On petroleum and the cost of higher education

I came across this Google+ post by Pierre Bonhomme via a fellow FreeBSD user who is currently a researcher at the University of Oslo. The gist of it is that Norway is a land of milk and honey with free higher education for all and sundry, financed by our bottomless oil and gas reserves.

This is, in fact, a collection of mostly factual statements arranged in such a way as to lead the reader to incorrect conclusions in furtherance of the author’s agenda (opposition to the introduction / increase of tuition fees in Canada), buttressed by an impressive collection of links which the author fervently hopes the reader will not bother to follow, because they do not support his message.

Allow me to rebut a few of his points.

The Norwegian State does not own 80% of petroleum production. It owns 71% of an oil company (Statoil) which owns or operates 80% of Norwegian petroleum production as well as numerous oil and gas fields in over 40 countries worldwide, including oil shale deposits in Canada (sorry about that!). The State’s share of the dividends from Statoil amounts to less than $4 bn.¹

The claim that Norway receives “78% of taxes from state owned oil and gas corporations” is either a gross misunderstanding, clever misdirection or an outright lie. The Norwegian State levies a 78% tax on direct income from oil and gas production. These taxes, and the dividends from Statoil, are deposited in the Government Pension Fund of Norway, which invests in stock, bonds and real estate worldwide. The State is permitted to withdraw up to 4% of the fund’s value (a conservative estimate of its annual growth) to balance the budget. In 2013, it withdrew 3,3%. The projected number for 2014 is 2,9%.

The State budget of Norway for 2014 (no English translation, sorry) lists NOK 1,238 bn (~ $200 bn) in income and NOK 1,006 in expenses. The balance is the difference between the amount deposited into the Government Pension Fund and the amount withdrawn, and accounts for about 10% of expenses. The rest are covered by direct and indirect taxes (personal income and wealth tax, payroll tax, corporate tax, sales tax etc.) which represent 80% of the budget, and miscellaneous income (fines, administrative fees, dividends from non-petroleum stock, interest etc.) which make up the balance.

Norway has a high GDP—40% higher than Canada—but it also has a high cost of living. I strongly doubt that the median Norwegian household is significantly better off than the median Canadian household.

The idea that Norway provides free higher education because it is a rich country is simply untrue. It is, in fact, ridiculous. What may be hard to understand is that until the late 1960s, Norway was, for all intents and purposes, a third-world country, yet higher education has been free—to those who could afford time off for it—since its first University was founded in 1811.² The post-war democratization of higher education was achieved not by providing it for free, which it already was, but by providing affordable student loans.

The reason why higher education is free in Norway is quite simply that we consider it a good investment. This is a matter of priorities—no more, no less. Any industrialized country with a stable economy has the means to provide free higher education if it chooses to do so. Many European countries provide free higher education to their citizens and those of other EEA countries; Norway is unique only to the extent that it also provides it to non-EEA citizens.

And before you rush off to the nearest Royal Norwegian Consulate to apply for a student visa… There are quotas.


¹ Mine was about $2,000. Puts things in perspective. ² To the best of my knowledge. I was unable to find any document discussing the matter in any other terms than “this is the way it has always been”.

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