Response to interpellation 2024/25:256 on the reform space
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
1 M considers that the fiscal framework is a cornerstone for stable public finances and enables prioritization according to need 1. 2 M argues that it is a good arrangement that the state can direct resources to, for example, defense and correctional services 2. 3 4 M emphasizes that the budget bill is transparent and that priority has been given to strengthening households' purchasing power 3 4. 4 M wants to continue lowering taxes for workers 4 and considers it a good direction that not everything is indexed with inflation in order to enable prioritization of the reform space 4. 5 6 V considers that the government should report actual cuts when choosing not to increase the child allowance or the housing allowance 5 6. 6 V argues that it is an active prioritization not to index these expenditures 6.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I thank all the Social Democrats for the debates. I appreciate these debates, and now it is time for a debate on the reform space.
Madam Speaker! Samuel Gonzalez Westling has asked me if I share his description of how the reform space arises and if I can account for the background of why the term began to be used. He has also asked me if I am prepared to report the public finance effects of a maintained public commitment in the economic bills.
The reform space is a central part of the budget process and the important fiscal framework that was established in the late 1990s. The fiscal framework and the budget process are based on a top-down perspective where expenditures are weighed against each other and expenditure increases are tested against a pre-determined economic space - the reform space. The process ensures control over state expenditures while simultaneously enabling the government to conduct active cyclical policy where unfunded expenditures can increase in times of poorer economic development.
The fiscal framework has served Sweden well. It is a cornerstone of Sweden's stable public finances. Since it was introduced, both the national debt as a share of GDP and the state's interest payments have decreased significantly. With lower interest payments, we have had the opportunity to spend more money on other things, for example investments. In times when several European countries need to raise taxes to finance their interest payments, Sweden can instead lower taxes while simultaneously having a low national debt. It is a strength.
The fiscal framework is thus a fundamental pillar in building a wealthier and more secure Sweden. It is important that any changes in the fiscal framework, calculation methods for the reform space, or what exactly is reported in the budget bills are preceded by analyses that deeply examine the effects of the changes.
The needs in the public sector vary from year to year. Therefore, it is also important that the government has the possibility to prioritize according to need, for example during the years with high inflation where a significant portion of the reform space was used to support welfare.
TREDJE VICE TALMANNEN
I can state that it was not quite the same answer that was submitted to the Riksdag as what we heard here.
Samuel Gonzalez Westling (V)
Madam Speaker! I must state that I became a bit confused when I listened and read at the same time. Not much corresponded with the answer I had received.
The basic principle is still the same. In the answer I had received from the Minister for Finance, it is stated, among other things, that the Minister for Finance does not think it is a good idea to report the public financial effects of maintained public commitments in the economic bills.
I still believe that the Minister for Finance is trying to make this a more complicated issue than it actually is. When fiscal space arises, as the Minister for Finance quite rightly notes, revenues increase while simultaneously leaving room to do other things, that is to say, one does not increase the expenditures that the state has. For example, the compensation to municipalities and regions is included. What the government has chosen to do this year is to not provide anything for municipalities and regions to maintain the level of service they are to provide to the population in Sweden's 290 municipalities.
Another thing that is regrettable is that in the response I have received, the Minister for Finance says that for her it is natural that public activities can continuously improve their ways of working. A sustained commitment can thus be achieved with a smaller amount of resources. It is often about using the tax money more efficiently.
The Minister for Finance argues that she, as Minister for Finance, and the government have a better overview of how regions and municipalities can distribute and use their resources than the municipalities and regions themselves do. That is how I must interpret the answer nonetheless.
But there are other parts of the reform space that arise due to other things. For example, there are a lot of transfers that the state has committed to making. One such is, for example, the housing allowance. The allowance-granting level has not been raised since 1997, and it is almost 30 years ago. The income limit has been raised marginally, and it was the previous government that did so - only after 20 years. The current government has chosen not to increase the income limit at all. If we compare with 1996, when one stopped increasing the income limit in line with wage developments, we can state that the allowance is based on a significantly lower limit.
