Government set to snub allies in budget negotiations

Deal with Venstre would mark second time this year the government turns to the opposition to pass key legislation

The government is deep into negotiations with opposition party Venstre (V) in its bid to secure support for the 2013 budget, financial daily Børsen reports.

The surprising collaboration hinges on the government accepting Venstre's demand that proposed social welfare reforms be a part of the budget. Both parties, according to Børsen, seem willing to accommodate each other’s demands.

John Dyrby Paulsen, the Socialdemokraterne (S) finance spokesperson, didn’t reject the notion of co-operating with Venstre, but he said that it may be difficult to agree to where the money saved should be spent.

“If the agreement leads to a social welfare reform within this parliamentary year, then it could be acceptable,” Paulsen told Børsen. “It sounds like a challenge, but let’s see how far we get at the negotiation table.”

Social welfare reform is, along with reforms of student benefits and state-funded sick pay, forecast to generate about 3 billion kroner and Venstre wants to use some of those funds to finance tax rollbacks on businesses, including removing the fat tax and maintaining the tax discount for Danes working abroad.

“It’s the goals that are the most essential aspect here. How we use the various financial elements is not as pertinent. Money has no colour,” Venstre finance spokesperson Peter Christensen told Børsen.

But if the government agrees with Venstre to keep the tax discount for Danes working abroad, they will be heading for political collision with their coalition partner, Socialistisk Folkeparti (SF), which has been pushing to slash it.

It the deal with Venstre were to go through, it would mark the second time this year the government snubbed its ally Enhedslisten (EL) to enter into an agreement with its main rival

The far-left Enhedslisten's disaffection with the government was ratcheted up a notch earlier this month when the prime minister, Helle Thorning-Schmidt (S), delivered an address to opening session of parliament earlier this month that appeared to underscore that it had little interest in increasing unemployment benefits.

Yesterday, Frank Aaen, the Enhedslisten finance spokesperson, said an agreement with Venstre would not get his party's vote and that the unemployment benefit issue would be an “ultimate demand” for the party. “If the government makes a deal like that with Venstre, they’ll have to get Venstre to vote for it, because we won’t,” Aaen told Børsen.

But today, Johanne Schmidt-Nielsen, the party's political spokesperson, softened that message, though her party has threatened to sobotage agreements in the past  if its demands to shore up unemployment benefits are not met.

“We must solve the unemployment benefit problem. I don’t think that’s such a massive demand. We have proposed a job guarantee, but it’s not an ultimate demand. We only demand that we find a solution. If the government has other ideas, they can present them,” Schmidt-Nielsen told public broadcaster DR.

The negotiations for next year’s budget commenced this evening as the finance minister, Bjarne Corydon (S), met with representatives from Venstre and Enhedslisten.