Government decides on amendments to 2021 budget proposal
On 19 November, the Government submitted to Parliament its proposal to amend the budget proposal for 2021. The proposal will allocate funding for the second phase of future-oriented investments and for increased expenditures arising from COVID-19, among other things. The Government is committed to protecting people’s wellbeing and the ability of businesses to cope during the COVID-19 crisis in Finland, with as few detrimental human and economic consequences as possible.
Funding for the second phase of future-oriented investments
As outlined in the Government Programme, the Government is implementing a one-off programme of future-oriented investments to support the attainment of the Government Programme’s objectives and ensure the long-term sustainability of general government finances. In the first phase, which was included in 2020 budget and the General Government Fiscal Plan for 2020–2023, investments totalling EUR 1.4 billion were allocated for 2020–2022. In addition, approximately EUR 215 million in investments will be allocated from the Housing Fund of Finland in 2020–2022.
On 23 October 2020, the Ministerial Committee on Economic Policy discussed the second phase of financing for future-oriented investments. The supplementary budget proposal allocates approximately EUR 356 million for future-oriented investments in 2021. Around EUR 322 million in funding for the second phase of future-oriented investments in 2022 will be included in the General Government Fiscal Plan for 2022–2025 and in the budget proposal for 2022.
The second phase of future-oriented investments for 2021 includes EUR 40 million for improving the conditions for continuous learning and EUR 80 million for recruiting teachers, instructors and support staff for vocational education and training and for increasing the number of teaching hours for untenured teachers. An increase of EUR 50 million is proposed for development cooperation and an increase of EUR 25.5 million for nature conservation funding. EUR 25 million is proposed for measures to promote walking and cycling. An increase of EUR 40 million is proposed to support the sustainable growth and vitality of regions with a focus on preparedness for sudden structural changes, regional innovations and experiments, regional development funding, funding for the KEINO Competence Centre and support for agreement-based cooperation. An increase of EUR 6 million is proposed for the development programme for work and wellbeing at work.
Changes related to the COVID-19 situation
The Government proposes extending some of the temporary derogations from the unemployment security legislation until the end of March 2021. An increase of EUR 56.4 million is proposed to fund the extensions to the right of entrepreneurs to unemployment security and the raised exempt amount.
The Government also proposes increasing the health insurance reimbursement for COVID-19 tests carried out by private healthcare providers. The increase would be financed by transferring EUR 45 million from the Government transfers and grants item to cover the costs generated to public healthcare and social welfare due to COVID-19.
EUR 350 million in capital funding is proposed to strengthen the financial position of Finavia Corporation.
An increase of EUR 11.5 million is proposed to support flight connections to regional airports.
To relieve congestion in court proceedings, a total of EUR 2.9 million is proposed for courts, legal aid offices and the prosecution service in order to reduce the adverse effects of congestion caused by the COVID-19 situation and to prevent unreasonable delays in processing times. EUR 1.6 million is proposed for the Criminal Sanctions Agency to relieve congestion in the enforcement of sentences.
An additional EUR 5.46 million is proposed for the regional state administrative agencies to cover the costs of additional tasks generated by the COVID-19 situation.
EUR 2.79 million is proposed for the administrative branch of the Ministry of Justice to safeguard the resources for criminal proceedings.
An increase of EUR 4 million is proposed for the costs of introducing the positive credit register.
An increase of two person-years and EUR 140,000 is proposed for the operating costs of the National Supervisory Authority for Welfare and Health. The need for additional funding is caused by the increased investments in the monitoring of information systems in healthcare and social welfare.
An increase of EUR 0.975 million is proposed for the operating costs of the occupational safety and health (OSH) division of the regional state administrative agencies and for the establishment of 15 new public posts of OSH inspectors.
An increase of EUR 225,000 is proposed for the implementation of European Green Leaf activities in the City of Lappeenranta. An increase of EUR 750 000 is proposed to mitigate tenants’ financial problems.
For the operating costs of the police, an increase of EUR 1,181 million is proposed for the rental of premises, an increase of EUR 1 million for the reform of the telecommunications interception system and an increase of EUR 443,000 for the expenditures arising from implementing the EU SIS Regulation.
An increase of EUR 290 000 is proposed for the rental expenses of the Border Guard.
The supplementary proposal also includes several other additions to various administrative branches.
Net government borrowing to increase by EUR 946 million
The tax revenue forecast will be reduced by EUR 316 million. Factors reducing tax revenue include the decrease in income from earned and capital income taxes based on the preliminary information obtained from the completion of taxation for 2019.
The estimate of miscellaneous revenue and property income will be increased by a total of EUR 383 million. In line with the Government Programme, future-oriented investments are financed through property income. Therefore, the additional investments in the second phase of future-oriented investments will increase the property income needed to finance them in 2021 by EUR 331 million.
The Government proposes increasing the appropriations for 2021 by a total of EUR 1.0 billion to a total of EUR 65.2 billion and increasing the estimate of annual revenue by EUR 67 million to EUR 53,5 billion. The proposal will increase net government borrowing by 946 million. Net government borrowing is expected to total EUR 11.7 billion in 2021. Government debt is expected to total approximately EUR 138 billion at the end of 2021.
Inquiries: Joonas Rahkola, Special Adviser to the Prime Minister in Economic Affairs, tel. +358 295 160 998, Markus Lahtinen, Special Adviser to the Minister of Finance, tel. +358 295 530 417, Heikki Sairanen, Special Adviser to the Minister of the Interior, tel. +358 50 456 4662, Henri Purje, Special Adviser to the Minister of Education, tel. +358 295 330 017, and Camilla Mäkinen, Special Adviser to the Minister of Justice, tel. +358 295 150 119