New Hospital, Helicopters, and Highland Cops: Iceland’s 2019 Budget

Yesterday the government released its proposed budget for next year. It includes spending increases and tax cuts. The treasury expects a budget surplus next year of 1% despite a 7% increase in public spending. It includes spending on health care, social services, housing, transportation, and policing.

The biggest single expenditure is funding for long-delayed and badly needed new Landspitali National University Hospital. The contracts for the first phase of construction were signed recently. The budget also includes spending on new retirement homes, and general healthcare.

The Coast Guard will receive funding for three new rescue helicopters to be delivered early next decade. There will be a 2,000 ISK increase in the monthly income tax discount, as well as a modest increase to the child tax credit. Meanwhile, the government awarded itself a 153 million ISK rise, in addition to a 21.6 million ISK inflation adjustment, for a total of 635 million ISK to Iceland’s government ministers and their assistants.

The University of Iceland will finally be able to build its Icelandic Cultural Centre, which has been a giant hole next to the National Library these past five years. The increase in the police budget is meant to deal with monitoring of tourist sights particularly in the highlands.

The budget did not go without immediate criticism. Solveig Anna Jónsdóttir, the newly elected leader of the Efling labour union, told RÚV the increase in tax discounts and child benefits do not keep up with changing wages. Efling represents many of the lowest earners in Iceland, most of whom are disproportionately of immigrant backgrounds. The Confederation of Employers fears the assumptions underlying the budget are too optimistic but did welcome the reduction in corporate social security contributions.

Finance Minister Bjarni Benediktsson said in a press conference that he believes the sale of state assets can make up for the slowing growth. There are plans to fully sell off Íslandsbanki and partially privatise Landsbankinn. He also mentioned the creation of a sovereign wealth fund, which would be funded by rents on natural resources.

The parliamentary opening was not without incident. Many noted the military-clad police at the site, a first in Icelandic history. There were also two groups of protesters: largely silent protesters demanding Parliament confront the drafting of a new constitution – one of the brighter hopes that followed the 2008 financial collapse of the country – and another, calling upon the government to bring Haukur Hilmarsson home. There were no reported arrests made.