Then there is the child allowance. One can say that the child allowance is one of the most important incomes for families with children, especially for single mothers. What a family with children keeps of the child allowance today, compared to the last increase that Vänsterpartiet pushed through in 2018, means that the value of the child allowance today is 21 percent lower than when it was last increased. At the same time, food prices have increased by nearly 25 percent.
Does the Minister for Finance think it is reasonable that the costs for the state should be kept down in the systems that should be adjusted for inflation, cost development, and wage levels?
Finansministern Elisabeth Svantesson (M)
Madam Speaker! What the interpellator raises is an important discussion. It has also become clear during these years of high inflation. Everyone might not have thought about indexation, but indexation has suddenly become something very important. Many of our compensation systems are indexed in different ways based on inflation. This can apply to compensations but also to some taxes. There has been a debate about it, and I think that is good.
When it comes to this and the questions I have received from the member regarding how a reform space arises, I share that view. That is number one. Number two concerns how it came to be once upon a time. I was not here in the 90s discussing the framework, but it is fundamentally exactly as the interpellator says: Tax revenues grow, but certain expenditures do not grow in the same way.
Why do I not think it should be changed? My perception is that it is, nonetheless, a fundamentally good arrangement. In different times, a state may need to prioritize different things. One example is that municipalities and regions during the period of high inflation were hit enormously by high pension costs. This year, those costs are 50 billion lower than last year because inflation has come down. It shows that it was necessary that we, at that time, allocated 40 percent of the reform space to help the municipalities and regions. It could not have been done if everything had not been pledged in different ways, regardless of which variant one had chosen.
There are periods when we must spend more money on correctional services and defense than in other periods. Now, unfortunately, it is such a period. I wish it were not so.
Of course, one can have different starting points in this. One can always discuss what needs to be indexed and what does not. But I still think it is a good order that we, from the state's side, ensure that resources are injected where they are best needed during the period that one lives and finds oneself in.
Samuel Gonzalez Westling (V)
Madam Speaker! I completely agree that one can make different types of prioritizations in society based on the current situation. The question here is whether it is not reasonable that, in such cases, one also reports what it is that one does not intend to do, for example, not to increase the housing allowance and above all the child allowance, which I had as an example.
As it stands in Sweden today, families with the lowest incomes have it incredibly tough. I know that the Finance Minister usually boasts that taxes have now been lowered for everyone. It is claimed, above all, that taxes have been lowered for those with low incomes and so on.
What is happening is that a nursing assistant receives approximately 200 kronor in reduced tax per month today. At the same time, the Finance Minister himself received a salary payment as recently as last Friday where I believe the tax reduction amounts to 3,000 kronor per month. That is what happens when one chooses to prioritize tax cuts rather than strengthening the financial systems that exist so that we have a basic security in society.
The multi-billion investment to lower taxes gives the nursing assistant approximately 2,400 kronor a year. Suppose the nursing assistant has two children, the same number as in the Finance Minister's example with a nurse and a police officer in a previous debate. With the Left Party's proposal of an increased child allowance of 400 kronor a month, the nursing assistant would instead receive 9,600 kronor extra a year. And it would have been cheaper for the state's finances than the government's proposal of lowered taxes.
This is not becoming clear for people in society today. People pretend that this is something incredibly complicated and cumbersome, that these are things that just happen on their own. The child allowance exists, but it is an active decision, even if it is an active passive decision, from the government not to increase the child allowance in line with the economic development.
Doesn't the Minister for Finance think it would be reasonable for the government to state that one chooses not to increase the child allowance in line with economic developments because one chooses to prioritize other things? Today it sounds as if a lot of money has arisen and that one chooses to spend it on these different types of investments instead. I just feel that one might choose to state this.
