Government proposes amendments to 2024 budget proposal
On Thursday 23 November, the Government submitted its proposal to Parliament to amend the budget proposal for 2024. Among others, the proposal includes amendments related to support for Ukraine, the health and social services transfer calculation and central government transfers to local government. In line with the proposal, the revenue estimate will be increased by EUR 76 million, while the need for appropriations will decrease by EUR 48 million.
Support for Ukraine and reconstruction efforts
An increase of EUR 95.7 million is proposed to the maximum amount of the Defence Forces’ UKR 2023 materiel procurement authorisation for 2024–2028. The proposal will cover the cost of materiel replacements resulting from the 19th materiel package granted to Ukraine. The increase in appropriations in 2024 would total EUR 20.7 million. With the increase, the maximum amount of the procurement authorisation would be EUR 1.451 million.
In connection with drawing up Finland’s national reconstruction plan for Ukraine, funding solutions have been identified to facilitate the participation of Finnish businesses in the reconstruction efforts.
In this context, the Government proposes increasing Finnfund’s capital by EUR 25 million to be used for investments and loans targeted at Ukraine. At the same time, the Government proposes that the central government issue a loss compensation commitment under the Act on the Finnish Fund for Industrial Cooperation Ltd to cover 80 per cent of the value of investments, or a total of no more than EUR 20 million.
In addition, the Government proposes that Parliament give its consent for the Ministry of Economic Affairs and Employment to compensate Finnvera Plc for up to EUR 50 million in credit losses from export guarantees granted to promote exports and investments in Ukraine.
Reform of healthcare, social welfare and rescue services
The amount of funding to be transferred from municipalities to wellbeing services counties in connection with the healthcare, social welfare and rescue services reform has been revised to correspond to the costs of organising the transferred services based on the municipalities’ financial statements for 2022 and, with respect to tax revenue, based on data from the completed tax assessment for the tax year 2022. The need to reduce central government transfers calculated based on the final tax revenue data received in November differs considerably from the level anticipated when drawing up the budget proposal for 2024 and from what municipalities have been able to take into account in their budget preparations. The revisions made based on the tax data will not have an impact on the level of funding for wellbeing services counties.
The Government proposes easing the burden on local government finances in 2024. The retroactive reduction in central government transfers for 2023 would therefore be transferred to 2025–2027 instead of 2024 and 2025. In addition, a fixed-term increase of EUR 192 million would be made to the central government transfer for 2024, followed by a corresponding decrease of EUR 64 million per year in 2025–2027.
Investment programme included in the Government Programme
As part of the investment programme included in the Government Programme, an authorisation of EUR 22.0 million is proposed for planning the development of the Riihimäki–Tampere stretch of the main rail line. Appropriations related to this in 2024 will amount to EUR 0.5 EUR million.
In addition, EUR 1 million is proposed for a fixed-term project to develop Swedish-language services in the wellbeing services counties of East Uusimaa and West Uusimaa.
Amendments to savings measures and increases in appropriations outlined in the Government Programme
Some amendments are proposed to the package of adjustment measures for general government finances outlined in the Government Programme (Annex B to the Government Programme) due to revisions to the schedule for drafting legislative proposals. For example, the government proposal on the reception allowance will be submitted in spring 2024 at the earliest. For this reason, it is proposed that the resulting savings of EUR 13.4 million be removed from the Budget at this stage.
Estimates of the effects of amendments to the general housing allowance in 2024 have also been revised. It is therefore proposed that the appropriation for general housing allowance be increased by EUR 76 million. Correspondingly, a reduction of EUR 15.2 million is proposed for basic social assistance.
An increase of EUR 5 million in appropriations is proposed for raising the family provider increment to the study grants as part of the family package.
