National Budget 2003

National Budget 2003

Structural Policy - Public Sector Reform

The key policy instruments of the Government's programme for modernising the public sector are decentralisation and delegation within the central government, and decentralisation of tasks to the municipalities. The Government's main task consists in designing framework conditions that stimulate reform efforts at the local level. Modernisation is currently focusing on putting in place framework conditions which create incentives for increased user-orientation and for improved cost efficiency.

The public sector service providers in Norway are funded for the most part on a block grant basis. The Government is considering the introduction of funding systems in which the funds to a greater extent follow the user. This is with a view to widening consumer choice and establishing a level playing field in new areas. In order to contain the overall level of public expenditure, sound cost control needs to be given high priority when assessing various modes of funding.

Regardless of funding system, excess demand will exist in a number of areas unless demand is regulated via user payment. While user payment is relatively high within technical services, public transport, nursing homes and day care centres, user charges are generally low or non-existing in public health and education, including higher education.

High priority is given to scrutiny and strengthening of regulatory agencies in the reform effort and the Government intends to present a White Paper on regulatory agencies during the current year.

The principles underlying the disposition and treatment of the fiscal budget set important parameters for reform efforts at the local level. A committee is due to present, by 1 December 2002, recommendations on what changes should be made in the central government's budget and accounting principles. The committee is also considering the merits of multi-year budgeting in order to take better account of the characteristics of investment, adjustment and development projects that span several years.

The Government will this year publish a White Paper on merging the social welfare, labour market and social security agencies into a single body in order to improve the co-ordination of public services.

The Government is committed to a block grant system as the central source of financing of local government. Block funding with no earmarking enables municipal authorities to assign their own priorities as regards resource use. Furthermore, it gives the central authorities a good basis for cost control and macroeconomic management. Through adjustments in the framework conditions, the central government will facilitate cost-efficient funding of service provision at the municipal level.

Many municipalities are too small or sparsely populated for efficient markets to be established for municipal services or for economies of scale to be exploited. Inter-municipal collaboration and municipal mergers may in some cases make for more effective and efficient operations. The Government has proposed improved incentives for municipal mergers.

In conjunction with this year's wage settlement, steps were taken towards a more flexible wage formation both at central and local government levels. The Government will also work for more flexible rules for appointments and working time, and has already presented a proposal entailing a relaxation of the rules on overtime worked to the Storting, cf. above.

The Government gives particular priority to public sector reforms in the following areas:

  • A committee will assess the content, quality and organisation of primary schools. Laws and rules will be simplified and the funding system will be evaluated. The Government also intends to make it easier to set up independent (private) schools in Norway.
  • Reforms of higher education include a new degree structure, a results-based funding system, and new acts on state universities and colleges. A new financial support scheme will be introduced for higher education in the autumn of 2002 in which grants will partially depend on completion of the course in question.
  • The hospital reform concentrates sectoral responsibility, funding responsibility and ownership in State hands.
  • In the period 2002-2005 the Norwegian Armed Forces will establish a new forces structure that will substantially improve operational ability within a tighter funding provision.
  • The police reform entails a significant reduction in the number of police districts with a view to achieving better service provision for the public and greater cost-effectiveness.
  • The courts reform will reduce the number of court districts and courts of first instance.
  • The Public Roads Administration's production operation is to be converted into a public corporation, and all Public Roads Administration contracts will be opened to competition.