Budget focuses on jobs and the environment

Benefit cuts, more money to bring down Sweden's CO2 emissions, and tax cuts aimed at the low paid. These were the highlights of Swedish Finance Minister Anders Borg's second budget, which he presented on Thursday.

Budget focuses on jobs and the environment

“This is a time for rejoicing. Things are going well for Sweden. Jobs are being secured and the general welfare is being secured,” Borg told the Riksdag. Pär Nuder, Borg’s predecessor as finance minister and now his Social Democrat opponent, said the budget would create injustices.

The number of people in work is expected to rise by 200,000 in the years to 2010, unemployment will fall by more than 90,000 and the number of people at risk of so-called social exclusion will fall by 175,000. Households have more money over and investments in industry are growing. The balance of trade is positive and the budget surplus is the largest for 40 years, Borg said.

Borg denied charges by the Social Democrats that the jobs being created were low-wage positions. He said the healthy economy and lower unemployment would lead to a fairer society.

A number of changes are to be made to the benefits system, with people on long-term sick leave able to claim up to 75 percent of their previous income between 12 and 30 months after leaving work, compared to 64 percent today.

This will be combined with more rigorous policing of the system, greater demands on the long-term sick to apply for jobs and more money for rehabilitation.

“Sickness insurance should give security for people who are ill, but should not be used to hide unemployment, and should not be used fraudulently or over-used,” he said.

There will be new rules for people on part-time unemployment benefit. People only in part-time work, who are claiming benefit to cover the time they are not working, will in future only be able to do so for 75 days er year.

“The point of this is to reduce overuse and reduce the risk of people becoming permanently locked into part-time work,” the government said in a statement.

The Social Democrats were scathing about Borg’s proposals, saying they were offering more to those who already have most.

“You are consistent in your unjust policies. There’s something robot-like, clinical and cold about it,” said Nuder.

“The unemployed, sick, early-retired and pensioners will have to pay for Borg’s tax cuts,” he said,

Nuder also claimed that the measures would have a negative impact on Sweden’s competitiveness. People leaving the trade unions and reductions in unemployment benefits would mean fewer people would have the confidence to make the jump from old industries to the new economy, Nuder claimed.

Nuder also said that the government was being irresponsible, claiming that it was “stoking the fire” during a period of high growth. He pointed to recent interest rate rises, which he said increased the cost of a normal house in the Stockholm area by 12,000 kronor a year, eating up the government tax cuts.

But Borg insisted that the government was following a responsible course, pointing to the health of the public finances. The government would exceed its target of a net surplus of one percent in government lending.

Borg also announced measures to combat climate change. Tax increases aimed at limiting CO2 emissions will be introduced, he said.

Most of the measures in the budget had already been announced by ministers. These include the replacement of property tax with a municipal charge capped at 6,000 kronor per house and 1,200 kronor per apartment.

In defence, Borg said that there was “potential for efficiency savings”. The conversion of the Swedish armed forces from focusing on defence against invasion to operational defence made savings of 3-4 billion kronor possible.

The budget also promised greater spending on higher education and medical spending. In schools, resources will be focused on reading, writing and arithmetic.

Lower taxes on household services and efforts to stimulate women’s entrepreneurship would promote gender equality, the government said. It also restated its commitment to a gender equality bonus to encourage parents’ to share parental leave equally.