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A birthday gift from us to ourselves

Matti Apunen | 16.6.2016

​​The figures make grim reading. The state will axe a total of 1.2 billion euros overall from education and research by 2019. That means a reduction of around 9 percent compared to last year.

At the same time, the state is sitting on a huge pile of money. Finland is not hopelessly poor, but joylessly stingy. The country treats its economy like a piggy bank, lacking imagination and over-rating the wisdom of doing nothing.

I am inclined to believe that the Finnish economy is a chronically ill patient, which can only improve its condition by getting onto its feet. But what would constitute an energetic, reasonably rapid solution with a dash of creativity?

You've probably guessed already. We need to look for it in those large piles of money.

"Let's put our balance sheets to work," says Prime Minister Juha Sipilä. This is absolutely right and this would be the time and place to do it.

The Finnish state has exceptionally large assets by international comparisons. In a recent report titled Lazy Giant, Hannu Leinonen, retired chief editor of the Finnish business publication Kauppalehti, estimated that the state could find 20 billion euros simply by privatising and selling off companies under its ownership.

There are many reasons why reducing state ownership would be desirable. It is crazy that the state is bearing the risks of individual companies instead of overseeing the market. Business risks should not be covered by taxpayers.

Even if we do not sell off all of our state-owned assets, the state could monetise around three billion euros of its holdings relatively painlessly. This would avoid the need to weaken its portfolio of strategic holdings.

My suggestion would be as follows: Build a new Sitra (the Finnish Innovation Fund) quickly. It could be a fund set up in honour of the forthcoming centenary of Finland's independence, whose proceeds would be directed at meeting the needs of research and higher education.

This would not add up to selling off the family silver, but a more strategic allocation of the proceeds from state holdings. If the commercialisation of research and innovation is as valuable as is claimed, why not give ourselves a hundred-year birthday gift in this form?

Creating such a fund would pose no political problems. Since universities form part of the fiscal accounts, it would not breach the EU rules on public finances: transferring assets only registers in this sense when they constitute an increase in expenditure.

The autonomy of universities and research institutions is illusory in part. They have decision-making power over their own affairs, but without better funding they are autonomous on paper only.

If the initial capital for the fund were around 2.5 billion euros and we assumed a return on that of around four percent, it would mean a 100 million euro shot in the arm for research. With this, we could buy equipment or know-how, state-of-the-art instrumentation for engineers, or world-class researchers to propel our universities forwards.

To ensure that the money does not sink into the bottomless pit of general expenses, it should only be disbursed in return for major structural reforms. Finnish universities are currently full-service supermarkets, with frequent overlaps in teaching and research based on inadequate resourcing.

Our universities will only succeed against the international competition if they are clearly divided into research and teaching universities – the latter are no less valuable than the former. In other words, what if we provided a EUR 100 million carrot to try out a clearer division of tasks – an arrangement which has borne fruit in the market economy over the last two or three hundred years? 


kolumni_EVA_Matti_Apunen_3_muok_160x190_pieni_henkilokuva.jpg

Matti Apunen
Director
Finnish Business and Policy Forum (EVA)​

 

 

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