In the final budget session of this government term, the Government stated that it is on the threshold of achieving its economic policy goals
Skills, employment, growth and food are key elements of the 2019 budget proposal

The Government’s budget proposal increases social fairness, combats skills shortages, reduces time gaining employment, improves security and supports Finnish food production. Personal taxation will remain almost unchanged. In the final budget session of its term, the Government agreed its budget proposal for 2019; the proposal totals EUR 55.3 billion. The government budget session also included the incorporation of numerous policies made at the government session on spending limits. The budget proposal will go the government plenary session for approval on Monday 17 September.

This year will be the best year of the current economic cycle in the Finnish economy, with economic growth forecast to outperform last year’s figure by a modest amount. The pace of employment growth in the early part of 2018 turned out to be even higher than would have been expected on the basis of economic activity.

Almost all the economic policy goals set by the Government are about to be reached:

• employment rate to rise to 72 per cent – almost achieved.
• number of people in employment to rise by 110,000 – achieved.
• no increase in total tax ratio – a decline of 2 percentage points during the Government term.
• turnaround in GDP-to-debt ratio during the electoral term – achieved already in 2016.
• Reliance on debt to end in 2021 – general government finances brought into balance in 2019 and in surplus in 2021.

Quick access to the labour market

The Government agreed on measures to promote employment growth and address the need to improve the position of those with low employment potential. Difficulties with the supply of labour and the low level of employment among people with impaired work capacity are among the factors that restrict the growth of employment.

The use of the wage subsidy system by companies will be broadened to improve the employment situation of people who have been unemployed for a long time and those with impaired work capacity. The processing times for wage subsidy payments will be shortened and the whole process will be simplified. Companies will be rewarded if they convert a fixed-term employment relationship into an open-ended employment relationship during the wage subsidy period or hire an unemployed jobseeker for an open-ended employment relationship using the wage subsidy. EUR 5 million will be allocated for the purpose in 2019. The wage subsidy will be used more effectively to improve the employment of people with impaired work capacity. The Government has decided to raise the maximum amount of the 100% wage subsidy designed for NGOs to 4,000 person-years.

Personalised processes focusing on work capacity will be developed as part of the growth service pilots to promote the employment of long-term unemployed persons. A fixed-term performance bonus will be introduced for the personnel in Employment and Economic Development Offices to promote the employment of long-term unemployed persons. EUR 1 million will be reserved for the purpose in 2019.

To increase the incentives for accepting short-term work, the system of adjusting the unemployment benefit to the recipient’s earnings will be amended so that the adjusted unemployment benefit will be calculated using the date of payment instead of the dates of employment, which is the current practice. In other respects, the provisions on benefit adjustment will remain unchanged. The amendment will have a positive impact on the financial situation of benefit recipients, because they would receive the unemployment benefit in full for the month they are employed but have not yet received their salary. Their salary would affect their unemployment benefit only after they have received it.

The Government has decided to set up a national work ability programme to improve the identification of the individual needs of long-term unemployed persons in terms of work capacity, functional capacity and rehabilitation by making use of multidisciplinary service networks. The emergence of intermediate labour markets will be boosted by using public procurement. In this context, the possibility will be examined of whether legislative measures can be introduced to impose a requirement on the municipalities and future counties to increase the use of the employment obligation in public procurements and recruit more persons with low employment potential to central, local and county government positions.

To ensure sufficient resources for labour market policy, the Government has decided to continue to finance wage subsidised work and start-up grants with the unemployment security expenditure in 2019 and also in connection with the regional government reform from 2021 onwards.

The Government will extend South-West Finland’s bridge agreement concept to other areas badly affected  by labour shortages. The bridge agreements will be drawn up by the end of this year and implemented within the scope of the spending limits.

The Government will allocate EUR 3 million to rapidly implementable regional projects for supporting the availability of skilled labour in regional cities, where the surrounding municipalities and businesses are also willing to make a financial contribution. The bridge agreement will be used as a template.

The Government aims to ensure that there is a smooth and flexible transition from employment experiments to growth service pilots. Best practices from employment experiments will be included in growth service pilots by means of the alliance model, for example.                     

The position of non-owner family members of businesses will be changed from entrepreneur to employee. A review period of 12 months will be introduced during which non-owner family members shall not have had ownership or exercised control in the business. The non-owner family member will be subject to a work requirement of 12 months.

