Response to interpellation 2023/24:303 on increased inequality due to high costs
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns increased inequality due to high costs. M believes that the government supports the economically vulnerable through increased benefits, tax cuts, and electricity support 1. M argues that a restrained fiscal policy combats inflation 2, that the banks' profitability is good for the system's resilience 1 and that a bank tax would be passed on to the customers 1. M emphasizes the work principle 2 3 and prioritized resource supplements to municipalities and regions. S argues that households are pressured by inflation driven by corporate profits 4. S believes that the government provides targeted support to those who are best off 4 and does not inject enough money for welfare 5. S wants to limit value transfers through a bank tax 6 and proposes debt forgiveness, extra child benefit, and increased maintenance support 4 7.
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 Niklas Wykman (M)
Madam Speaker! Linus Sköld has asked the Minister for Finance what she intends to do to protect wage earners and the finances of economically vulnerable households in the crisis, and how she intends to act within her area of responsibility so that the high and rising prices do not lead to excess profits for banks and retailers.
The interpellation has been handed over to me.
Swedish households are currently being pressured by high costs. The government is working to support economically vulnerable households, among other things through increased benefits, support, and tax cuts. Electricity support and reduced energy tax on gasoline and diesel have been significant measures. The government has proposed that the temporary increase of the housing allowance should be extended for an additional six months. We are lowering the tax for pensioners and for households with low and normal incomes.
It is a priority that inflation comes down, because it is the root of many of the economic problems that people are currently facing. Through a restrained and well-balanced fiscal policy, the government ensures that fiscal policy does not hinder the Riksbank in bringing down inflation.
Rising prices require more actors to take responsibility. An important factor for holding back price increases is the promotion of effective competition. We have, among other things, tightened the monitoring of price formation in the Swedish economy. Konkurrensverket has been provided with funds for this increased supervision. Last spring, Konkurrensverket and Konjunkturinstitutet were also tasked with analyzing the competition situation and price developments within the grocery trade and other industries where lack of competition may be considered a cause of increased prices.
The profitability of the banks has been very high in recent years. This is linked to a powerful and rapid increase in the interest rate level. That banks are profitable is good for the resilience of the financial system and strengthens the banks' capacity to maintain lending even in poorer economic times.
The banking market in Sweden is concentrated and dominated by a few large banks. The Competition Authority has pointed out that one of the most important explanations for the large banks' dominance is that customers are reluctant to change banks. It is therefore important to strengthen the customers' position and increase their opportunities to negotiate with their bank. Against that background, the government has tasked the Financial Supervisory Authority to review how consumers' position on the banking market can be strengthened.
A new bank tax would likely be passed on to the customers through increased interest rates and fees. This would mean that the households' situation would become even more strained. It is not the right way to go.
Linus Sköld (S)
Madam Speaker! I thank Niklas Wykman for taking the debate in the Finance Minister's stead, so that it can take place.
Niklas Wykman notes in his response that Swedish households are currently being pressured by high costs, and yes, that is indeed no exaggeration, Madam Speaker. One example of this is that SVT is reporting today that Swedes' debts to the Enforcement Authority increased by 50 million per day during the past year 2023. These are record-high debts to the Enforcement Authority. Another example is that a record number of families with children are being evicted from their homes.
The Christmas buffet cost the Swedes more than 18 percent more in 2023 than it did in 2021. It may perhaps sound like a dated piece of information now that we are standing here and it is January; it has been a long time since it was Christmas. But it is also a long time since I submitted the interpellation, and the costs of the Christmas buffet – the costs of the food – continue to dig deep holes in people's wallets during the poorest week of the year.
A common mortgage interest rate has more than doubled over the last 18 months, and wage earners have seen inflation eat up the wage increases of the last ten years. Today, SCB published statistics that allow one to conclude that the economic standard of households has deteriorated for the first time since the 90s.
At the same time, Wykman responds that the all-overshadowing goal is to keep inflation down and that it is the root of all evil. It is perhaps difficult to argue against, but how is the government doing with this? Inflation is indeed moving downwards, but over the last two years we have had much higher inflation than our closest neighboring countries. A contributing cause could be what heavy-weight economists have pointed out in the media over the last few weeks, namely that up to half of the inflation is driven by corporate profits.
At the same time as things are going terribly for the economically vulnerable households, things are going record-well for the banks. The largest banks have made 153 billion in profit during the first three quarters of 2023; it remains to be seen what the full-year result will look like.
