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'Every wasted krona amounts to theft'

Published: 18 Mar 2010 16:49 GMT+01:00
Updated: 18 Mar 2010 16:49 GMT+01:00

"Every wasted krona should be regarded as a theft from the people," Gustav Möller, the legendary Social Democrat and minister of social affairs, famously quipped. This quote has been regularly dusted off by politicians from across the political spectrum. While politically efficacious, the central message of the quote seems to have been lost on the political class, as evidenced by the vast sums of hard-earned taxpayer income wasted each and every year. Before examining some particularly egregious examples, let us dwell for a moment on the concept of waste. What constitutes a wasted krona?

Several definitions spring to mind. Purchasing goods or services one cannot realistically afford is perhaps the one closest to hand. Yet it can also relate to paying far too high a price for items one genuinely requires, likely due to poorly managed procurement. And let us not forget projects that inevitably run over budget, as well as the myriad minor items that live an anonymous existence on the state’s ledger, never to rear their ugly heads during a campaign debate.

While I have neither the time nor resources to shed light on every instance of government waste in Sweden, my initial inquiry has revealed some astonishing and flagrant examples. Indeed, waste is rampant across all of Sweden’s municipalities as well as its county councils and state agencies – not to mention that monstrous machinery of the European Union.

Sweden, like most countries, has been rocked by the current financial crisis. Banks and automakers have taken a beating, and several times the government has stepped in to ease the pain by issuing guarantees or emergency loans. This year alone Sweden's municipalities and county councils may receive an additional 17 billion Swedish kronor to avoid making cuts in core welfare services. Despite this fiscal stimulus, though, many local governments are running massive deficits. Extraordinarily, this hasn’t stopped them from pumping taxpayer money into local pork projects.

Roughly 170 million of the 17 additional billion kronor will be funneled to Norrköping, a municipality that, during the last boom, plunked down 300 million kronor for a football arena that now buckles under the weight of 20 million kronor in annual operating costs. Indeed, sports arenas play in a division of their own when it comes to wasteful government spending. The local youth and children’s board in Vänersborg, for instance, received 90 million kronor for an indoor arena. The budget for the arena was soon revised to first 140 and then 176 million kronor. And the costs continue to climb. The most recent forecast projects a final cost of 270 million kronor. Värmdö, a community with a total annual budget of around 1.5 billion kronor, spent 130 million kronor of the taxpayers’ money on a water park. According to the municipality's calculations, 100,000 paying customers per year would cover costs. Despite over 160,000 paying customers in 2009, however, the water park hemorrhages about one million kronor a month.

In municipality after municipality one discovers frivolous and ill-conceived projects whose underlying budgets are, to put it diplomatically, unrealistic. But waste is not confined to million-krona boondoggles. In fact, one can find pesky and unjustifiable expenses in almost all of Sweden’s municipalities.

Instances of small-scale waste are, in some ways, far more egregious than any singular mammoth endeavor because they concern sums whose relative insignificance defies scrutiny. As such they are rarely if ever the subject of debate. But what they lack in size they make up for in number.

The virtual world Second Life, a passing Internet fad, initially attracted keen interest from the public sector. The municipality of Malmö, for instance, spent 1.2 million kronor creating a presence in Second Life. The Umeå Live project, funded by the municipality of Umeå, Västerbotten County Administration, and Umeå University, has also invested in Second Life. The Swedish Research Council granted researchers in Umeå three million kronor to study "religiosity in virtual worlds."

One would be forgiven for finding these initiatives laudable and interesting. But given each community’s finite resources, it will sooner or later become a matter of priorities. Vänersborg, which you will recall ploughed over 250 million kronor into an indoor sports arena, has at the same time jettisoned 162 school employees. But waste can have other adverse effects, as well. Värmdö’s loss-making water park, for example, has forced a local fitness club out of business. In other words, taxpayer money has funded activities leading to the unemployment of local residents.

In a radio debate last year, the Minister for Local Government and Financial Markets, Christian Democrat Mats Odell, said that politicians who buy hot tubs at the expense of senior care will be thrown out of office. Though in agreement on principle, Social Democrat Sven-Erik Österberg countered that all this talk of waste was pure "nonsense" based on "myths." My research has shown, however, that politicians of every hue have a hard time distinguishing between important and unimportant expenses and between necessity and frivolity.

To be sure, wasteful government spending is a hot-button issue for many voters. In recognition of this frustration, the Swedish Taxpayers Association and Timbro, a free-market think tank, have created a taxpayer ombudsman. Now citizens have someone to whom they can report wasteful government spending.

In the coming year, I as the serving ombudsman will review complaints, bringing them to public attention and acting to stem the tide. I will not scrutinize the level of taxation, but rather how the money is spent. I am confident that all political parties are keen to pare down wasteful spending in these trying financial times. After all, every wasted krona constitutes a theft from the people.

Johan Ingerö

Sweden’s Taxpayer Ombudsman

Related links:

Paul Rapacioli (paul.rapacioli@thelocal.com)

Your comments about this article

20:23 March 18, 2010 by krigeren
This is a good thing. Sweden has a highly inefficient bureaucracy, the real problem is getting anything through with teeth that will counter the poor spending habits.

Government should stop creating jobs that are not needed to begin with......
06:02 March 19, 2010 by Heni
The tree major cities of Sweden made a "profit" 2009. What this article is telling people is that, if you dont live in a city you shouldnt be living at all.

