Revision of government finance statistics

Published:

Revised data on general government revenue and expenditure is now available. The purpose and consequence is an extension of the scope of central and local government, and furthermore a reclassification of certain types of revenue and expenditure.

About every five years, the time series of the national accounts and government finances are revised. The previous revision from 2014, a consequence of changes in international standards, was carried out along with corresponding revisions in other European countries. The revision undertaken this year is rather limited and furthermore contingent on national circumstances rather than on international events. Many of the revisions incorporated comprise reclassifications of enterprises and units between the sectors that the national accounts divide the economy into.

Road toll

One important reclassification performed in the current revision pertains to the public toll road companies. Formerly, these units were classified as public corporations. Under previous practice the toll revenues collected from motorists were classified as owner’s withdrawals in the central and local government sectors.

The revision has moved all toll road companies into central government. Toll revenue is classified as fees, distributed between central and local government. Since the funds placed at the disposal of the public budgets by the toll road companies are partly loan-financed, the reclassification will lead to a downward revision of central government surplus. Furthermore, central government debt will be revised upward considerably. Be the close of 2017 the net debt of the toll road companies amounted to NOK 50 billion. This debt has now been added to the central government financial account.

Road construction

Through Public-Private Partnerships (PPPs), private corporations are charged with planning, development, operation and maintenance of infrastructure projects, which after an agreed-upon period will be transferred to the government.

In the period 2003-2009 three stretches of highway were developed through PPPs. Development of these projects was carried out by private companies. Operational responsibility stays with these companies until the structures are turned over to the central government after 25 years. All the while operational responsibility lies with them, these private corporations receive an annual payment from the central government. When these projects were first undertaken, they were not entered as fixed capital investments in central government books. Retroactive corrections have been made to revise central government road investments upward by approximately NOK 6 billion in the construction period. Surplus in the same period has been reduced correspondingly.

Administration companies in public transport

Regional public transportation is handled by the county municipalities. Some county municipalities have opted to establish administration companies to that end. The units plan, organize, and market the transportation service and handle ticket sales, but typically they do not own any of the carriers or the infrastructure. Operation, on the other hand, is handled by various operators. The current revision moves the administration companies from public corporations to local government. The corrections run back to 2002.

As a result of these corrections county municipalities that use administration companies are treated equally as county municipalities that provide public transportation without use of such companies. The corrections consequently revise sales revenue and expenditure in local government significantly upwards.

Reclassification of the television license fee

The national accounts do not classify the Norwegian Broadcasting Corporation (NRK) as belonging in central government, but rather as a public corporation, which forms part of the sector non-financial corporations. NRK’s license revenues are thus entered as working income in the business sector. The current revision does not move the Broadcasting Corporation from the business sector and into central government. However, as a consequence of international standards requiring uniform treatment of television license fees, the Norwegian license fee has now been rerouted through central government. License fees are now entered as tax revenue in central government, and an equivalent amount is entered as an expenditure transfer. This operation, all else equal, will thus leave central government surplus unchanged. The correction runs back to 1978.

Natural resources and economic rent

The extraordinary return yielded to the proprietor of a natural resource due to its properties of non-renewability and scarcity is termed economic rent. Petroleum deposits, waterfalls, minerals, frequencies, and real estate are examples of such resources. Through the imposition of various types of excise tax on the exploitation of natural resources, the central government has enabled itself to extract parts of the economic rent. The area fee levied on the petroleum sector on the continental shelf, license fees on the production of hydroelectric power, and auction proceeds in telecommunications are examples of such fees. The national accounts have bundled said fees together as a separate category under property income, a revenue item which also comprises interest and dividends on financial assets.

Other issues

Among other corrections made, the most important one is the revision of employers’ pension contributions in the governmental health enterprises. This revision corrects the entering practices in accordance with international standards for national accounts. The corrections lead to an upward revision of the pension contributions, and consequently, total compensation of employees, in the period 2002-2006. In the subsequent years, however, these figures are revised downward.