Response to interpellation 2022/23:272 on measures to strengthen the finances of municipalities
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD argues that order in public finances is a priority task 1 and that combating inflation is the most important measure to secure the municipalities' finances 2. KD believes that municipalities should use their accumulated equalization reserves 2 and that growth, hours worked, and combating inflation are crucial for the municipalities' long-term robustness 3 4. S argues that state grants must increase significantly to meet increased prices and wages 5 and that the government does not compensate municipalities or poor households for inflation 6. S believes that the government prioritizes other things than welfare 7 and should follow the Municipal Inquiry's proposal regarding a state grant principle 8.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Erik Slottner (KD)
Madam Speaker! Åsa Eriksson has asked the Minister for Finance what measures the Minister, within their area of responsibility, can imagine taking to strengthen the municipalities' finances. The work within the government is so distributed that it is I who shall answer the interpellation.
Sweden is in a situation where the finances of households, companies, and the municipal sector are being pressured hard. In a normal recession when inflation is falling, a natural stabilization policy measure for the government would have been an expansive fiscal policy to increase demand in the economy. Now we have a completely different situation with a declining economy and sky-high inflation. An overly expansive fiscal policy risks increasing inflation and making things more difficult for the municipal sector and other parts of society. Therefore, it is important not to increase demand too much in the economy through an overly expansive fiscal policy.
Order and discipline in public finances is a priority for the government. In view of the economic situation and the high inflation, the direction of the budget for 2023 is slightly contractionary. In the budget, approximately one-third of the total reform space is allocated to the municipal sector. The general government grant is permanently increased by 6 billion kronor starting this year. Furthermore, around 6 billion kronor are allocated in targeted government grants, including 3.5 billion kronor for health and care, including reinforced care, increased care capacity and strengthened civil defense, as well as 1.5 billion kronor for the school.
I am aware that municipalities and regions, despite the funds currently being provided, face an economically challenging period. A combination of measures will be needed to safeguard and strengthen welfare. More money will not solve all the problems that the municipal sector faces. Municipalities and regions need to continue to work innovatively and develop operations according to new conditions, including by taking advantage of the possibilities of digitalization. The state has a responsibility to provide the best possible conditions for this.
The Government is closely following the developments in municipalities and regions and will return in the budget bill for 2024 with an assessment of the need for reinforcements of the resources to the municipal sector for 2024 and onwards.
Åsa Eriksson (S)
Madam Speaker! Since I am of a positive disposition, I choose to rejoice that the Minister says to be aware that municipalities and regions face a financially challenging period. I believe that everyone who is active in municipal politics or regional politics feels this.
But my question to the Minister for Finance was which measures she and the government can imagine taking to strengthen the municipalities' finances. The Minister for Civil Affairs unfortunately chooses not to answer that question at all.
Madam Speaker! Instead, the Minister for Civil Affairs says that municipalities and regions need to "work innovatively and develop operations according to new conditions, including by taking advantage of the opportunities of digitalization." Yes, so far we agree. We really need to digitalize everything that can advantageously be digitalized, and it should be streamlined. But to meet a knowledge-disrupted child in preschool, or to calm a confused person with dementia in a residential home, or to try to motivate a young person with mental illness to keep fighting in school, that requires skilled and educated staff.
With the SD-led government's policy, you are worsening the opportunities for development and smart solutions because the operations must now focus instead on laying people off when the money is not enough.
Madam Speaker! The National Institute of Economic Research has calculated that the state grants to the municipalities would need to increase by 24 billion per year until the year 2040 in order for the Local Government Act's requirement for a balanced budget to be met. Despite this, the Sweden Democrat-led government chooses to lower the tax for high-income earners such as the Minister for Civil Affairs and myself instead of investing in welfare in this year's budget.