I believe we could agree on a way to report it. It is not particularly difficult, actually. The Ministry of Finance's definition of the economic development is, in fact, similar to the Konjunkturinstitutet's definition. One could perhaps start there.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I would like to thank you for the questions and for this important discussion.
I never try to pretend that this would be extremely complicated. But it may not be easy for everyone to enter the framework and delve into this. A space arises, just as the member said, and it is used in different ways.
I have been very transparent about the fact that we have reprioritized among the expenditures. I actually also believe that the Swedish budget bill, regardless of who is in power, must be one of the most transparent in Europe. But I don't know. Someone is welcome to disprove me.
We have, as we have said, been very transparent about the fact that we have made reprioritizations. We have, for example, removed the one percent goal for aid and instead allocated those funds to both welfare and defense, which have needed resources, because we have thought that it is a reasonable prioritization.
But I think it would be a bad idea if all expenditures were just to increase by themselves in some way. Then, in difficult times, one would not be able to direct resources to where they are needed most. Now, for example, it is the defense, and last year it was specifically welfare that needed very much more money.
People can have different opinions about this. I definitely do not want to make it sound more complicated than it is, but I stand by the priorities we make. The state has many expenditures, much more than just compensations and that which municipalities and regions take a share of. I do not know if it would be feasible to, in all areas, report what the interpellor now expresses that we should do, but perhaps it can be done. I think the process works quite well as it is.
Samuel Gonzalez Westling (V)
Madam Speaker! I understand that the Minister for Finance thinks the system is quite good as it is today. This means, in practice, that one does not need to report the actual cuts that are made by not making decisions to increase these various transfers. For example, the child allowance this year is at the same level as it has been since 2018. This means that the 1,250 kronor one receives per child today is worth under 1,000 kronor by today's measures if one compares it with 2018. So that is the case. If one were to follow the cost development that has occurred, the child allowance should rather be over 1,500 kronor today. That must be taken into the calculation.
I do not see that it would be a problem for the government to report the prioritization that one has chosen to make. One can actually report and say: No, we see that money needs to be put into defense, and therefore we intend to cut the child allowance for the assistant nurse with two children. That is precisely what one does when one chooses not to increase that compensation annually, not to index that cost for the state's expenditures. That is where we land.
We think that what is reasonable is for the government to be clear about which priorities it intends to make. It can be completely okay and reasonable to make that priority and to think that it is the one that should be made. But it is not clear for the Swedish people and for the nursing assistant with two children that it is she who should bear the cost of an expanded defense while the Finance Minister chooses to lower the tax for himself by nearly 40,000 a year.
Finansministern Elisabeth Svantesson (M)
Madam Speaker! I must admit that I am finding it a bit difficult to follow the reasoning. I believe that the vast majority know that the child allowance is not indexed. Most parents see that on their accounts. It is nothing that is being hidden by any party here in the Riksdag. It was indeed several years ago that it was increased. It will surely be increased in some years ahead – I do not know. But my point is that this is not something that is being hidden. As I said from the beginning, it is the case that many of our compensations are increased with inflation while many others are not, for example, housing allowances and child allowance.
What we prioritize and have prioritized is to bring down inflation and strengthen households and their purchasing power. We have prioritized welfare when it has been extra tough. We also ensure that resources are allocated to what increases growth in the short term and in the long term. My goal is always that households should be strengthened.
I have had the pleasure of sitting here in the Riksdag since 2006. We began lowering taxes on low and middle incomes in 2007. Up until today, a nurse has received 4,000 more per month just because of our tax cuts. We have lowered taxes for people who work. People have different opinions about this. Vänsterpartiet would rather raise taxes. One does this in Stockholm and in many other places - no, not in Stockholm, but in the budget taxes are raised, so one could say, so I am not completely wrong.
I would like to continue to lower taxes for hard-working people. What we have talked about now is not obvious, but I believe fundamentally that it is a good direction that not everything is indexed with inflation. In that case, there would be no possibility to prioritize the reform space, which does not arise out of thin air but arises because the economy grows.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.