Speech/statement | Date: 29/05/2013
In his speech the Prime Minister focused on the OECD’s preparation of an action plan against aggressive tax planning. He challenged OECD countries to further enhance international cooperation in this field.
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Secretary-General, distinguished ministers, ladies and gentlemen,
It is a pleasure to see all of you here at the OECD Ministerial Council Meeting and the OECD Forum.
I would like to thank the Secretary-General and his staff for organising this event.
Thank you also to the vice-chairs, Australia and Estonia.
The cooperation between us has been excellent.
In a world where national economies every year are becoming
more closely interlinked,
and more dependent on each other,
good policy making is impossible without comparable statistics and sound economic analysis.
Good decisions require good information.
For decades the OECD has played a crucial role in producing indicators, peer reviews and analyses of economic performance.
Today, in a world that is more complex than ever, your work is more important than ever.
Therefore, I want to start by thanking all of you at the OECD for the good and important work you do.
The OECD has always played a leading role in discussions on economic issues.
By doing so, you have had a significant influence on policy making.
Let me give you one example.
Today, most people agree that if we are to succeed in combating climate change, we need an international price on carbon.
But this has not always been the case.
I remember well the time I represented Norway – then as State Secretary for the Environment – at an OECD meeting here in Paris in 1990.
The OECD Secretariat had proposed the idea of carbon pricing.
Most countries viewed this as an interesting idea in theory, but as unrealistic in the real world.
Today, 23 years later, nearly all OECD countries have established carbon pricing systems.
Another strength of the OECD is that you are engaged in a broad range of policy areas.
In addition to pure economic analysis, you play a leading role in areas like environment, health and education policy.
For example, the PISA study has become a benchmark for education systems worldwide.
Sometimes, however, the statistics you produce are not what politicians want to hear.
I remember that I was not very happy about the PISA study at first.
Now, however, when Norway’s performance has improved, I find the PISA study very relevant.
Now, my view is that the PISA provides very convincing evidence of my Government’s successful education policy.
Ladies and gentlemen,
Today, five years after the crisis hit, growth in the global economy remains weak.
We are facing a deep and enduring economic crisis – a jobs crisis.
According to the ILO, 200 million people are unemployed in the world today.
And long-term unemployment has reached alarming levels in several countries.
Yes, it is true, stock markets have improved lately.
But this crisis is not over until the unemployment has come down.
Labour is without doubt our most valuable economic resource.
It is the most important asset of any nation.
We simply cannot afford to waste it.
Youth unemployment is a particular concern to me.
Today, 17 per cent of young people in OECD countries are unemployed.
That is twice the general rate.
And those who are working are often trapped in low-quality jobs or have only temporary contracts.
So many skills and so much young talent untapped. The long-term impact of this will be grave.
Once a high level of unemployment is established, it is very difficult to bring it down.
Unemployment erodes skills and human capital.
The longer you are unemployed, the less attractive you are in the labour market.
That is why the growing rates of long-term unemployment are of such great concern.
Also, we should keep in mind that the labour market is an important arena for social interaction.
Without a job many people lose self-esteem and dignity.
Long term unemployment and social exclusion may also give rise to social and political instability.
Therefore, I repeat, this crisis is not over until the unemployment has come down.
International co-operation is more important than ever.
Since one country’s exports are another country’s imports, we cannot all export our way out of the crisis.
When all countries cut spending at the same time, growth is undermined everywhere.
The result may be that it becomes even more difficult to reach fiscal targets.
In saying this, I am well aware that some countries simply do not have a choice.
They have to consolidate their public finances, even during a time of recession.
However, others should not tighten their belts
because excessive budget cuts in an economic downturn can easily reduce economic growth,
deepen the job crisis and make it even more difficult to address medium and long-term fiscal challenges.
Let me point to three areas that I believe are essential for solving the long term fiscal challenges.
- Tax reform
- Pension reform and
- Improved labour markets
Tax policy has always been a key issue to the OECD.
The aim has been to ensure a level playing field for companies based in different countries and prevent double taxation.
In recent years, however, the discussion has taken another turn.
Now, the international community is increasingly concerned with preventing double non-taxation.
By aggressive tax planning, international corporations can avoid paying their fair share of taxes.
This is not acceptable.
With public finances under strain in many countries, people have to endure higher taxes and poorer public services.
We cannot then accept that international corporations do not contribute at all.
We should all be concerned about the erosion of national tax bases.
The OECD project Base Erosion and Profit Shifting - which you will discuss later today - is therefore very important.
This project will help the international community address aggressive tax planning. It will require broad international cooperation.
But the good news is that stopping tax evasion and limiting the use of tax havens is a win-win situation.
It expands the tax base,
it increases tax revenues,
and it allows us to reduce tax rates.
Therefore, we should all strengthen our national efforts to plug tax holes in our respective national tax codes.
Also, we should strengthen our international efforts through international tax treaties.
Through a Nordic project, Norway has in recent years signed bilateral information exchange agreements with 40 states on the OECDs list of 43 so called tax havens.
In addition, we should continue to keep the fight against tax avoidance a top priority in all relevant international fora.
I am happy that EU, as well as the G8 and the G20 have made tax avoidance a top priority.
I also call on the OECD to keep tax reform and the fight against tax evasion on top of its agenda.
Of equal importance is the issue of pension reform.
The population in most OECD countries is aging.
Fortunately life expectancy is increasing.
Unfortunately birth rates are decreasing.
The result is an increased dependency ratio.
If not addressed, pension obligations will put public finances under further strain in the years ahead.
Pension reforms that encourage longer working lives should therefore be high on the political agenda.
Another way of reducing unemployment is through active labour market policies.
For instance, programmes that help people keep their skills up-to-date are important.
I therefore welcome the OECD’s Skills Strategy.
Norway will be the first country to develop a strategy under this initiative.
My experience is that close cooperation between the government and strong social partners is a great advantage for the labour market.
It reduces the risk of conflict, and it ensures a stable framework for business and workers.
Jobs, equality and trust – are the themes of our meeting today.
It used to be the standard view that countries had to choose between economic growth and income equality.
I think that this approach is too simplistic.
Actually, the Nordic experience is the opposite.
The Nordic countries have high growth combined with high degree of income equality.
One reason for this is women’s participation in the labour market.
In my country the labour participation rate for women has risen from below 50 per cent in the early 1970s to almost 80 per cent today.
This has contributed greatly not only to economic growth, but also to gender equality and overall national wellbeing.
Thus, investments in day care for children and parental leave, may also be good investments that secure high employment.
Gender equality, universal education and health care contribute both to equality and economic growth.
I also believe that an active climate policy could go hand-in-hand with economic growth.
We must not put ourselves in a situation in which we have to choose between the environment and the economy.
I’m convinced that it is possible to reconcile the two.
My view is - and I know this is also the view of the OECD – that the key is carbon pricing.
By putting a price on carbon,
we make it profitable to reduce emissions,
and to develop climate friendly technologies.
I hope OECD will continue to keep climate high on its agenda.
Because to solve this complex, long term and global problem;
we need your insight,
your sharp analysis,
and your evidence based approach.
Ladies and gentlemen,
The global economy is at a critical juncture.
Short-term risks are somewhat lower than they were a year ago, but the long-term challenges remain largely unchanged.
To steer our economies out of these troubled waters – while at the same time dealing with the threat of climate change –
we need to cooperate,
we need to exchange views and experiences,
and we need sound analyses - even if we do not always like the results of the analyses we get.
In short: we need a strong OECD.
I believe that the 2013 Ministerial Council Meeting presents a great opportunity to take our cooperation forward.
Thank you for your attention.