Madam Speaker! Although the Minister for Municipalities has not exactly made themselves known for visiting many municipalities, the Minister cannot have missed the cry from desperate municipal council members. In a debate article in Aftonbladet recently, signed by all chairpersons of municipal boards in Dalarna, that is to say a broad spectrum of parties from left to right, they demand increased support from the state in order not to be forced to make cuts in the already heavily pressured welfare system.
Still, the government chose not to take the necessary measures in the autumn budget. Nor do they provide the long-awaited information and the long-term perspective that the municipalities need to be able to plan their operations. This applies to municipal councilors of all party colors. Everyone is calling for concrete answers so that they can carry out long-term planning.
Madam Speaker! The general state grants in the government's budget are at the same level as last year, even though prices and wages in municipalities and regions have increased by more than 7 percent. If the state were to cover the same share of the welfare commitment this year as the state did last year, when we had a Social Democratic-led government, the state grants would increase by more than 11 billion.
Madam Speaker! I would like to hear the Minister answer why he considers inflation-compensating state grants to the municipalities, so that they can avoid laying people off in the already heavily pressured welfare sector, to be "expansionary fiscal policy" when large tax cuts for us high-income earners are obviously not judged to be so.
Niklas Karlsson (S)
Madam Speaker! I can state that the task that the Minister has been given to manage is, to say the least, an unreasonable one, especially since he is to take care of the municipal sector's challenges in both the short and long term without having been given responsibility for the wallet. That was one of the reasons why Member Eriksson submitted the interpellation to the Minister for Finance. The Government has chosen to send the responsible Minister for municipal affairs, and to manage them without a wallet is a task that is, if not impossible, very difficult. And the Minister must also take responsibility for the Government's and the Minister for Finance's answers.
It is, of course, as the Minister says in his response to the interpellation that long-term measures will be required for the municipalities to meet their long-term commitments. If the municipal sector is to be robust financially, personnel-wise, and in terms of competence, structural measures will be required. But that does not solve the challenges that the municipal sector faces in the short term.
The municipal sector has almost like a man or a woman announced that the economic situation is very acute. If Sweden's government does not choose to do something and inject additional funds, it will have large and extensive consequences for the welfare.
I note that the government, as has been said earlier in the debate, instead chooses to let large tax cuts take precedence over investments in welfare. One could get the impression that the government chooses to exploit the ongoing crisis to starve welfare in the municipal and regional sectors.
In the interpellation answer, it is said that one cannot allocate additional resources to the municipalities and regions with the argument that it would fuel inflation. It feels like a very contrived argument, because it cannot be that welfare is to bear the responsibility for combating inflation. There are other political proposals than the one that the government now chooses to implement to combat inflation.
Furthermore, it is the case that the report presented by the National Institute of Economic Research in December, which measures fiscal policy effects on inflation, shows that investments in welfare and saving the municipal and regional sectors would result in one-tenth changes in inflation. Public consumption would increase by approximately 0.2-0.3 percent in inflation. The impact of public investments on inflation would be approximately 0.1-0.2 percent - this in a situation where we have an inflation of 10 percent.
No, Minister, that argument does not hold. If one wants to not only save the municipal sector in the long term but also take responsibility for welfare in the short term, one must also be prepared to provide the economic resources required so that our elderly, children in childcare, and children and young people in school do not pay the price for the inflation fight that the government has now implemented.
It is not decent, I think, to propose that the inflation-protected incomes of high-income earners, which cost the state treasury 13 billion kronor, and at the same time turn a blind eye when Sweden's municipalities and regions are on their knees, creating risk for staff layoffs and starving out the general and public welfare.
Eva Lindh (S)
Madam Speaker! I am very proud of the welfare model that we have in Sweden. It is the foundation for us to have a good school, good elderly care, and good health and medical care. I want to continue to be proud of it, not for my own sake, but because it truly is important for our loved ones.
But now welfare is under threat. It is not just us, but just as Åsa Eriksson said, many testify that there is a crisis in a large number of municipalities and regions. It may not be the case in all of them yet, because some municipalities have slightly better conditions because we have an uneven situation in Sweden. Many, however, are having a very tough time and are already budgeting with deficits.