They further managed to spin something like a 1.2 million SKR (please someone check those numbers, might be a fraction of that) investment in new technology into something that could bankrupt the country.

What about the millions of bailout money that is guarantied all major banks in Sweden? What about the pension funds that are being speculated into oblivion, according to Kalla Fakta, they lost 40 billion SKR (40 miljarder SKR, någon som kommer ihåg det avsnittet kan ju fylla i det exakta beloppet) during 2008.

Maybe the biggest problem isnt when a politician takes a taxi to work, which they shouldnt, they should use a bike, but instead all the tax-brakes and bailouts/guaranties the corporations are getting. For me that is who steals the money from me the citizen.
07:37 March 19, 2010 by karex
I think they should start with the "educational trips" to Disneyland.
16:24 March 19, 2010 by DamnImmigrant
There definitely are things that the government is wasting money on but there can be problems with this kind of knee jerk reaction to government spending.

An example would be projects which people feel the government is wasting money on but history will prove it was money well spent.

Then there are also those things that some people feel are wrong and other people feel are right.

Paying too much is never correct but then again getting poor quality products because you had to pay too little is also wrong.
21:48 March 20, 2010 by stoffer
@DamnImmigrant - you are so damn right. It is not easy to see what it waste and what is not.

The free market also wastes a lot of money, but the neolibtrads do not want to acknowledge that. Also, there are market failures and problems of externalities (for refence: DeMartino, George (2000). Global Economy, Global Justice. Routledge. p. 70, ISBN 0415224012, Pigou, A.C. (1920). Economics of Welfare, Feldman, Allan M., and Roberto Serrano, [1980] 2006. Welfare Economics and Social Choice Theory)

In short, neoliberals oversimplify problems of economy and society.
16:07 March 22, 2010 by Åskar
And the general sentiment of Skattebetalarns förening is that every tax crown spent is a tax crown wasted.

By the way, how can a representative for a private organisation call himself "Sweden's Taxpayer Ombudsman"? Isn't that trying to make people believe he has an official position, "föregivande av allmän ställning" in Swedish, which is a punishable offense?
23:14 March 23, 2010 by kzjh72
A practice that I personally have come across in Sweden (as well as in Australia by the way) that actually encourage and rewards waste of tax money is the practice to automatically reduce funding for next year for an institution of any sort (such as hospitals, defence, community services) which have not spent all of their funding for this year. This often leads to very questionable spending by the end of the financial year. Surely an allowance to instead let such funds (or at least part of them) to be carried over to next financial year without any automatic reduction of next years funding would be to prefer. If it over a period of time is concluded that less funding is required going forward, then this could be decided/agreed in a controlled manner.
14:24 March 26, 2010 by RoyceD
Well I would have to say that if there was any real incentive not to waste tax payers money then politicians would look into every krona they approve. But from what I can see even the Tax minister who got caught cheating on his taxes got no punishment. Nothing.

Surely wasting tax payers money should come at some sort of risk?

Sweden could be fantastic place. It is financially stable, has a great tax system and lots of smart citizens who keep coming up with world leading ideas that generate interest in sweden and generates money. But it seems that the people who get put into positions of power are complete monkeys. As a group there seems to be no leadership, and the politicians resemble a bunch of kids who were playing football inside a classroom and are arguing over whose fault it is that a window got broken, when they were all playing.
09:20 March 27, 2010 by Elton John
stoffer: The free market wastes a lot of money, you say. Who is the free market? Whos money is wasted and in what way? According to whom is the money "wasted"?
12:20 March 28, 2010 by cbeynch
Why do I have a sneaky feeling that the Social Democrats will very much oppose the appointment of this Ombudsman? Perhaps the U.S. should appont one also now that two-bit dictator Oblahblah has embarked on the Swedish societal model.
15:28 March 29, 2010 by Åskar
@cbeynch, Had you read comment #6 you would have known that this is a private person who has assumed a title which might lead people to think that he is some sort of officially appointed public servant, which he isn't.
10:43 March 30, 2010 by livinginsweden
Stop paying the politicians and stop subsidizing The Local!!!

ha ha ha
09:30 April 5, 2010 by Nemesis
If this idea goes aahead, under no circumstances should anyone who is a eno-liberal be even allowed to step foot in the offices.

Sweden does need extra efficiency in some areas, but it does not need wholesale destruction of public services as occurred in the UK, following neo-liberal ideas.
11:25 April 6, 2010 by Åskar
And the latest thing is selling out the Stockholm Local Transport customer services.
12:47 April 6, 2010 by Audrian
This is "Animal Farm" story being played all over again.

The present recession, where trillion of dollars capital was destroyed and similar amount of human resources was wasted, is one of the testimonies that show free market system is the biggest waster …. The bureaucratic waste that is being discussed in this article is on the margin of mountains of waste squandered by monopoly capitalism and its corruption. The present discussion is taking our attention to something minor.

I also suggest bureaucratic waste of the type outlined in the article above is problems of democracy, openness and public oversight. It is unlikely to be solved by the creation of another bureaucracy.

I add one book to the list provided by soffer (# 5): "The Political Economy of Growth" by Paul Barren. It is an old book that does not go outdated. It focuses on wastes of the capitalist system. It is available in libraries only.
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