourage turning these ideas into businesses and is it profitable to work and employ people in Finland?
We must be able to renew our welfare model to meet the needs of today and tomorrow.
We are faced with considerable challenges. In Finland, the change in the populations age structure is the fastest in Europe. As a result, the rise in the dependency ratio is the fastest, too. Bold reforms are required to guarantee services and wellbeing.
The recent financial crisis and recession left an EUR 8 billion gap in State revenue and expenditure. With growth restarted, we must now take determined action to reduce the gap.
The Government has a clear aim concerning central government finances. We have decided to reduce the debt ratio during the current electoral period.
To make this happen, the Government Programme provides a net sum of EUR 2.5 billion for the necessary adaptive measures.
The Government will assess indebtedness annually. Should the measures adopted prove insufficient to change the development, we will introduce new methods.
The Government will build its economic policy to maintain Finland's current credit rating which is the highest possible. This requires consistent, credible and clear economic policy and, when necessary, ability to react rapidly to changes that are happening around us.
Reduced economic credibility and a downgraded credit rating would increase debt servicing costs. This would be the same as throwing taxpayers money down the drain. Do we want to spend money on servicing central government debt or on providing services to our citizens?
Confidence should be seen not as a static state of affairs but as a process that requires constant work. This is important for citizens and businesses to be able to trust in their future in Finland.
That said, I would like to point out that the sustainability gap will introduce an even greater challenge to public finances. This means that, in future, the revenue brought in by the working and tax paying population will not be enough to finance the services and income transfers for our ageing welfare society. In other words, if we fail to reform our structures drastically, we will not have enough money for schools, health care centres, care of the elderly or pensions in the coming years.
Our Nordic welfare society will prosper if we are able and ready to reform.
A decline in the debt ratio is essential, but alone it will not be enough to close the sustainability gap. We need structural reforms, too. The most important reforms will include the lengthening of working careers and a radical reform of the local government structure.
The local government reform must be based on and aim at a sustainable system that will safeguard equal and high-quality services to all citizens. The objective of the reform is to create a thriving local government structure with strong municipalities. A strong municipality consists of natural commuting areas and is able to bear the economic burden of basic service provision.
The second key reform centres on lengthening working careers. We Finns must reach common understanding on a long-term solution to lengthen careers, to safeguard adequate funding for the earnings-related pension system and to secure a sufficient level of pension security.
The reform measures should target the whole working career, including its initial, middle and final stages. As the Government Programme says, labour market organisations are committed to identify, negotiate and implement the necessary measures to attain the objective set. The Government, for its part, remains committed to good and close cooperation with the labour market organisations.
Currently, incapacity for work is the main factor behind shortened working careers; therefore, the Government will place particular emphasis on measures to prevent work incapacity and improve possibilities for those who are partially capable of working. This can be achieved by developing occupational health services, rehabilitation and work in general.
Good quality of working life encourages people to stay longer in employment. Work communities are key to wellbeing and coping at work. The people doing the actual work are in the best place to suggest how things could be improved in the future.
Without entrepreneurship and without the economic growth and jobs created by the private sector, we would not have wellbeing in Finland.
The Government will pay particular attention to ensuring that Finland will remain a country where it is profitable to run a business, employ people and create growth. In addition to industrial exports, we must be able to export innovations and services. The clean-tech industry, based on environment and energy technologies, offers a number of possibilities.
The overall policies governing research and development funding must be re-examined. The main objective should be to improve the effectiveness of the funding system and, by doing so, introduce new incentives for companies to grow and internationalise their activities.
Cutting the level of corporate income tax will improve Finnish companies competitiveness in the global market and enhance incentives to invest in Finland. Cuts in energy tax will promote industrial competitiveness as the forest and metal industry will pay EUR 120 million less in energy taxes every year.
The Government is not in a position to generate growth on its own labour market organisations too must be willing to share the responsibility. Finland needs a new kind of cooperation. The Government is prepared to support the drafting of a labour market settlement with means that will underpin competitiveness, employment and purchasing power. I will invite representatives of the labour market organisations to a meeting with the Government in August to discuss ways to address these challenges.
Work against inequality and poverty
Work is the best social security. One of the Government priorities is to promote employment. The Government has earmarked almost EUR 140 million for the prevention of youth and long-term unemployment. We will also implement the social guarantee for young people. This means that all young people under 25 and every recent graduate under 30 will be offered a job or the possibility of practical training, studying, workshop training or rehabilitation within three months of unemployment.
All people should have equal possibilities to succeed, to apply their talent, to fulfil their potential and to care for themselves and their family.
The Government will follow in its predecessors steps by continuing improvements in basic security. The position of people living on a low income will be improved significantly. Those who cannot care for themselves will be particularly well attended to. The right of older people to good care will be secured with the proposed act on the services for the elderly.
During its term of office, the Government will improve basic security by more than EUR 330 million. The position of those living on basic security will be improved by our increasing the basic daily allowance and unemployment allowance by EUR 100 per month. The Government will also raise the basic deduction in local government taxation and the deduction for earned income, increase income support and the general housing allowance, target more support to single parents and link student grants and financial aid with the consumer price index. After the current electoral period, all minimum benefits will be tied to the index and their level will automatically keep up with price rises.
International affairs and EU policy
The prosperity of Finland and the wellbeing of Finns are to a great extent dependent on our international cooperation in the fields of economy and politics.
Finlands foreign policy will continue to be based on activeness, initiative and continuity. Finland carries responsibility not only for its own citizens but also internationally.
In our EU policy, we are keen to promote reforms that improve the EUs global economic competitiveness, enhance the functioning of the internal market and contribute to the Unions overall effectiveness. Our EU policies are positive and determined but at the same time realistic.
In bilateral relations, the Government intends to devote increasing effort to relations with Russia, the United States and the emerging economies. The key role of the Nordic and Baltic countries will, however, remain.
External economic relations will become one of the new foreign policy priorities. The objective is to support the internationalisation of small and medium-sized enterprises, encourage the export of products and services and create new jobs in Finland by so doing. In trade policy, Finland supports open, free and fair trade and promotes the integration of the emerging countries into the international economy.
A caring and successful Finland marked by wellbeing
The values behind Finlands success are best expressed by the following words: encouragement, education, tolerance and caring.
The Government is committed to work towards:
- securing the financial base for Finlands public finances;
- creating new jobs, sustainable growth and competitiveness in Finland and
- reducing poverty and inequality and providing care for the weakest in Finland.
In other words, we will work to foster wellbeing for future generations in Finland, too.
All Government activities and decisions should be assessed against this and only this objective.