In today's newspaper, Helén Eliasson, group leader in Västra Götaland, says that a major challenge in managing the economy is the lack of government decisions regarding the level of state grants for 2024, and that this lack of decision implies an increased risk that extensive measures need to be taken, such as cuts and notices of termination, to reduce costs and that the region may subsequently receive supplementary funds in retrospect.
Municipalities and regions are concerned, and that is exactly what Åsa Eriksson has written about in her important interpellation. It is about receiving information so that they can know how much they have to cut.
Some have already said this year, and it will not become easier or better next year. Healthcare is already facing major challenges. After the pandemic, it has been tough for many regions, and it will not become easier now that they lack resources. There is a shortage of staff. Many municipalities and regions need to make major efforts to obtain competent staff, and that costs money. In order to be able to manage welfare now and in the future, money is needed, and it is lacking now, which makes it difficult to find staff in the future.
In addition to insufficient resources in the state budget, municipalities and regions, as well as many others in Sweden, are struggling with high electricity prices, higher interest rates, and increased rents for premises. As the previous speaker said, the government compensates high-income earners for inflation but not those with poorer circumstances, such as poor households. Nor do they compensate all municipalities and regions. I do not understand it.
It has been a long time since the municipalities had such a weak result as now. There are 48 municipalities budgeting for a deficit. We do not see the final result yet and do not know how it will turn out, but already now they are budgeting for a deficit. Among the regions, it is 17 of 21 that are budgeting for a deficit.
Madam Speaker! I am concerned. We need to get a decision now, and I hope that we get it from the Minister here today. It is needed now and for the future because our important welfare is threatened.
Statsrådet Erik Slottner (KD)
Madam Speaker! There were many contributions, and unfortunately, I will not have time to comment on everything.
Let me however begin by correcting Åsa Eriksson. The government is not SD-led. I want to have this said because such a claim provides false information to those following the debate, which is serious. The government consists of the Moderates, the Christian Democrats and the Liberals. It has a cooperation with the Sweden Democrats in a number of areas to obtain parliamentary support, but it is not SD-led.
Furthermore, it was said that I am not known for having visited particularly many municipalities. I find that to be cheeky. During my more than half-year as Civil Minister, I have visited 16 out of a total of 21 county administrative boards. On these trips, municipal representatives come to the meetings I have with the County Governor, and in many places, all municipal representatives have come. Last Monday I was in Jönköping, and then representatives for 8 of 13 municipalities came. I have, therefore, met very many municipal and regional representatives.
Fighting inflation is perhaps the most important political measure to save and secure the municipalities' finances. Higher inflation is currently the greatest threat to the municipal sector's economy. Every tenth of a percentage point that the interest rate is raised means billions in costs for the municipal sector, so the most important thing we can do is to keep inflation down and get a lower interest rate as quickly as possible. It is the most important policy to secure the municipalities' finances and thus the welfare.
We know that the municipal sector has almost 50 billion kronor in accumulated surpluses in result equalization reserves, and many municipalities are now choosing to use these. You shake your heads, but that is how it is. Of 290 municipalities, 204 have accumulated result equalization reserves totaling almost 50 billion. It is a wise management policy of the municipalities to build up such reserves so as not to be entirely dependent on the government and the Riksdag raising state grants every time the economy falters.
Åsa Eriksson complained that I did not answer the question in the interpellation regarding what I am prepared to do within my area of responsibility. Within my area of responsibility lie the general state grants to the municipal sector, so what I am prepared to do is, of course, to adjust these upwards. The government has done so this year with 6 billion kronor in general support and an additional 6-7 billion in targeted support. A third of the reform space went to the municipal sector. In our government bill, we said that we would return with a consolidated assessment, and that we are prepared to return with further increased state grants in 2024. What level it is set at, we will return to in the autumn budget. A decision will therefore be made.