It is proposed that the operating expenditure of the Employment and Economic Development Offices receive an additional EUR 10.3 million for supporting active job seeking and for improving jobseeker services.

The Government has decided to implement a one-time pension subsidy for ageing unemployed people. People who have been unemployed for over five years and are aged 60 or more would qualify for the subsidy and would await transfer to the old-age pension system.

The Government pledges to implement all measures necessary for streamlining residence permit applications for employees and entrepreneurs so that a maximum processing period of four months will be effective throughout the country by the end of this year and a maximum processing period of two months will apply by the end of 2019.

In applications for extended residence permits where there is a change in the duties or employer of a person who has legally worked in Finland for at least 12 months, the  Employment and Economic Development Office’s partial decision will in future focus on assessing the terms and conditions of the employment relationship and the employer and employee preconditions. Sanctions against employer infringements will be made more stringent to root out exploitation of foreign labour and unfair competition.

The Government will make provision for reviewing the refugee quota volume if the European Union implements decisions that will transfer asylum seeking procedures from the border to regional disembarkation platforms.

The Government wants to promote rapid employment of migrants. Procedures will be developed in such a way that job seeking and the requirement to accept a job will apply more comprehensively than before and measures that create a break in this will be shortened during periods of integration.

Research and internationalisation to boost GDP growth

The Government has decided on various measures to boost the level of growth in the economy. Research and development will benefit from permanent general increases of EUR 94 million in authorisations and EUR 26 million in appropriations.

A general increase of EUR 69 million will be made in Business Finland’s grant authorisations. The aim of this is to expand the scope for Business Finland to support applied research carried out jointly by companies and other research organisations, in particular. EUR 8 million will be added for furthering Business Finland’s internationalisation, exports and investment, and an additional EUR 7 million annually is allocated for boosting strategic research at VTT Technical Research Centre of Finland. Using existing appropriations, plastics recycling will be promoted and greater attention given to the development of substitute alternatives as part of the circular economy programme being drawn up.

The annual authorisations for the Academy of Finland will be raised by EUR 25 million. This will improve the opportunities for the Academy of Finland to support young scholars and researchers and to enhance the quality of research and innovation, as well as ensuring it remains relevant and up to date. An additional appropriation of EUR 5 million annually will be allocated to strengthening the R&D&I activities of the universities of applied sciences. A general increase of EUR 6 million will be made in central government funding for university-level research in healthcare units.

More resources for knowledge, skills and education

The shortage of skilled employees will be relieved by introducing new rapid-impact measures. Short-term training with the aim of completing a vocational unit (in vocational education and training) or a study module (at a university or a university of applied sciences) will be provided to the unemployed. A total of EUR 20 million of additional funding will be allocated for this purpose in the second supplementary budget for 2018 this autumn. The increased supply of short courses that are oriented towards working life will be put to use more effectively in self-motivated studies supported with unemployment benefit.

The labour market transition of people with an immigrant background will be accelerated and streamlined by means of effective support services and language training. In the second supplementary budget for 2018, EUR 5 million will be allocated for the activities of Centre of Expertise in Immigrant Integration. Furthermore, EUR 3 million will be allocated for the provision of guidance and counselling focusing on education and working life to students at higher education institutions which are responsible for supporting immigrants, and for organising short-term training for immigrants at higher education institutions. Literacy and language training provided to people outside working life will be funded with an additional EUR 2 million.

An appropriation of EUR 10 million will be allocated for enhancing equality and raising the participation rate in early childhood education and care. The objective of the funding is to decrease group sizes and to hire more personnel to daycare centres operating in challenging areas. The pilot project on free early childhood education and care for five-year-olds will be expanded, and an additional appropriation of EUR 5 million will be allocated for this purpose.

In 2019, EUR 10 million will be allocated for the implementation of the new Act on General Upper Secondary Education and for development of the quality of general upper secondary education.

Implementation of the reform of vocational education and training will continue, and EUR 15 million will be allocated to support the implementation.

To enhance equality in education, a study material supplement will be introduced for students in general and vocational upper secondary education. The amount of the supplement will be EUR 46.80 per month, and it will be paid to students under 20 years of age who are eligible for study grant at an increased rate and to students under 17 years of age who come from low-income families. The study material supplement will not affect the amount of social assistance payable to the recipient.

