Government decided on first supplementary budget proposal for 2017
The Government negotiated the first supplementary budget proposal for 2017 on 19 May. A proposal is due to be submitted to Parliament on Wednesday, 24 May.
Increase in tax revenue estimates
Estimated tax revenue has increased by EUR 490 million, particularly due to tax receipts and a more positive updated economic forecast. Due to better than expected economic development, it is proposed that value-added tax revenue be increased by EUR 186 million and car tax by EUR 52 million. Faster processing of tax items in the Tax Administration during 2017 has contributed, in turn, to higher than expected inheritance and gift tax revenue. It is proposed that inheritance and gift tax revenue be raised by EUR 220 million.
Central government’s borrowing requirement declines slightly
Taking into account an increase in actual revenue of EUR 482 million and an increase in appropriations of EUR 304 million, the 2017 supplementary budget proposal reduces the central government’s net borrowing requirement by EUR 178 million. Central government net borrowing in 2017 is expected to be approximately EUR 5.4 billion. At the end of 2017, central government debt is expected to be approximately EUR 108 billion, which is approximately 49% in ratio to GDP.
Support for the positive restructuring of Southwest Finland
The positive impact of manufacturing industry growth will be extended in Southwest Finland into the 2020s. The area is in significant need of skills and additional labour. To ensure long-term growth, funds are proposed to strengthen positive restructuring in Southwest Finland.
It is proposed that EUR 2 million be allocated in positive restructuring areas to implement growth pilots supporting the implementation of the reform of vocational education and training. Pilot projects to be implemented in 2017–2019 will study in more detail the need for vocational experts and will create operating models aimed at meeting the need for experts quickly and in a front-loaded manner. It is proposed that an additional EUR 4 million be allocated in 2017–2019 to strengthening university of applied sciences education in positive restructuring areas. It is proposed that EUR 2 million be allocated to create in Turku a common platform for higher education and research in technology, and EUR 12 million in 2017–2021 to develop an operating model for cooperation of Finland’s technology sector universities in Southwest Finland.
The Government will assess by the end of 2020 how cooperation of higher education institutions in the field of technology has succeeded in satisfying the recruitment demand for technology graduates in Southwest Finland. In this context, it will also be assessed whether there is a need for changes with respect to the division of education responsibilities of universities of technology.
To eliminate traffic bottlenecks and improve traffic safety, an updated road plan will be launched on the section Lieto Station–Aura on Highway 9 between Turku and Tampere.
The Ministry of Economic Affairs and Employment will allocate EUR 16,737,000 to the public employment and business services of Centres for Economic Development, Transport and the Environment. The appropriations will be used to respond to acute economic and employment situation requirements and positive restructuring, and to strengthen the availability of skilled labour.
The funding will be allocated from the Ministry of Economic Affairs and Employment’s unallocated appropriations for 2017. Additional appropriations will be allocated to Uusimaa, Southwest Finland, Satakunta, Tavastia Proper, Pirkanmaa, Southeast Finland, Northern Savonia, Central Finland, Ostrobothnia and Northern Ostrobothnia.
Efficient transport links
To support Finland’s competitiveness and sustainable growth, Finland’s accessibility and efficient connections must be ensured. In exports and imports, Finland is dependent in terms of sea transports on the traffic flow quality and capacity of important routes.
For the Oulu fairway project, an appropriation of EUR 12.5 million is proposed for deepening the fairway from 10 metres to 12.5 metres to raise the port’s transport efficiency. It is proposed that the authorisation and appropriation for the Rauma fairway project be increased by EUR 2 million due to an increase in the volume of rock to be excavated in the project compared with the original plan. Funds will be allocated for the deepening of the Vuosaari fairway in the 2018 budget. The central government’s financial contribution is EUR 10 million.
An authorisation of EUR 21 million is proposed for the electrification of the Uusikaupunki rail track. The objective of the electrification is to achieve cost savings in transport services and to mitigate safety and environmental risks at the Turku rail yard.
An appropriation of EUR 3.5 million is proposed for assistance granted for the building costs of the KymiRing motorsports centre, currently under construction. A condition of the granting and payment of the central government assistance is verification, through legally binding financial commitments given by providers of financing, that the funding required by the motorsports centre project will be fully realised.
