Homer Alaska - News

Story last updated at 6:46 PM on Wednesday, November 9, 2011

Norway trip generates ideas for Alaskans



By Michael Armstrong
Staff Writer


 

Photo by Tina Seaton

Larry Persily, left, federal coordinator for the Alaska Natural Gas Transportation Projects, and Rep. Paul Seaton, R-Homer, look at sculpture during the Norway Policy Tour this fall.

Looking back at the five-day Norway policy tour he took this fall, Rep. Paul Seaton, R-Homer, said while Norway has a different culture and political system, the Scandinavian oil-producing country has ideas it can share.

"I'm in no way saying we should change to the Norway model," he said. "If we can learn from the ways they've been successful, and if some of their ways incorporate into our way of doing things, we should learn from them."

Seaton was part of a 43-member delegation sponsored by the Institute of the North, the Anchorage nonprofit founded by former Gov. Wally Hickel to understand "the reality, richness and responsibility of the North."

Twelve legislators, including Seaton, met with Norwegian officials and experts to see what elements of its system of oil and gas development and taxation could be applicable in Alaska. From Aug. 27 to Sept. 4, the delegation visited Oslo, Stavanger and Tromsø as well as Hammerfest, a town about the same latitude as Barrow.

"In all of this we're not pushing any specific piece of legislation," said Institute of the North managing director Nils Andreassen. "We just want to inform people what we learned over there."

To learn about Norway's oil and gas economy, Seaton said he realized he had to understand Norway's history and culture.

"We went over there on a policy tour, but there were so many things we were looking at that weren't policy because they related to their philosophy and not ours," he said.

For example, Norway has a strong social welfare system, with universal health care, free education through graduate school and state-paid retirement. New mothers get a year of paid maternity leave and fathers three months of paid leave. Seaton said the delegation got a sense of that system when people tried to figure out what to tip waiters and waitresses.

"It turns out, you really don't tip," he said. "Tips aren't something that's a part of somebody's income stream."

A waitress might get $75,000 a year — a lot until you calculate a 25 percent value-added tax and 28 percent income tax rates with a 7.8 percent social security tax. Higher income brackets pay up to 50 percent.

Oslo also is the most expensive city in the world, Seaton said. Gas also runs $10 a gallon. That's another example of social equality, though. Seaton said gas prices are set the same for rural areas as they would be in urban areas.

Unlike the two-party political system in Alaska and the United States, Norway has seven main political parties, all of them what would be considered left of American parties. No one party has ever won a majority, so to elect a prime minister, parties have to form coalitions.

"It's much more of a consensus thing," Seaton said. "Your coalition won and you get to set the agenda."

In terms of oil and gas policy, the consensus Norway made was that "oil is not going to be there forever," Seaton said.

He said Norwegians asked, "For an economy, what is oil going to do for them, for the economy?"

One decision Norway made was to invest in oil service companies and become experts around the world, he said. Norway also decided to distribute petroleum jobs around the country. Rather than base companies in Oslo, the capital, it made the oil center in Stavanger.

"It's totally different from us," Seaton said. "Companies decide what's in their best interest. Norway has this other attitude of they're going to decide what's best in their societal interest."

Norway develops its oil and gas fields differently, Seaton said he learned. The government explores promising areas, does seismic testing and shares data with everyone. Companies bid to develop a field and get a 6-year contract, with a 2-year deadline to produce.

The marginal tax rate on direct production is 78 percent, with a corporate income tax of 28 percent.

"It's a high tax rate. That's what it is. 'You want to work with us or not?'" Seaton said is the Norwegian attitude. "It's a different attitude from 'How can we make this work for you?'"

Norwegians value a stable tax system as being important. Seaton noted that the same oil and gas companies working in Alaska also work in Norway.

One Norwegian idea that could work in Alaska is the state direct financial interest, or SDFI, concept, Seaton said. Under SDFI, the state becomes a partner at the table in an industry. Norway figured out that having about a 20 percent interest is a good compromise between having too much and too little interest. A SDFI would be similar to something like the Alaska Housing Finance Corp. or the Alaska Railroad.

In terms of culture, Seaton said Norwegians and Alaskans are both alike in some ways.

"The people were very friendly. Alaskans are very friendly," he said. "(Norwegians) really enjoy athletics. They really enjoy family. They are much more family time oriented than we are. When it's 5 o'clock, the doors close because it's family time."

That's something Vegard Unhjem, 17, of Isfjorden, Norway, said he agrees with. A Norwegian exchange student at Homer High School under the AFS program, Unhjem lives with Cynthia Morelli and Taro Safakura.

Socially, Norwegian homes are more family oriented, as seen in business attitudes, he said.

"That's the difference from Americans. Everything closes earlier compared to this," Unhjem said.

Norwegians also use public transport more, he noted. In his town of 3,000, he can take a bus across town or to ski resorts. A bus ride to a nearby town would be about $3. Teenagers can't get a driver's license until age 18.

"There's the big difference," Unhjem said. "In Norway, there are a lot of transports like the bus. You can take a bus every 50 minutes or so."

Seaton noted one thing that stood out in Norway.

"I've never seen as many bronze statues anywhere in my life. Honestly, there are statues everywhere," he said. "They're an art appreciation culture as well."

A report by the Institute of the North is available on its website at www.institutenorth.org/programs/arctic-advocacy-infrastructure/the-norway-model.

Future policy trips the Institute of the North might take include visits to Iceland and Greenland, Andreassen said.

Michael Armstrong can be reached at michael.armstrong@homernews.com.

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