The eligibility for student financial aid and school transport subsidy will be extended to cover those who are above the compulsory education age who attend comprehensive school education also elsewhere than in folk high schools.

The maximum number of months of student financial aid available during the school year for students in general upper secondary education will be raised from 9 to 10.

Tax revenue will grow, employee taxation will remain almost unchanged

Central government tax revenue is estimated to be approximately EUR 45.8 billion in 2019, up by about 3.7 per cent from 2018. 

Most of the tax policy measures of the Government Programme have already been implemented in the period 2016–2018. In accordance with its earlier policies, the Government will continue to reduce vehicle tax and to raise the excise duty on tobacco products in 2019. The deduction for interest expenses on housing loans will be further restricted, with 25 per cent of the interest being tax deductible in 2019.

Employee taxation will remain almost unchanged, after taking into account changes in contributions. The taxation of earned income will be reduced, with the emphasis on low-income earners, by raising the low-income allowance, the earned income deduction and the pension income allowances in central and local taxation. The combined effect of this annually, covering all tax recipients, will be EUR 130 million. In addition, an index adjustment will be made to the earned income taxation parameters to ensure that there is no increase in taxation arising from movements in the general earnings level. The existence of a reduced lower limit at which the so-called solidarity tax is paid will continue in 2019.

The deduction for temporary quarters will be modified to provide better support for moving to areas where work is available. The maximum amount of the deduction will be increased to EUR 450 from the present EUR 250.

Vehicle tax will be reduced by altogether EUR 50 million for tax days beyond the start of 2020.

The maximum amount of the tax exempt mileage allowance payable to voluntary workers will be increased to EUR 3,000 per calendar year from the present EUR 2,000. Its application will be broadened to include compensation from public sector entities.

To balance the parameter changes that reduce labour taxation, the Government has decided to increase excise duty on alcohol by an annual EUR 30 million and on soft drinks by an annual EUR 25 million, and to increase energy tax by an annual EUR 22 million. The higher energy tax concerns fuels for machinery and heating, including peat. Due to the tax increase on peat, the feed-in tariff for timber chips will decrease by EUR 3 million. Following an earlier decision, the tax relief for combined heat and power production will be altered, replacing the halved rate of carbon dioxide tax with a lower energy content tax. The taxation of machinery and heating fuels will be modified so that the calculation of carbon dioxide tax will also take into account fuel life cycle emissions. A change will be made to electricity taxation to ensure that large batteries are not subject to double taxation.  These earlier decisions are expected to increase the revenue from energy taxes by EUR 13 million.

The limitation on the right to corporate interest expense deductions will be tightened by EUR 10 million when Finland implements the EU’s Anti-Tax Avoidance Directive. The halving of fairway dues for vessel traffic will continue. The aim is to reduce the costs faced by businesses.

In accordance with the Government Programme, municipalities will be compensated for the tax revenue impact of changes in tax parameters.

Equity savings accounts for small investors, improved operating conditions for start-ups

The Government is to introduce equity savings accounts for small investors as a way of making it easier to invest. Funds transferred to equity savings accounts may be invested in the shares of listed companies. Of the returns accumulated in such accounts (including dividends and share value gains) the amount that will be classified as taxable capital income upon the withdrawal of funds will equate to the relative proportion of the returns in relation to the funds in the account. An upper limit of EUR 50,000 will be placed on investments that can be made in such an account. The tax treatment of capital redemption contracts and pure and single-premium endowments will be made more stringent in line with the proposals of the Ministry of Finance working group that examined the tax treatment of different investment products: the amount of taxable capital income upon the withdrawal of funds will equate to the proportion of returns in relation to the funds in the account. These arrangements will come into effect at the start of 2020.

Transfer of shares of unlisted employer companies to personnel: During autumn 2018, the Tax Administration will draw up guidelines on how, under certain conditions, it will be possible to provide personnel with shares at a lower valuation than a private equity investor, without tax consequences. A Finnish template will also be designed with the goal of making share ownership easier for personnel of unlisted start-up companies. The aim of this will be that any gains made from holding options will, in general, be taxed as capital income, and the tax paid only when such gains are realised.

