Government decided on fourth supplementary budget proposal for 2015

In this year’s fourth supplementary budget proposal, negotiated by the Government on Monday, 26 October, the largest proposals for additional expenditure relate to expenditure arising from migration and to the housing allowance. The intention is to submit the supplementary proposal to Parliament on Thursday, 29 October.

Appropriation increases arising from migration

The Government proposes an increase totalling approximately EUR 94 million for expenditure arising from migration, owing to the higher number of asylum seekers and refugees as well as to certain revisions to estimates. The proposal is based on 30,000–35,000 asylum applicants this year.

A total of EUR 48.2 million is proposed for the reception of refugees and an additional EUR 13.1 million for support payable to reception service customers. An increase of EUR 23.1 million is proposed for compensation payable to private legal-aid counsel, due to an increase in the number of asylum seekers’ legal-aid cases as well as an increase in the amount of fees and legal expenses. In addition, an additional EUR 9.4 million is proposed for central government compensation to municipalities, due to a higher level than expected of compensation payable for the reception of refugees.

Other revisions to appropriations

An increase of EUR 0.9 million is proposed for Ministry of Defence operating expenditure to secure training flight hours for the Finnish Air Force’s Hornet fleet.

An additional EUR 3.2 million is proposed for Customs’ operating expenditure, owing to the bringing forward of the customs clearance information system modernisation and enhanced customs control in the Tornio area.

Payments to the European Union are reduced by EUR 150 million. This is due to the impact of EU supplementary budgets, an increase in the EU’s miscellaneous income and national accounts revisions.

In connection with the reform of universities of applied sciences, an appropriation increase of approximately EUR 39.5 is proposed to compensate universities of applied sciences for value-added tax expenditure on rents in 2014 and 2015 due to an amendment of Section 30 of the Value-Added Tax Act as well as for compensation of value-added tax expenditure on investment costs paid by private universities of applied sciences in 2014.

An additional EUR 3.4 million is proposed for compensation of crop damage in 2015. In addition, an increase of EUR 0.3 million is proposed for unavoidable expenditure arising from the disposal of dead production animals on farms.

The authorisation for the Ring Rail Line project is increased by EUR 5 million to EUR 514 million. The increase in the authorisation is due to maintenance costs arising from a delay in the project, new glycol leaks and unforeseen additional work and modifications. The authorisation for the Rauma fairway is increased by EUR 8 million to EUR 28 million. The increase is due mainly to dredging mass deposition solutions required in the granted water permit, which are significantly more expensive compared with the original plan.

An increase of  EUR 3.5 million is proposed for the Finnish Meteorological Institute for the acquisition of a new satellite reception antenna at the Sodankylä satellite service centre.

It is proposed that the Structural Fund item be reduced by EUR 60 million, due to the later start-up than expected of the 2014–2020 programme period and lower payments than expected in 2015 for projects of the 2007–2013 programme period.

An increase of EUR 15 million is proposed for basic daily allowance expenditure, and it is proposed that the central government’s share of labour market support expenditure be reduced by EUR 45 million. Changes result from an increase in the number of basic daily allowance recipients and a reduction in the number of labour market support recipients compared with earlier estimates. An additional EUR 80 million is proposed for the housing allowance appropriation. The need arises from a significant increase in the number of long-term unemployed as well as cost effects caused by the reform of the housing allowance system.

It is proposed that EUR 0.3 million be allocated for 2015 to funding earmarked for the preparation and implementation of the structural reform of social and health care services.

Diverging factors in revenue estimates

The estimate of actual revenue receipts is increased on a net basis by approximately EUR 33 million. The estimate of earned and capital income tax is lowered by EUR 135 million, mainly due to refunds of withholding tax of earlier years. The estimate of revenue received from the EU for rural development is lowered by EUR 116 million. The estimate of revenue recognised from Senate Properties is increased by EUR 160 million. The revenue estimate for loans payable back to the central government is increased by approximately EUR 103 million due to the premature repayment of an export refinancing loan.

Central government’s borrowing requirement declines slightly

Taking into account a net increase in revenue of approximately EUR 33 million and a net increase in appropriations of approximately EUR 2 million, the 2015 fourth supplementary budget proposal reduces the central government’s net borrowing requirement by approximately EUR 31 million. Central government net borrowing in 2015 is expected to be approximately EUR 5.2 billion. At the end of 2015, central government debt is expected to be approximately EUR 100 billion, which is around 49% in ratio to GDP.

Inquiries: Markus Lahtinen, Special Adviser to the Prime Minister (Economic Policy), tel. +358 295 160 404, Suvi Aherto, Special Adviser to the Minister of Finance, tel. +358 50 349 6121 and Juha Halttunen, Special Adviser to the Minister of Justice and Employment, tel. +358 50 574 0236