The Social Democrats have, however, not given any information regarding the grants to the municipal sector in their shadow budget. No information is given on what level the Social Democrats would have set the state grants at if they had been in government. There is talk of inflation-compensating state grants, something the Social Democrats have never had when they have been in a government position. Is it a new policy to promise inflation-compensating state grants? It has never been heard here before.
My speaking time is up, so I will have to return with more comments in the next post.
Åsa Eriksson (S)
Madam Speaker! Let me begin by commenting on what the Minister says about not being SD-controlled. The Minister probably knows that the Social Democrats have more mandates in the Swedish Riksdag than the three government parties have combined. In other words, the government is controlled by the Sweden Democrats, otherwise the government would not get anything through here in the chamber. But that was not why I submitted this interpellation, actually to the Minister for Finance.
In any case, I still hear nothing concrete from the Minister for Civil Affairs regarding what he intends to do. Information is welcome in the autumn budget, but all municipal councilors have called for information earlier so that they can plan the finances and know whether they should lay off staff already or try to weather the winter.
That point about fighting inflation when it concerns specifically the municipal sector and welfare sounds like a poor excuse to avoid investing in the municipalities, because just as Member Karlsson explained, there are calculations that show that it would not contribute to inflation.
Madam Speaker! A few days ago, I received an email from the chairman of the municipal executive board in Sala, Amanda Lindblad. She is, just like many other municipal councilors, very concerned about how they are to succeed in raising the knowledge results in schools, which is necessary, and be able to educate skilled people within elderly care when inflation is eating up the entire development space and more. She also points out another problem than the level of the state grants itself, namely the volatility and the uncertainty about what will apply in the coming years.
Madam Speaker! I want to quote from her email: It is primarily about long-term sustainability in our planning, for example, Äldreomsorgslyftet which is now being removed, despite it having been very good and important for the supply of competence, and furthermore, it is being removed at completely the wrong time. We need to make large efforts in the area to meet the demographic development, not remove the staff that already existed. Within the school here in Sala, much of the management's time has been spent seeking targeted state grants. There is always great uncertainty about which extra investment can be made, whether one dares to make it, and whether we will be approved or not. The short-sightedness creates difficulties for the planning and a stress in the organization. Furthermore, the uncertainty creates a decreased trust from the citizens in the current system.
Madam Speaker! This is serious. Governments of all colors are guilty of the fiddling with state grants that hinder the municipalities' planning. I acknowledge that. But we Social Democrats pushed in the Municipal Inquiry that both the number and the proportion of targeted state grants to the municipalities should be reduced.
I submitted this interpellation to the Minister for Finance because I perceive that she is primarily responsible for the principles in the budget, but now that I have the Minister for Municipalities here, I still want to ask a question. We Social Democrats support the Municipal Inquiry's proposal for a state grant principle, equivalent to the current financing principle. It would contribute to a reduced use of targeted state grants in favor of general grants and could provide more long-term perspective and better adaptation to local needs. I want to ask the Minister if he and the government also support the Municipal Inquiry's proposal for a state grant principle and what measures he, in that case, intends to take to get such a principle in place.
Niklas Karlsson (S)
Madam Speaker! I noted that the Minister spent half of his time in the exchange of remarks speaking, with feigned indignation, about everything other than an answer to the points that we from the opposition have put forward. I just want to inform the Minister that focusing on something else does not make the challenges the Minister faces any less significant.
When we stand in an interpellation debate here, it is not because we wish the minister ill. We are here because we want to point out the shortcomings we see in the government's policy and inform the minister that there are opportunities to drive this in a different direction and that there are other political proposals that would hopefully have significantly better consequences.