Support for Finnish food production and for farmers to cope with their work

The government decided on significant measures to secure Finnish food production. In Finland the profitability of agriculture has been weak for a long time. High precipitation in summer 2017 led to income losses and higher costs for many farms. Based on summer 2018 forecasts, the cereal harvest will be the weakest since the turn of the millennium, due to the drought conditions.

In the second supplementary budget proposal for 2018 and in connection with the amendment to the budget proposal for 2019, a total of EUR 30 million will be allocated to national measures. The funds will be targeted at national measures that may be taken to supplement the EU’s crisis measures in 2018–2019, top-ups to national aid for livestock in support area C (north of Lappeenranta−Tampere−Pori) in 2018–2019 and aid for livestock and crop production in support area AB (south of Lappeenranta−Tampere−Pori) in 2018–2019.

EUR 6 million will be allocated to maintain the payments for less favoured areas (LFA) at the 2019 level (in addition to the EUR 21.5 million allocated earlier in the Government spending limit discussion).

Tax refunds relating to energy taxes on agriculture paid for 2018 will be raised by a total of EUR 20 million.

The reduction of the interest for late payment under the Farmers’ Pension Act on a temporary basis will be continued with a sum of EUR 1.2 million in 2019–2020. EUR 3 million will be allocated to the Farmers’ Pension Institute (MELA) for 2019–2020 to continue the Välitä viljelijästä (Consideration for farmers) project. The aim is to provide more crisis support for farmers throughout the country.

In mid-January 2019 the Government will present a proposal concerning state guarantees under the Development Fund for Agriculture and Forestry (Makera). The state guarantees will be granted from the funds already allocated to Makera. This requires notification to the European Commission.

Based on preparatory work already done, the Government decided to secure the resources for the Ombudsman required by the Food Market Act. The Government also decided to exempt crop damage and plant disease insurances from the tax on insurance premiums in the period 2019–2027.

Counsellor Reijo Karhinen was earlier appointed to study means to improve the profitability of agriculture. The Government decided  to allocate EUR 4.2 million to measures such as those supporting food exports, development of the farm structure and the preparedness for the impacts of climate change. The work of Reijo Karhinen will continue, with the final report to be completed by the end of this year.

Besides the  measures to support agriculture and the food sector, flexibilities are sought with regard to EU rules to ease the situation of farmers and speed up payments. 

Stronger protection for the Baltic Sea and inland waters

The Government will enhance protection of the Baltic Sea and inland waters in order that their status can improve and targets be met.

In the protection of the Baltic Sea and inland waters, a three-year programme will be launched totalling EUR 45 million, with funding of EUR 15 million allocated for the first part in 2019. The funds will be used for measures such as reducing nutrient loading of waters caused by agriculture, promoting nutrient recycling and improving the management of urban stormwater, taking advantage of Government key project findings. Funds are also to be used to boost research on the state of the Baltic Sea and make better use of the renovated research vessel Aranda.

Inequality will be reduced, more funding for lowest income earners

To reduce inequality, the levels of the smallest daily allowances (sickness allowance, parental allowance, rehabilitation allowance and special care allowance) will be raised to the same level as labour market support. Approximately EUR 20 million in further funding will be allocated for the purpose next year. This will mean a monthly increase of EUR 80.50 in the minimum daily allowances. The Government proposes that EUR 4.4 million in net terms be allocated to cover the costs of removing the 55-day qualifying period for sickness allowance.

A EUR 10 million increase will be allocated to the raising of the level of the guarantee pension for the lowest income pensioners. This will mean an estimated monthly increase of EUR 9. The guarantee pension recipients also include younger people in receipt of disability pension. EUR 5 million will be allocated to the lowering of the annual deductible for drug reimbursements. The amendment will be prepared in cooperation with the social partners.

A total of EUR 8 million will be allocated in 2019 to improving the position of over-indebted individuals. This will be targeted at financial and debt counselling, counselling for indebted individuals as part of the debt enforcement process and the speeding up of court proceedings.

Procurement skills in municipalities and joint municipal authorities will be reinforced, with the aim of improving the ability to procure services for people with disabilities and other special groups.

Children and families will receive more support

The basic security of the lowest income families with small children will improve as the level of the parental allowance will be raised along with other minimum daily allowances.