National co-financing of EU R&D projects
The Government proposes that the appropriation of EUR 35 million proposed in the budget proposal for 2024 for national co-financing of EU R&D projects for higher education institutions and government research institutes be transferred mainly to the operating expenditures of research institutes in different administrative branches and to central government funding for universities and universities of applied sciences. The transfer will correspond to the extent to which the organisations in question have received EU funding for R&D projects during the current framework programme period. The goal of the funding is to encourage research organisations to participate more extensively in EU R&D projects in the future.
EUR 5 million is proposed for capital investments in the Peace Fund established by CMI – Martti Ahtisaari Peace Foundation. The funding is based on a decision by the Finnish Innovation Fund Sitra to donate a total of EUR 10 million to the fund. In addition, EUR 0.45 million is proposed to cover the costs of the state funeral and grave memorial of former president Ahtisaari.
It is proposed that EUR 5 million be earmarked from the operating expenditure appropriation of the Prime Minister’s Office for the implementation of the Government Programme. A total of EUR 4.76 million would be transferred from the operating expenditure items of other ministries for this purpose.
An increase of EUR 1 million is proposed for the Ministry of the Interior’s grants to the City of Helsinki to increase the number of rescue trainees.
It is proposed that value-added tax expenditure in the administrative branch of the Ministry of Defence be reduced by approximately EUR 277 million following a revision of the annual allocation of value-added tax expenditure related to the procurement of multi-role fighter aircraft.
An increase of EUR 0.5 million is proposed for work to foster the legacy of veterans, to be allocated through a separate government grant decision of the Ministry of Defence.
An appropriation of EUR 0.9 million is proposed for making the data room a permanent unit and expanding its activities, for the operating expenses of Statistics Finland and the VATT Institute for Economic Research, and for Aalto University.
An increase of EUR 960,000 is proposed for the continued funding of environmental permits for shooting ranges to promote game management.
An additional appropriation of EUR 470,000 is proposed for organising language immersion and bilingual teaching.
In the ‘Lukulahja lapselle’ project, maternity and child health clinics donate a bag of books to every newborn baby. An appropriation of EUR 350,000 is proposed for these activities.
It is proposed that an additional appropriation of EUR 30,000 be allocated to supplementary pensions for athletes.
An increase of EUR 0.5 million is proposed to the government grant for 4H activities.
A budget authority of EUR 2 million is proposed for the production incentive for the audiovisual industry. In addition, the budget authority for RDI will be reallocated to the production incentive, which means that a total of EUR 12 million will be available in 2024. A budget authority of EUR 1.5 million is proposed for a new shipbuilding project under the umbrella of innovation support for shipbuilding. Business Finland’s RDI grant authorisation will be reduced by a corresponding amount so that state R&D funding in the 2024 Budget remains unchanged.
Revenue estimate to be increased by EUR 76 million
In total, the revenue estimate will be increased by EUR 76 million to EUR 76.4 billion. The Government proposes increasing the tax revenue estimate by EUR 44 million. An increase of EUR 113 million to the corporate tax revenue estimate is proposed due to the one-off tax impacts of the transfer of the Neste Corporation shares owned by Ilmastorahasto Oy (the Climate Fund) back to the State. A decrease of EUR 69 million in the estimate of transfer tax revenue is proposed due to amendments to the Transfer Tax Act.
Net government borrowing to decrease by EUR 124 million
The Government proposes reducing appropriations for 2024 by EUR 48 million to a total of EUR 87.8 billion. Taking into account the changes in appropriations and revenue estimates detailed above, the proposal will reduce net government borrowing by EUR 124 million. Net borrowing in 2024 is therefore expected to total around EUR 11.4 billion.
Inquiries: Mikko Martikkala, Special Adviser to the Prime Minister in Economic Affairs, tel. +358 295 16001, Jussi Lindgren, Special Adviser to the Minister of Finance in Economic Affairs, tel. +358 295 530 514, Laura Ollila, Special Adviser to the Minister of Education, tel. +358 295 330 130, Marjo Loponen, Special Adviser to the Minister of Agriculture and Forestry, tel. +358 50 308 5411