An authorisation of EUR 14 million is proposed for the Tillola–Keltti road section project on Highway 12 between Lahti and Kouvola. The objective is to improve traffic safety and traffic flow as well as to direct traffic via a split-level interchange to the KymiRing motorsports track. Implementation of the project is conditional on the realisation of funding for the KymiRing.
Asylum seekers and immigration
It is proposed that the appropriation budgeted for assistance payable to clients of immigration-related reception activity be increased by EUR 14.9 million. This year, the number of people within the reception system will be greater than expected, i.e. an average of 14,700 people. It is proposed that the appropriation for voluntary returns be increased by EUR 3 million.
It is proposed that military crisis management expenditure be increased by approximately EUR 8.6 million, mainly due to the continuation of the training mission in Iraq.
Finland 100 independence centenary
In honour of the Finland 100 independence centenary, the Ministry of Social Affairs and Health will launch three new grant programmes. It is proposed that EUR 5.5 million be earmarked for grant applications in the new programmes. Organisations and foundations may apply for the grants to promote health and social welfare.
An increase of EUR 500 million is proposed for Finnvera Plc’s acquisition of funds authorisation, as a result of the raising of the maximum amount of loans granted by central government to Finnvera Plc within the state budget, following a legal amendment that entered into force on 1 January 2017.
Finnish Funding Agency for Innovation Tekes
It is proposed that EUR 10 million be transferred to the loan authorisation of the Finnish Funding Agency for Innovation Tekes from appropriations earmarked for the capitalisation of Tekes Venture Capital Ltd, to be used for accelerating piloting and demo projects. The appropriation transfer arising from the authorisation increase will be EUR 4.3 million in 2017.
Health, social services and regional government reform
A EUR 22 million increase is proposed for the establishment of the counties’ information management as well as for the counties’ advance preparation and provisional administration expenditure.
It is proposed that an appropriation totalling EUR 30 million be allocated to discretionary government transfers granted for the costs of client freedom of choice pilot projects in healthcare and social welfare.
An appropriation of EUR 8.2 million is proposed for the capitalisation of Governia Oy. The State of Finland and the Russian Federation are preparing an agreement on the acquisition for the State of Finland of the Finland House property, located in St. Petersburg. In the intergovernmental agreement, the wholly state-owned special assignment company Governia Oy would act as the purchaser on behalf of the State of Finland.
An increase of EUR 8.2 million is proposed for payment of loan guarantees granted by the State of Finland relating to the renovation of Finland House, run by the St. Petersburg Foundation maintained by the Finnish Institute in St. Petersburg, after the loan provider called in the loan.
It is proposed that the state ownership holding of Neste Plc and Vapo Oy be reduced from the present 50.1% such that the ownership holding in both companies will remain at a minimum of 33.4% of the votes granted by the total number of shares. The Government will accordingly continue to safeguard its position in all significant decisions relating to the companies.
An increase of EUR 1.6 million is proposed for Natural Resources Institute Finland to renew its Savonlinna operations into a strategic operating location, which will develop operating methods and new business models to transfer forest bioeconomy research results into practical use.
An additional appropriation of EUR 10 million for public employment and business services is proposed in connection with the introduction of an activation model for unemployment security.
It is proposed that an additional appropriation of EUR 1 million be allocated to central government compensation for the administrative expenditure of relief services for agricultural entrepreneurs and fur producers. The appropriation will be used for a project implemented by the Farmers’ Social Insurance Institution Mela aimed at helping agricultural entrepreneurs cope in challenging situations.
It is proposed that EUR 5 million be allocated to the Ministry of the Environment to mitigate environmental damage arising from the risk of environmental contamination caused by the bankruptcy of Belvedere Mining Oy.
Inquiries: Markus Lahtinen, Special Adviser to the Prime Minister (Economic Policy), tel. +358 295 160 404; Juha Halttunen, Special Adviser to the Minister of Employment, tel. +358 50 574 0236; and Ville Valkonen, Special Adviser to the Minister of Finance, tel. +358 44 567 2201