Wykman refers to the fact that things are being done to support vulnerable households. One example is the electricity support, which was indeed a formidable catastrophe. It was paid out much later than the government had promised and went mostly to those who consumed the most, which are hardly those who have the smallest economic margins.
Wykman says that the enhanced housing allowance is extended by six months. Then Wykman and his friends swap it for targeted support for those who are best off, namely enhanced ROT and RUT deductions for expensive renovations of kitchens and for those who can afford to hire home help.
Niklas Wykman says that one lowers the tax for households with low and normal incomes, but that is not quite true. Or does Wykman think that people who are permanently unable to work as a result of illness or disability do not have a low income?
We would have liked to see a debt relief for households that are struggling, reinforced consumer guidance, increased maintenance support for single parents and an extra child allowance that perhaps could have been paid out just this week during the year's poorest month.
Niklas Wykman's non-answer to this question can only be understood as that the banks' record profits and the households' increasingly vulnerable economic situation are a desirable state.
Adrian Magnusson (S)
Madam Speaker! One aspect that was not quite touched upon in the answer is welfare. Welfare is sometimes described, rather sloppily, as some kind of service instrument, but I would like to assert that welfare, since it began to be expanded in Sweden, has had a fairly strong redistributive policy element. We come together and organize certain types of utilities, because it would be much more expensive if each of the individuals were to provide the utilities themselves.
With the welfare crisis that we are currently going through, partly as a result of the cost crisis and in the long run as a result of the government not injecting the money required to support welfare, a considerable amount of the costs are being shifted onto individuals. From the Swedish right, there has for a longer period been an active campaign for people to, for example, purchase private health insurance and those types of solutions. This is to shift further costs onto individuals. If one puts welfare into a crisis, it will lead to further increases in the costs for individuals.
The bank tax has been raised by the interpellor. These funds could, for example, go to the welfare system. The construction that has been developed must not lead to the whole thing being shifted onto the bank customers.
There are many other distribution policy instruments that could be used. For example, the interpellator pointed out in the interpellation itself that ICA retailers receive 2.7 billion kronor in dividends. This is a direct transfer of value from working people to capital owners. These are also costs that reinforce inequality and increase the class divides we have in Sweden. That has not been addressed either. One could, for example, as we have proposed, appoint a food price commission to try to address the cost increases. It has been established that the cost increases are unjustified in relation to the increased costs in society at large.
It is not just about a lack of distribution policy here, but it is almost about an inverse distribution policy. It is quite remarkable.
I would like to assert that it is the case that political decisions and the lack of political decisions during this cost crisis lead to increased inequality. In that case, the interpellor is somewhat correct in their approach - the increased costs actually lead to increased inequality.
This could be countered by the government to a much greater extent than is the case. I think it appears in the answer that it could be done so much more.
Statsrådet Niklas Wykman (M)
Madam Speaker! Inflation is a major problem for the entire society. It erodes the pension, makes it harder to calculate investments, shifts relative prices, and makes it harder to manage household finances. More than anything else, inflation is the wage earners' worst enemy. The value of working is eroded when wages lose value.
Madam Speaker! To combat inflation and to ensure that the fiscal policy we pursue does not stand in the way of the Riksbank's opportunities to bring Sweden back to price stability has been a paramount goal precisely for these reasons. It should pay to work. The person who goes to a job in Sweden should know that they have a good life and a good income. The person who has worked a whole life in Sweden should know that the pension does not only cover the absolute necessities. The person who wants to build Sweden further and start companies, invest, or do entrepreneurial things should know that Sweden is a country to rely on.
For all these reasons and many more, it has been necessary to conduct a restrained fiscal policy so that we can return to price stability. Within the framework of that prioritization and choice of path, it has obviously been important to conduct a policy that is as effective and fair as possible. Welfare has been provided with large supplements of 16 billion kronor to municipalities and regions. We have lowered the tax on pensions so that it has become more profitable to have worked. We have lowered the tax on working so that it pays more to work. We make necessary supplements to Sweden's justice system and defense so that Sweden will stand as stably as possible during the testing times that the country finds itself in.
Madam Speaker! Actually, I do not know if the interpellator and my opponent have anything against this – it is somewhat difficult to understand what the core of the criticism consists of.
