General government revenue and expenditure, 2011

General government revenue totalled NOK 1 573 billion in 2011, up NOK 149 billion from the previous year. Total expenditure rose by NOK 61 billion to NOK 1 203 billion.

Central government revenue up NOK 140 billion

Central government revenue rose by NOK 140 billion from 2010 to 2011. The increase was mostly due to income relating to petroleum activities. Central government receives revenue from petroleum activities through taxes on income and wealth from the industry as well as on goods and services related to extraction of petroleum. They also receive profit income from Statoil ASA and SDFI (State's Direct Financial Interest). Taxes on income and wealth excluding extraction of petroleum and social security contributions also contributed to the rise in central government revenue.

Substantial growth in retirement pensions

Central government expenditure increased from NOK 897 billion in 2010 to NOK 953 billion in 2011. The increase was mostly due to increased grants to local government and substantial growth in payments of retirement pensions. Retirement pensions totalled NOK 152 billion in 2011; 11 per cent higher than in 2010.

The considerable increase in retirement pensions is mostly due to an increasing number of pensioners less than 67 years of age. As of 2011, it became possible to extract full or partial retirement pension from the national insurance scheme from the age of 62 years, and pension rights are accumulated up to and including the year a person turns 75 years. Flexible withdrawal from the national insurance scheme is constructed in such a manner that the annual pension received will be higher the later it is commenced. Retirement pension can also be combined with income from work without reduction. Figures from NAV State Register of Employers and Employees show that the percentage of the population between 62 and 66 years in employment increased in 2011 when compared to 2010. It therefore appears that many people would like to combine working part time and receiving retirement pensions. The Department of Employment estimates that approximately 25 000 persons under 67 years received retirement pensions in 2011.

With regard to disability pensions, the growth is low. For 2011, disability pensions constitute NOK 59 billion; about NOK 1 billion above the registered levels seen in 2010. After a couple of years with vast increases in payments of unemployment benefits after the financial crisis in 2008, the levels dropped by approximately NOK 1 billion from 2010 to 2011.

Reduced local government deficit

Figures for local government show a deficit of NOK 21.6 billion in 2011.

Total revenue is estimated at almost NOK 383 billion, representing a growth of about 8 per cent compared to 2010. Tax income has declined by about 2 per cent, which stems from recent changes in the income system for municipalities. The changes involve a lower tax rate at municipality level and higher current transfers from the central government, which have risen by about 15 per cent. There was also an increase in dividends received and withdrawals from the income of quasi-corporations.

Modest growth in local government expenditure

Total expenditure, the sum of expenses and net acquisition of non-financial assets, grew by approximately NOK 22.5 billion, and totalled NOK 405 billion in 2011. Wages and salaries represent more than one half of total expenditure and are estimated at NOK 208.5 billion in 2011 - a growth of around 7 per cent. The preliminary figures also suggest a modest increase in the use of goods and services.

Local government fixed capital formation has grown at a high rate in recent years, but in 2011 this growth stopped, with a small increase of about 2 per cent taking place.

Expenditure by function

Expenditure classified by function shows that social protection is the largest group of expenditure for central government, despite a modest decrease in 2011. The decrease stems from a part of the transfers to municipalities that previously were earmarked for kindergarten. These transfers have now been included in general transfers from central government, and are therefore reclassified from family and children to general public services. The latter was thus the function with the largest growth in 2011. For general government, these effects are not relevant as transfers between levels of government are eliminated.

With regard to local government expenditure by function, table 9 shows that expenditure for social protection is the largest function, and increased to NOK 111 billion. This includes expenses for the care of the elderly and children, which increased by around 8.5 per cent. Expenditure for education increased by 2.0 per cent.