RPT-Conservative leader Solberg sweeps into power in Norwegian election
* Four centre-right groups take 96 seats vs 85 needed
* Solberg faces tricky coalition talks with populists
* Conservatives promise tax cuts, better health care
OSLO, Sept 10 (Reuters) - Norway's opposition Conservatives,
promising tax cuts and better healthcare, won elections in a
landslide on Monday but faced tough coalition talks with a
populist party that wants to spend more of the accumulated oil
riches and curb immigration.
Led by Erna Solberg, a former girl scout leader who has
overcome dyslexia, the Conservatives promise to diversify the
economy away from oil, privatise state firms, and reduce some of
the world's highest taxes rates to give the private sector more
breathing room.
Solberg, 52, will become Norway's second female prime
minister, as well as its first Conservative prime minister since
1990. At least the top two cabinet posts - and possibly the top
three - are likely to be filled by women.
"Today voters have given a historically strong victory for
the centre-right," said a tearful Solberg, nicknamed "Iron Erna"
for her tough stances when she served in cabinet between 2001
and 2005. "We will give this country a new government."
Norway has enjoyed rare economic success during the past
decade, escaping Europe's economic crisis with little more than
a scratch, as its booming offshore oil sector lifted per capita
GDP to $100,000 and a huge public sector insulated the economy.
But growth is now slowing, competitiveness is stagnating,
and the government's record on critical social services is
mixed. Voters have accused outgoing Prime Minister Jens
Stoltenberg of wasting a once-in-a-lifetime economic boom.
With 76 percent of the vote counted, the Conservatives, the
populist right-wing Progress Party and two centrist parties that
campaigned together to oust Stoltenberg were set to collect 96
seats in parliament, 11 more than needed for the majority.
Stoltenberg and his allies collected just 72 seats and the
prime minister announced he would step down after eight years
and two straight terms in office.
"I have waited for a long time to say this: Good bye Jens!"
Progress leader Siv Jensen screamed to cheering supporters. "We
will sit down and negotiate a common government platform."
MINORITY GOVERNMENT?
The trickiest task for Solberg, who will become prime
minister on her third attempt, will be to tame the
anti-immigration, anti-tax Progress party, which will enter
government for the first time.
Although Progress has toned down its rhetoric, it is seen by
some as too radical for government, and once had among its
members Anders Behring Breivik, who killed 77 people in 2011 in
a gun and bomb attack targeting Labour.
The small Christian Democrats and Liberals, one of whom will
be needed for a majority, are not keen on teaming up with
Progress, objecting to its policies on immigration and spending,
raising the prospect that Solberg may lead a minority cabinet.
"We will contribute to a change (of government)" Christian
Democrat party leader Knut Arild Hareide said. "We've been
guaranteeing that a change will take place, and we will keep
that promise," he said without committing to entering cabinet.
Norway has a long history of minority governments, which
tend to be stable, due at least in part to laws that do not
allow for early elections.
"The difference between the Progress Party and the centre
parties is big," Johannes Berg, a researcher at the Institute Of
Social Research said. "It is possible to make a government but
it will be very difficult.
"Progress wants to use more of the oil money than the other
parties, their immigration policy is much more strict than the
others, they want to tighten the foreign aid budget, which the
other parties are against," he said.
SPENDING
Bringing Progress into government could force Solberg to
make concessions on spending, taxes and perhaps even make a
symbolic gesture on immigration. But any shift is likely to be
mild, analysts said.
In immigration, Norway's hands are tied by international
treaties, which limit its room to manoeuvre. And the economy
desperately needs new workers as unemployment is under 3 percent
and a steady influx of workers keeps the labour market from
overheating.
But on spending, the next government will have big leeway,
as it levies a 78 percent tax on the oil sector, amassing huge
budget surpluses and a $750 billion oil fund worth more than 150
percent of GDP.
"The Conservative and Progress parties are in agreement
about lowering income tax and wealth tax as well as increasing
public sector fees in some areas," DNB, the country's biggest
bank, said. "At the same time they have very divergent views on
which cuts of taxes and duties should be given priority."
Danske Bank predicted that spending under the new government
would rise by up to 15 billion crowns ($2.5 billion) next year,
or 0.66 percent of the non-oil economy, a big increase but well
within the budget's means.
One of the major sticking points will be changes to the oil
fund as both parties want big changes but do not agree on the
specifics, with the Conservatives keen to get a broad consensus
on any reform to the fund.
Progress wants to break off three smaller funds from the
main fund and spend more of the oil money domestically, while
the Conservatives have mooted the idea of breaking the fund into
two competing funds and do not want to spend as much oil money
domestically as Progress.
The parties are likely to find more common ground on
privatisation as they argue the state has grown too big. Solberg
has said Norway should sell down some of its holding in Statoil
and telecoms group Telenor.
Solberg said her party will gather on Friday to appoint
official negotiators and the new cabinet will take office after
the outgoing government presents the 2014 budget on Oct. 14.
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