I hear criticism that we have not introduced a bank tax. One could imagine that a bank tax would mean approximately 4,000 more in housing costs every year for many borrowers - would that have been a reasonable policy? As I understand it, it would be completely impossible to introduce a bank tax as early as next year. It would have created a hole of 10 billion kronor in the public finances. Would the best path forward in this situation have been to threaten Sweden's mortgage borrowers with increased costs?
I also read that the Social Democrats themselves say that the banks need to invest more to meet the type of crime we have, including fraud, and that the bank profits should be used there.
But a basic knowledge of economics, which I believe most can grasp, is that a krona can only be used once. One cannot spend the same krona twice. Between these, one simply needs to make a choice.
Madam Speaker! I turn to the fact that it is only subsidy increases that are supposed to increase equality, gender equality, and efficiency in society. Such may be needed, and several different supports have been indexed up, for example the guarantee pension. But fundamentally, it is work that builds equality, gender equality, and the strong and secure society. It is difficult for me to understand the interpellant's and the Social Democrats' constant opposition to the idea that people who get up in the morning and work hard should also get a little better off.
Linus Sköld (S)
Madam Speaker! Niklas Wykman is here to answer, in the Finance Minister's stead, questions about what the government is doing to protect the finances of vulnerable households in the crisis and how one should act so that trade and banks do not continue to make excess profits. It is this we are here to debate. Niklas Wykman does not need to trouble himself with debating my proposal for a bank tax. I have posed questions to Niklas Wykman, and it behooves a minister to answer questions that are posed to him in the Chamber.
In addition to what I mentioned in my previous speech, I noted that Niklas Wykman's colleague Elisabeth Svantesson, whom I actually should have had this debate with, shouted in the media last spring that she would summon the food giants after reports had emerged that profits were increasing while price increases on groceries were at their worst. Now Wykman responds that, in addition to this, the Competition Authority and the National Institute of Economic Research were commissioned to analyze the competition situation and the price development within the grocery trade, where a lack of competition could be considered a cause for increased prices.
How did it go then, one might ask. The largest grocery retailers made 2.7 billion in profit, which was distributed half a year later. Thea Institute of Economics stated dryly in its commissioned report that "the overall assessment is that consumer prices on food over the period studied have increased more than can be explained by the increased costs." Elisabeth Svantesson's shouting about summoning the food giants thus had little effect.
I don't actually give much weight to Niklas Wykman's talk about our view on labor market policy, but now I demand that Niklas Wykman answers my question about what he will do to protect the finances of the most vulnerable households in this crisis. There is record-high debt at the Enforcement Authority, and a record number of families with children are being evicted from their homes. One cannot think that this is in the right order, and I truly hope that Niklas Wykman does not do so.
Adrian Magnusson (S)
Madam Speaker! The heading of Linus Sköld's interpellation is "Increased inequality due to high costs". When one hears the answer, one may wonder if the government considers it a problem that inequality is being reinforced due to high costs. I am not sure that the government thinks it is a problem that inequality in Swedish society is being reinforced due to the cost crisis we are in.
Many of our proposals are not about distributing grants but about limiting value transfers from those who work to those who own, from people with skyrocketing mortgage rates to those who own shares in major banks. The bank tax would mean that value transfers are limited. It is an important part of many of our proposals.
I am fully aware that distribution policy is an ideological dividing line, historically and in the present, between the political right and the political left. And when I hear the answer and listen to the debate, I become thoughtful and wonder if the government thinks it is a problem or not that inequality is being reinforced due to the cost crisis. I am inclined to believe that they do not think it is a problem.
Statsrådet Niklas Wykman (M)
Madam Speaker! I have accounted for how the government acts so that Sweden remains united through the very tough crisis we have. The return of inflation in the economy creates great pressures; not least are those people who have small economic margins affected. We know how it hits pensioners and people with low wages when all prices increase. Then one needs to consolidate forces, prioritize, and choose in order to address the inflation problem and ensure that the rate of price increases subsides. We have conducted a tight and restrained policy so as not to stand in the way of the Riksbank's opportunity to bring Sweden back to price stability.
The interpellator and his party colleague describe well how inflation is a major problem for the whole of society, for wage earners and pensioners, and for all those who go and shop for their groceries. They do not, however, seem as engaged in the political tools and choices that need to be made to address the inflation problem. If the solution to the inflation problem had been an expansive fiscal policy, that is, spending more money, one could have understood some of the reasoning. But the problem is that one cannot cure the inflation sickness in that way. It needs to be met with the type of policy we have in Sweden, with an independent Riksbank and a cautious fiscal policy that does not fuel the price development.
