Pekkarinen open to overhaul of corporate subsidies

The Research Institute of the Finnish Economy (ETLA) sparked an intense public debate on corporate subsidies last month when it calculated that companies in Finland get about EUR 2 billion a year in various types of public support.
      In its analysis, ETLA criticised the system as inefficient, and proposed that it be trimmed to half the present level in the next Parliamentary term.
     
After ETLA released its analysis, calls for cutting back on the myriad of grants to Finnish corporations has become a rallying call for politicians calling for spending cuts.
      Minister of Economic Affairs Mauri Pekkarinen (Centre Party) criticised the quality of the debate on subsidies, noting that it is difficult even for prestigious debaters and media to know if those taking part in the debate are talking about the same things.
      As an example Pekkarinen mentions a speech made by Nokia Chairman of the Board Jorma Ollila before the Confederation of Finnish Industry (EK) calling for cutting back on corporate subsidies.
      “We don’t want the ministry to finance something that the business world itself does not want”, Pekkarinen says.
     
Pekkarinen is amazed that many leading figures in EK and the Federation of Finnish Technology Industries have expressed disagreement with ETLA, an organisation that they support financially.
      “I want to hear if business organisations really want to reduce TEKES (TEKES - the Finnish Funding Agency for Technology and Innovation) financing for large companies. I am ready to act!” Pekkarinen says.
      The subsidies can be examined already during this government term if the need arises. Pekkarinen appointed a working group in December to examine corporate subsidies. The group’s report is expected to be ready at the end of January.
     
The most influential of the member organisations of EK, the Federation of Finnish Technology Industries, said last Thursday that the Ministry of Employment and the Economy should turn the governing boards of TEKES, and Finnish Industry Investment Ltd. into management group types of bodies, and to appoint a single common board for all three institutions.
      Pekkarinen disagrees with the proposal.
      “If the same board were to make decisions, mistakes would easily multiply, and independence could be compromised”, Pekkarinen explains.
     
The Federation of Finnish Technology Industries also says that such a board should include representatives from the business world, and not just civil servants.
      Pekkarinen says that this demand has already been met to a sensible degree. Prompted by a study by Professor Vesa Puttonen, Pekkarinen named a negotiating team in the autumn to improve the coordination of innovations. Half of the members of the team are from the business world.
      Pekkarinen does not believe that it would be sensible to relinquish any greater decision-making power from civil servants or politicians to business.
     
There has been much criticism from the business community according to which the current support system offers an excessive number of grants of insufficient size, arguing that fewer grants involving larger amounts would be more effective.
      Pekkarinen disagres. He points out that although Finnish grants to companies are slightly below the EU average when calculated as a percentage of GDP, they are at about the same level as those in the rest of the EU when calculated on a per-project basis.
     


Links:
  Finnish Industry Investment Ltd
  Tekes – the Finnish Funding Agency for Technology and Innovation
  Finnvera
  Confederation of Finnish Industry (EK)
  Research Institute of the Finnish Economy (ETLA)
  Federation of Finnish Technology Industries