The Government?s measures to meet the decline in the cod catch
The Government’s measures to offset the impact of the adverse effects of the temporary cut in the cod catch quota can at this stage only be outlined in general terms.
For this reason, a part of the decisions that now are being presented has not been allocated or timed and will become clearer in the course of the fisheries year (1 September 2007 - 31 August 2008) as the impact of the cut in the cod catch emerges more clearly.
As these proposals now being presented were prepared, the Regional Development Institute consulted with the economic development associations in the regions around the country as well as with a large number of fishing boat operators. These consultations led to conclusions that can be summarised as follows:
- It is not seen as likely that massive unemployment will emerge over the next several months, either amongst fishermen or workers in fish processing ashore.
- Many companies will wait until next year to see how matters develop. Companies will try to avoid layoffs as long as possible.
- It may be expected that boats will become idle earlier and longer during this fisheries year than has been the case in the past and that fish processing plants will also shut down earlier and longer than in previous years.
The Government’s measures that are intended to offset the impact of a temporary cut in the catch quota are divided into projects that are designed to have a direct effect right away and various measures that will improve the lot of coastal communities in the longer run. The measures are aimed at individuals, companies and local governments.
Concerning individuals, the intention is to resort to short-term measures that will seek to create jobs immediately as it becomes evident that layoffs emerge. Such measures will be directed towards infrastructure, such as roads and harbours and telecommunications. A special effort will be made to improve the maintenance of public buildings and a project will be initiated to computerise public records. A large number of education opportunities will be offered that will enable people to improve their possibilities in the continuously changing employment market.
Concerning companies, measures will be taken to make it possible for the Regional Development Institute to help companies in the fisheries sector that seek its assistance. Discussions will also be initiated with commercial banks and other financial firms on ways and means for their participation in this effort concerning the present business of companies in the fisheries sector with commercial banks and also the possible work of financial firms that can be carried out in the regions. The room for manoeuvre for fisheries companies to keep their employees on their payroll will be increased by restoring the maximum number of compensation days from 45 to 60 and the longest continuous period from 20 days to 30.
Some local government may in the short run incur a revenue loss if employment and economic activity declines. This will consist of lost local income tax revenue at a time when expenditure can not be cut in line with revenue loss. The harbour funds of local governments will lose revenue due to reduced activity during the cut, although fluctuations in the catch of other species could in part mitigate the impact. This will be met with appropriations from the Treasury.
The Government intends to allocate 6.5 billion krónur for these measures over the next three years. These funds will be allocated to new projects intended to strengthen economic activity in the regions, increase education and improve the conditions of those individuals that lose their jobs, help meet the adversity of companies and support local governments that face a revenue loss.
In addition, public investment projects amounting to four billion krónur under the public communications programme will be moved forward. They will be carried out in the years 2008-2010 instead of subsequent years as had been originally intended.
The sum of new projects and those public investments being moved forward in time will amount to 11 billion krónur. Although there is nothing that can replace 60 thousand tonnes of cod, the Government will with these measures respond vigorously to offset the adverse impact of the decline in the fish catch.
Close to 2.5 billion krónur will be appropriated in the 2007 supplementary fiscal budget for these projects, a further 2.4 billion in 2008 and 1.7 billion in 2009. This includes a special appropriation in line with proposals of the Committee for the West fjords. The acceleration of public communications projects consists of an appropriation of 2.1 billion in 2008 and 2 billion in 2009. In addition, the buildup of the telecommunications system around the country will be accelerated.
The Government’s measures to meet the cut in the fish catch are temporary, since it is hoped that a decline in fishing effort will help the fish stock recover in coming years so that the fish catch may be increased within a few years. Many of the projects that now will be established will be temporary whilst the economy responds and finds new ways to create jobs in other areas. Other tasks will continue after the period of the Government’s measures ends.
Ministry of Finance
New Release no. 17 on 12 September 2007