It is important, for example, to ensure that the budgeting margins are in fact handled so they can be used as intended. Notable progress has unquestionably been made in this field in recent years. This may be a problem in the ongoing discussion, which often seems to assume that consolidation is something that happens almost by itself. I do not believe that is so. The reason why everything has gone so well just in recent years seems to me to be that the crisis in the early 1990s is still in everyone’s minds and therefore makes a firm policy easier. Moreover, growth as well as inflation have been unexpectedly favourable for three to four years and this has consolidated budgets much sooner than had been foreseen. Looking ahead, the challenges are considerable. If the quality of publicly financed services such as school education and the health service is to be maintained at an acceptable level in the longer run, this will be rather costly. That is because productivity in activities of this type, be they produced publicly or privately, will not rise as quickly as in the production of goods. Moreover, Sweden has an ageing population. Together with any difficulties in sticking to a tax level that is internationally high, this would severely test the public finances.
Under these circumstances it will be exceedingly important to make a thorough scrutiny of the social security system’s design; this is a question that has been on something of a back burner, what with the crisis for stabilisation policy in the 1990s and the achievement of a more lasting solution to the issue of pensions. In such a discussion about social security systems that are effective and sustainable in the long term there is a place for the issue of cyclical stabilisation. Systems that are fully or partly funded, publicly or privately, can function well as stabilisers. Thus, it is mainly in this context that I would like to place the discussion that has taken place about various types of buffer fund. But the need to reform the social security system is primarily connected, not with stabilisation policy but with being able to guarantee a high quality of publicly financed services without raising the tax take. Measures for influencing the business cycle Finally there are the questions of whether a more active, discretionary fiscal policy would be advisable and whether, to function better in the future, it may need to be supported by new institutional arrangements. First, let me stress that, for reasons I mentioned earlier, I do not have much faith in fine tuning. Of course that does not rule out trying not to accentuate fluctuations as far as possible when measures are taken primarily for other reasons.