The Minister is naturally correct when he says that the most important thing today is to fight inflation. Inflation is a concern, a nuisance. It must go, and it must be fought. The criticism that we voice from the rostrum of the Riksdag and that we voice in this interpellation debate is not criticism of the government's desire to fight inflation, but criticism of the way in which it is chosen to do so. Who shall bear the burdens? Who shall take the responsibility? What should the distribution policy look like? There we obviously have completely different views between the bourgeois government and the Social Democratic opposition.
I believe that if we are to manage the challenges ahead of us in the municipal and regional sectors, both in the short and long term, we must also have the ability to cooperate. Regarding the long-term measures, I think the Minister shows ambition and will. Furthermore, we have had an informal conversation regarding these issues which I appreciate very much and which I hope can continue between the government and the opposition so that we can improve this.
But we must also, in the meantime, solve the challenges that we have in the short term. That also involves representing the right interests. One must stand on the side of the welfare instead of protecting the incomes of high-income earners against inflation. We need to have that debate again.
Eva Lindh (S)
Madam Speaker! I want to start by commenting on two things that the Minister had views on. The first concerns the equalization reserve that some of the municipalities have, which is because we compensated the municipalities very much during the difficult pandemic. Many were then able to build up an equalization reserve because the Social Democrats protect municipalities and regions. That was one thing.
The second thing was that, just as the Minister says, it is not 290 out of 290 municipalities that have a result equalization reserve at all. This means that the municipalities which probably already have a rather difficult situation from the start and who cannot set aside any funds also do not have a result equalization reserve to draw upon, which means that the conditions for the municipalities are unequal. One does not have the same conditions.
Regardless of whether one has a results equalization reserve or not, we must provide municipalities and regions with the conditions to have a good welfare. This is what this debate is about. One cannot rely on some municipalities having a little money to move with during the years to come. That was the second point.
The Minister, that is, the Minister for Municipalities and Regions, says that he has indeed met many municipalities. But having lunch with municipal representatives at the County Administrative Board's residence is not the same as making visits to municipalities. When I have looked and counted, the Minister has visited three or perhaps four municipalities and made individual visits. That is not sufficient.
Statsrådet Erik Slottner (KD)
Madam Speaker! I am pleased that there are members who follow my days and my very hectic work weeks!
One can, of course, mock this and think that I visit too few municipalities. To be able to visit or to be able to speak with as many municipalities as possible, I have honestly thought that it has been a very effective and smart way to invite the municipalities to the county administrative boards and the residences. It has been an active choice to meet as many municipal representatives as possible.
Niklas Karlsson said that I used half of my speaking time to be indignant - it was 50 seconds I used for this, and it was about providing factual information. With the rhetoric that this was to be an SD-led government, the previous government would in that case be C- and V-led, for it was also not a majority government; it was a minority government that required support from Vänsterpartiet and/or Centerpartiet depending on how the other parties voted.
As said, the announcement regarding exactly what level we will set the state grants will be made in the autumn budget. It is not unusual that we provide information in the autumn budget regarding what the state grant levels are. That is the standard way of working, that is where this is done. Then, during the pandemic, a number of supplementary budgets were made due to the very extreme situation we were in at that time, but that does not belong to the normal, rather the normal is that we provide information in the autumn budget.
If we now look at the budget for 2023, it is a few per mille difference. The supplement the Socialdemokraterna wanted to make in the municipal sector amounted to a few per mille. We must never believe that it is a few billion in increased state grants that will be the decisive factor for the municipalities' resilience and the municipalities' opportunities to offer a good welfare. It will always play a role on the margin. The policy otherwise, that is, the number of hours worked, how growth develops, how inflation develops, and how the interest rate situation develops, will play a completely decisive role in relation to whether we increase the state grants by 3, 4, or 5 billion and how it shifts between the alternatives. We must nevertheless keep that clear to ourselves.
Since then, it has been said here in the debate that the Äldreomsorgslyftet is being removed. How do you know that it is being removed? It was planned by the previous government, which introduced it, that it should exist for three years. But we will also return to that in the autumn budget regarding how Äldreomsorgslyftet should be developed. However, we know that with the model we decided on for Äldreomsorgslyftet, it has not been able to be utilized. There is a lot of money left in the system because it was constructed in a way that made it difficult for many of the municipalities to spend the money. But the government will return in the autumn regarding how we view Äldreomsorgslyftet.