The position of adoptive and multiple-birth families will be improved. A EUR 300,000 increase is proposed for the adjustment of the adoption support for international adoptions. The paternity allowance period for fathers in multiple-birth families will be extended. Single mothers with sole custody of their child will be eligible for the parental allowance period corresponding to the paternity allowance period, and the parental allowance period for adoptive parents will be extended.

The influenza vaccination programme will be developed and extended so that in the future the vaccine will available to children aged from 6 months to six years. A EUR 1 million increase will be proposed for the procurement of vaccines.

Families with children will be supported in their daily lives by allocating EUR 25 million in 2019 to child protection and home-help services for families with children.

Home services for front-line veterans will be improved

New legislation will give front-line veterans the right to the same services supporting living at home to which disabled war veterans are already entitled. The decision will ensure front-line veterans equal access to services irrespective of their place of residence. Front-line veterans will have a right to the services, and municipalities will have the right to invoice the State Treasury for the costs in the same way that applies to disabled war veterans. 

The drafting of the bill will start immediately. Amending the legislation is the common wish of all the parliamentary groups. The amendments are intended to enter into force at the beginning of November 2019.

Number of police officers to be increased

The Government will allocate a total of over EUR 36 million in additional funding to the police in 2019. In addition to the extra funding of EUR 18 million already agreed in the government spending limits discussion, EUR 3.3 million will be allocated to increasing the number of posts within the police particularly in sparsely populated areas, with a view to safeguarding police operations and maintaining the number of person-years at 7,200. This will mean dozens of new posts.

A total of EUR 2.5 million will also be allocated to preventive police work in 2019. The aim of this is to respond to security challenges facing suburbs before problems escalate. In preventive work, the emphasis will be on community policing and multiprofessional Anchor activities. Community police officers cooperate with other authorities and local communities and residents. Through the preventive action of the police, youth and social workers and schools, the aim of Anchor teams is to intervene in the social exclusion of children and young people in particular. 

An increase of EUR 2.5 million will be allocated to the Finnish Security Intelligence Service for securing its core operations and operational capability. Account has also been taken of the impact of civilian intelligence legislation on the Finnish Security Intelligence Service. An additional appropriation of EUR 10 million will be allocated for this purpose, provided that the legislation comes into force.

A total of EUR 1.1 million will be allocated to enhancing sanctions that are ancillary to conditional imprisonment. An increase of EUR 0.67 million will be allocated to assessing the recidivism risk of those convicted of violence and for reviewing the process of ordering conditionally released prisoners under supervision.

Sustainable development budgeting to be expanded

Finland was one of the first countries in the world to incorporate sustainable development in a government budget submission. Sustainable development budgeting will be expanded in 2019. In the justifications for the main expenditure titles, the connections between the appropriations and sustainable development will be brought out more clearly. A new element in the budget proposal will be a separate analysis that assesses which appropriations specifically promote the goals of a carbon-neutral and resource-wise Finland. Taxation issues and financial support that is detrimental to the environment will also be examined.

Postponement of the regional government, health and social services reform is taken into account in the budget

The entry into force of the regional government, health and social services reform will be postponed until the beginning of 2021. The Government’s aim is that the county elections will be held in May 2019 and the county councils will start their work in August 2019.

The postponement of the reform has been taken into account in the budget proposal, although it does not have any significant impact on the proposal. A EUR 7 million increase is proposed to the election expenditure because of the postponement of the county elections. This means a reduction in the appropriation requirement for 2018. As the establishment of the National Supervisory Authority (Luova) will be postponed until 2021, the funding needed for the recruitment of management for the authority, totalling EUR 0.4 million, will be transferred from 2019 to 2020. The reform of student healthcare for higher education students will also be postponed until 2021. For this reason the Government proposes an appropriation of EUR 3 million for preparation of the extension in the operations of the Finnish Student Health Service in 2019–2020. A total of EUR 211 million is proposed for the preparation of the regional government, health and social services reform and for the support and guidance for its implementation. The postponed start of the term of office for county councils reduces the appropriation requirement. Funding for the preparation phase will be examined as an integrated whole in the general government fiscal plan for 2020–2023.

Local government measures prove effective

Local government finances have improved in recent years. The measures taken by local authorities and the Government have both boosted local government finances. Local government will reach its target budgetary position, since, in the light of current projections, next year’s deficit in local government finances will be under the targeted 0.5% of GDP. The Government decided to allocate EUR 30 million for next year towards an incentive system for digitalisation in local government. 

