The 3 Big Objectives of Present Government

The present Finnish government has three important objectives for the coming years – they are the following:

Carbon neutral by 2035

Achieve 75% employment rate over 4 years

RDI investment increased to 4% of GDP

These are nothing if not ambitious objectives and it is funny that the opposition opposes them even though they were on top of their priorities before the election.

The present government is not rushing into quick fixes. It has set up many special committees to consider how best to implement the measures below to achieve these objectives. It is quite probable that this government will have problems achieving these objectives because we are entering a period when economic growth is not as robust as last year. 

However being carbon neutral by 2035 is not only binding on this government, but on future governments into the distant future. 

Achieving a 75% employment rate over the next four years is possible so long as the maternity leave is shortened for women and length and for fathers, and if more proactive employment policies are achieved by the government including activating employment of older folk who are currently under employed because employers today for tax reasons appear to favour younger candidates. 

Achieving RDI investment increases up to 4% of GDP should not be too difficult for any government to achieve.

Let’s look at these objectives in more detail.  

Carbon neutral by 2035 – This objective is the toughest one because it means that many very expensive measures are required by both the public and private sectors. Not only do they want to be carbon neutral by 2035, but they also want to be carbon negative thereafter.

This will be executed by accelerating emission reduction efforts and strengthening carbon sinks. 

The role of the Climate Panel as a scientific and independent expert body will be strengthened. 

Finland will also continue Nordic co-operation on climate and energy to achieve carbon neutrality and strengthen joint leadership in international climate policy.

The following summary list of measures have been set by the government – the first 3 are significantly relevant for Climate Change, while the remaining 5 are less important:

Zero emissions for electricity and heat production by 2030’s

      1. Comprehensive reform of energy taxation.
      2. Coal, peat and oil to be phased out by the early 2030’s.
      3. Significant increases in renewable electricity production like wind power & nuclear power.
      4. Investments in bio-economy, circular economy, clean technologies, energy efficiency, zero emission power generation, energy storage solutions, carbon capture & recovery.
      5. Developing the Nordic energy system integration and EU joint research.

Increase Carbon Sink

Carbon sinks and stocks will be strengthened in the short and long term by measures in the Land Use Climate Program that include:

      1. Care of forests, growth and health.
      2. Means for reducing emissions from wetlands and peatlands.
      3. Reducing agricultural land emissions and strengthening carbon sequestration.

Reduce the carbon footprint of housing, construction and transport

    1. Introduce grants to improve energy efficiency schemes for housing.
    2. Support for electric vehicle charging infrastructure.
    3. Increase training in the construction sector to improve energy efficiency skills.
    4. Promote large-scale renovation and energy efficiency projects for whole towns and cities.
    5. Implementing roadmap for low carbon construction and material recycling like wood construction.

Halting the loss of biodiversity 

Strengthening Finland’s role as a pioneer in the circular economy

Climate friendly food policy

Improve the environmental protection of mines

Improve animal welfare

The second and third objectives are closely inter-related – Achieving 75% employment rate & RDI investment to become 4% of GDP, both by 2023.

The government understands that SMEs are responsible for around 60% of growth and employment. They are also concerned that there are too many small companies, which do not grow and export. 

Thus the following policies are being implemented:

  1. Concentrate on getting small SME’s to grow and export…
  2. Ensure that SME’s are fully utilising government’s  support.
  3. Increasing training and education for entrepreneurs.
  1. Increasing RDI expenditure – that’s the 4% of GDP target…  
  2. The government supports cities as they develop start-up campuses – Helsinki, Espoo and Oulu being the main cities.
  3. Introducing tax changes that will stimulate employment and secure ownership.
  4. Various ministries will responsible for writing a major strategic paper on how SMEs can be helped to develop more quickly. The paper should be ready by the beginning of 2020 and it will be made in cooperation with the other main ministries and other stakeholders.

A senior civil servant in the Ministry of Finance, Martti Hetemäki, has written and interesting paper proposing measures to increase investments, and thereby employment. In his report he refers to a ECB’s regular Survey on the Access to Finance of SME’s  in the euro area − October 2018 to March 2019 and he concludes, like the Survey, that finance is not a bottleneck. However, most small startups and small firms just do not have time for surveys, recruiting people, or calling the bank because they know that nothing will be available! Money is not at all available from banks and even angel investors and VC’s are cautious. Such firms live on a knife’s edge. The only way money can be secured is by good luck or by having an investor who has deep pockets and a flare for getting new investors on board!

The above was also noted recently by the CEO of ETLA, one of Finland’s employer’s think tanks. He took issue with the present government by claiming that they are focusing too much on small firms that generally do not grow much. He reviewed statistics showing that the average number of people employed in Finnish SMEs is actually becoming smaller and that is a cause for concern. There appears to be too many small SME’s here compared to the USA, where the average size of SMEs has been growing. Furthermore, he was of the opinion that the biggest problems faced by SMEs is not finance, or higher operating costs, but a lack of labour. He is probably repeating the results of the ECB survey, which should probably be treated with a large pinch of salt. However he did mention that there are too many risk-adverse owners in the SME sector that also creates a bottleneck for growth. He went on to propose that the new government should focus more on supporting growing SMEs that have more than one person working there. He also made the point that wage support payments from the government should only be granted for new employees taken on by the private sector. He saw no lasting value in increasing the size of the public sector through such a policy.

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