Then I received a question about targeted state grants. I believe the report from the Municipal Inquiry arrived in February 2020. It was not the case that the previous government with the Social Democrats at the helm – or the C- and V-led government, as we might call it now – pulled particularly many straws from the bundle to increase the general state grants and reduce the number of targeted state grants. I know that this is an issue. There are both advantages and disadvantages with targeted versus general state grants. I know that the municipal sector desires a reduction of the targeted and an increase of the general.
We are reviewing this issue. I have no announcements to make here today, but we are looking at how we should view these issues going forward. There are both more successful and less successful targeted government grants; SKR also acknowledges this.
It is not about some municipalities having a little money in the result equalization reserve, but there are a total of 50 billion kronor in approximately three-quarters of the municipalities. It is not only economically weak municipalities that lack this. For example, Stockholm and Helsingborg are two municipalities that do not have any result equalization reserve, so it differs greatly in how it looks on that front.
Åsa Eriksson (S)
Madam Speaker! I am pleased that the Minister is, in any case, incredibly committed to these issues. It is very good, even though we have completely different views on what the solution looks like. I am also pleased that the Minister is open to a continuation of Äldreomsorgslyftet. I believe that many municipalities across Sweden welcome this.
Furthermore, Madam Speaker, a good deal of what the Minister says simply does not add up, such as that there is a lack of investments in the municipal sector in the Social Democratic shadow budget and that it is about some tiny fraction of a percent. The Minister waves away 6 billion kronor here. We double the appropriation and the investment in the municipalities compared to the Minister. In my municipality, little Norberg, it is a huge amount of money that would make an enormous difference. The Minister comes from Stockholm, which is such a large municipality that these funds perhaps do not make as big a difference, but for many municipalities, every single krona plays a big role in what type of activities can be carried out.
Madam Speaker! For everyone who works in elderly care with too few colleagues, it is palpable to now hear that vacancies cannot be filled because the government has chosen not to prioritize welfare but has chosen to prioritize other things in its budget. It becomes palpable when substitute positions in preschools cannot be extended because the government has chosen to prioritize other things than investing in welfare.
I ask again: Why are state grants to the municipalities considered an expansionary fiscal policy according to the Minister, when large tax cuts for us high-income earners are obviously not judged to be so?
Statsrådet Erik Slottner (KD)
Madam Speaker! I thank the committed debaters for a committed debate. We have debated these issues a number of times, and we will have to return to them. It is an issue that engages and which is very important. We will very soon begin a new debate on approximately the same theme where the answer to the interpellation is more or less the same.
The Government is closely monitoring how the economy develops in the municipal sector. It is important that the municipalities and regions have an economy that ensures welfare can be secured throughout the country.
I apologize if it is perceived as if I am trivializing 6 billion. I only mean that 6 billion constitutes a few per mille of the municipal budget. There will never be any billions in increased state grants that will be decisive for the municipalities' finances moving forward, but what will be decisive will be issues such as growth, number of hours worked, how we get people in exclusion into the labor market, how the economy develops and not least how we successfully work with inflation control, the development of the interest rate situation, investments, the long-term debt burden etcetera.
It is this that affects the municipalities' long-term resilience and the possibility to secure the welfare. It is this that is most important, and therefore one must see the policy in its entirety.
I know that the Social Democrats added 6 billion kronor more to their autumn budget for the municipal sector in general state grants, and that constitutes a few per mille of the total budget. I think it is important to remember this, because I mean that the Social Democrats have a tendency to exaggerate the importance of what these billions can do.
We will follow the developments closely moving forward and return in the autumn. We have said that if the government considers that there is a need for increased resources, then the government will return with increased resources.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.