The Government will reinstate the discretionary increase in central government transfers to local government, with EUR 10 million allocated towards it.

General government consolidation measures in line with the Government Programme

The Government’s overall consolidation package for improving general government finances directly consists of measures to curb growth in public spending and reallocation of expenditure items. These measures together will strengthen general government finances by about EUR 4 billion. There is uncertainty related to measures that depend on decisions to be taken by local authorities. However, local authorities have taken other measures to consolidate local government finances, so that the magnitude of savings can be estimated to be in line with the adjustment measures included in the Appendix to the Government Programme.

Smaller deficit

The budget proposal consists of appropriations totalling around EUR 55.3 billion, which is about EUR 0.5 billion less than in the 2018 Budget. The conclusion of fixed-term key projects, the adjustment measures outlined in Appendix 6 of the Government Programme and the reduction in unemployment security expenditure due to the improved employment situation have all helped lower the level of appropriations. Statutory and contractual pay increases, such as the pay increases introduced in the spring based on the central government collective agreement and some automatic factors such as the rise in state pension expenditure, all raise the overall expenditure level.

Revenue from the central government’s on-budget entities in 2019, excluding net borrowing, is estimated at around EUR 53.9 billion. Taxes and tax-like payments account for approximately EUR 45.8 billion. Compared with the 2018 Budget, tax revenue is estimated to grow by about EUR 1.8 billion and revenue excluding borrowing to correspondingly increase by EUR 1.2 billion.

The central government’s on-budget deficit for 2019 is expected to total 1.4 billion, while the estimated deficit for 2018 based on the budget proposal is EUR 3.1 billion. 

At the end of 2019, government debt is estimated to total around EUR 109 billion, which is around 45% of GDP.

Improvement in general government finances, problems loom ahead

In 2017, the general government deficit decreased from the preceding year, and provided that the economy continues to grow at a reasonable pace, the financial position will become balanced. The consolidation measures adopted by the Government and the favourable cyclical position contribute to the decrease in the deficit. The Government is in fact reaching nearly all its fiscal policy objectives for 2019.

However, regardless of the improvement in general government finances over the past few years, public finances are not on a sustainable basis. To assess the actual position in public finances, it is necessary to take a longer-term view beyond cyclical fluctuations. Public finances will need to withstand future cyclical downturns, expenditure pressures already identified and unexpected contingencies without the debt-to-GDP ratio growing in an uncontrolled way.

The economic assessments presented above are preliminary. The Economic Survey by the Ministry of Finance will be published in connection with the budget proposal on 17 September.

Inquiries: Markus Lahtinen, Special Adviser to the Prime Minister (Economic Affairs), tel. +358 295 160 404, Matias Marttinen, Special Adviser to the Minister of Finance, tel. +358 44 269 3113, and Juha Halttunen, Special Adviser to the Minister of Employment, tel. +358 50 574 0236