Within this framework, what are we doing so that people can get through this in the best way possible? We have prioritized large resource additions where they are needed most, to municipalities and regions, so that we can continue to maintain as high a quality as possible in our welfare services. We have prioritized lowering the tax for those with low and average incomes so that they can better meet the price developments. We have prioritized lowering the tax for the country's pensioners and allowed the indexing in various transfer and subsidy systems to take effect so that those with the smallest margins will get some relief. We have chosen to introduce special support for those who have the most challenging life situations, for example, families with small children with small margins in their finances. We have also chosen to remedy some of the injustices that have divided Sweden over time. We have lowered the fuel costs so that it will be less expensive for families who need to use the car to get to and from work and manage the life of small children and the life puzzle in general.
It is correct that requirements have been placed on priorities. It has not been possible to give everything to everyone. But when I listen to the interpellator, I still cannot help but feel that there is a relatively broad consensus. Deep down, I believe that a well-balanced social democracy does not have much against these priorities. It boils down to a debate over whether one should introduce an additional bank tax or not.
The existing bank tax creates major problems for welfare funding, for our municipalities' opportunity to borrow collectively. It is an outstanding problem that is not solved. Perhaps one would want to solve that before introducing a new tax. Before introducing a new tax that would cost perhaps 4,000 kronor per year, perhaps one should ask whether the mortgage borrowers are not already sufficiently pressured.
Linus Sköld (S)
Madam Speaker! Niklas Wykman says that he has accounted for what the government is doing so that Sweden will hold together. I would like to say that the facts that I have pointed out in this interpellation debate - which Niklas Wykman has had no objections to and which one must therefore assume he accepts - clearly show that Sweden is not holding together in this way. It is going very well - record well - for Swedish banks. The traders are making huge profits. At the same time, it is going record poorly for households with the smallest margins.
The government has shown that it is unable to do anything about the price development of food and does not want to do anything about the record profits. The government is also making insufficient efforts to protect the economically vulnerable households in this crisis.
I have described some proposals that Niklas Wykman could have reflected his policy in if he had wanted to, but he has hung up on the bank tax. I would say that Niklas Wykman is on the verge of being unimaginative as he cannot think of a way to tax the banks' enormous profits without it being passed on to the customers. We Social Democrats are inventive enough to be able to figure out what such a construction should look like.
I have also described some of our proposals that would support some of the most vulnerable households. These proposals have been completely ignored by Niklas Wykman. It is increased maintenance support for single parents. It is an extra child allowance - perhaps it could have been paid out in January when people are struggling. It is also a debt relief and an extended housing supplement.
This is not acceptable, Niklas Wykman! In this way, Sweden will not hold together.
Statsrådet Niklas Wykman (M)
Madam Speaker! The interpellator says that the Social Democrats are more inventive and have a better imagination than I do when it comes to designing bank taxes that are not passed on to the bank customers. Mikael Damberg actually received that question at the press conference when the proposal for the new bank tax was presented. The question was: Then can't the banks raise the interest rates? Mikael Damberg answered: Yes, of course they can do that.
I am, therefore, not entirely sure that this imagination of the Social Democrats has been sufficiently large. The existing bank tax is also fraught with very large problems, as you know, regarding, for example, Kommuninvest and its possibilities to now be involved and contribute so that the country's municipalities can borrow to finance investments in welfare.
There are problems with the bank tax we have. The Social Democrats do not believe that it is a problem to extract additional bank tax. Our conviction is that it would be passed on through further increased mortgage costs for the time being and have a questionable long-term effect for the Swedish economy.
If the entire discussion is about whether we should have more bank tax or not, there are clear reasons not to want such a bank tax. Mikael Damberg himself points this out when he is asked questions, namely that there is a risk that it will be passed on to the mortgage borrowers. They already have it tough as it is with paying the interest rates that are currently there. Introducing a new bank tax in this situation would be unwise. It would simply not be a balanced economic policy.
Then there are many other things one can do. I still want to take a stand for one thing: There are good reasons to increase grants or increase transfers, but there are also good reasons to see those people who actually get up and work, who toil hard, get up early in the morning and go to sleep tired in the evening. It must pay to work. There needs to be a work line in Swedish politics. That is how resources are created for everything else. I want to take a stand for those people and for that policy.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.