Other highlights and Government policies from next year’s budget proposal

• The Government agreed a EUR 40 million transport package. The package consists of investments in transport safety as well as in the winter maintenance of the road network and management of frost heave damage. The Government agreed an increase of EUR 4 million in central government grants for private roads. A new Private Roads Act will enter into force on 1 January 2019.
• To promote accessibility between cities, the Government granted an additional appropriation of EUR 1 million to form an overall understanding of the development needs, timetable and measures required between Helsinki Main Railway Station and Tampere Railway Station in order to deliver a travel time of less than one hour. In accordance with an earlier decision, a planning provision for the Helsinki−Turku line will be used to accelerate general planning of a fast rail link and to initiate track planning.
• To strengthen prerequisites for elite sport, the central government will prepare for the capitalisation of an Olympic Fund that will be established by transferring to it a maximum of EUR 20 million of state-owned share assets. The central government capitalisation will be made in proportion to private capital provided.
• The Schools on the Move programme will be extended to upper secondary school students in the form of a Learning on the Move programme, which will receive a financial contribution totalling EUR 2.8 million in 2019.
• The Defence Forces will be allocated EUR 5.8 million to establish 100 new job positions.
• The amount of regional transport subsidy was increased so that it is now at a level of EUR 6 million for next year. The transport subsidy scheme serves to reduce additional costs arising from long transport journeys to places of business activity in remote and sparsely populated areas and thereby to improve the operating conditions and competitiveness of businesses in these areas.
• The Government wishes to safeguard the village shop network in rural areas and to strengthen their position as a provider of local services in rural areas. A total of EUR 1 million was allocated to the Village Shops as Service Hubs pilot project to improve conditions for business.
• A total of EUR 3.77 million will be earmarked for one-off equipment and information system costs relating to the implementation of the Military Intelligence Act.
• A total of EUR 1.9 million will be allocated to the repair and maintenance of routes in Metsähallitus’ hiking and recreational areas. The appropriation will promote route safety and the development of nature tourism.
• An appropriation of EUR 3.4 million is proposed for Baltic Sea, Barents and Arctic cooperation.
• The free provision of early childhood education and care for disabled children will be extended from 2021.
• The Government wishes to create conditions for increasing research, development and innovation activity based on health and wellbeing knowledge and for business investment in Finland. A total of EUR 3.3 million will be allocated to activity of an authorisation body administering the secondary use of social and health data.
• An increase of EUR 3.5 million will be made to the operating expenditure of the Social Insurance Institution of Finland (Kela) for implementation of the activation model.
• The role of social sector centres of excellence is to develop social sector expertise in their areas and to safeguard diverse links between education and work. The Government will allocate a total of EUR 2.95 million to the activities of centres of excellence.
• The Government will prepare for the establishment and work of the Sami Truth and Reconciliation Commission with an appropriation of EUR 1.5 million.
• The Healthy Premises Programme will be boosted by a proposed appropriation of EUR 0.7 million.
• Opportunities for private sector actors to participate in development cooperation will be developed in accordance with the Finnish Government Report on Development Policy by allocating an additional appropriation of EUR 1.5 million to the Finnpartnership development financing instrument. 
• A total of EUR 1.2 million is proposed for the reopening of the Finnish Embassy in Bagdad.

Selections from the implementation of the spring Government spending limits discussion

• A total of EUR 1.41 billion in interest subsidy authorisations is proposed for state-subsidised social housing production. This will enable the construction of approximately 9,000 affordable homes.
• The Government will capitalise the non-profitmaking company A-Kruunu Oy with EUR 50 million. The capitalisation will enable A-Kruunu to double its production and to extend it to other growing urban regions in addition to the Helsinki Metropolitan Area.
• The grants for special groups awarded by Housing Finance and Development Centre of Finland (ARA) will be directed particularly to support the homeless and those in the weakest situation of all. Homelessness work will be continued and investment made in preventing homelessness by increasing the National Housing Fund’s investment support for special groups by EUR 5 million. A total of EUR 110 million is proposed for investment support for special groups. In addition, housing guidance will be expanded and consolidated, and efforts made to mitigate tenants’ financial problems.
• A total of EUR 60 million will be allocated to Finland’s Presidency of the Council of the European Union operating expenditure for the preparation and implementation of Finland’s EU Presidency in 2019. In addition, EU Presidency security expenditure will include appropriations for, among other things, police operating expenditure.
• Expenditure relating to asylum seekers will diminish from 2018 by EUR 25 million. An estimate of 4,000 asylum seekers per year has been used as the assumption for immigration expenditure. The estimate of people within the scope of reception has risen due to prolonged and numerous appeal processes.
• An allocation of EUR 10 million will be added for the operating expenditure of the Employment and Economic Development Offices to be used for conducting regular interviews.
• A total of EUR 1.5 million will be allocated for the establishment of the National Pharmaceutical Development Centre.
• To support the implementation of the objectives of the Energy and Climate Strategy, EUR 6 million will be allocated in 2019 to acquisition and conversion support for electric cars as well as gas and ethanol conversions of cars. In addition to this, climate-friendly wood construction will be promoted with funding totalling EUR 2 million.
• The authority to grant energy subsidies will be increased by EUR 25 million to EUR 80 million.  This will be used to make provision for investments to produce renewable transport fuels.
• Due to a rise in the price of emission allowances, income from the auction of emission allowances is estimated to increase to EUR 164 million and at the same time the need for the renewable electricity production subsidy will decline by EUR 50 million next year.