Modernising the Art of Governance
Nikolai Astrup on equipping the Norwegian government for the digital and climate revolution.
Even the best governance needs to be upgraded from time to time. For the past three years, as Minister of Digitalisation and then Minister of Local Government and Modernisation, Nikolai Astrup has been working to reform Norway’s near-universally admired system of government to equip it for new opportunities and some huge challenges in the decades ahead.
Speaking in his final hours in office before a new centre-left coalition government takes over, Astrup is understandably in a reflective mood. At 43, a star of the country’s centre-right, he can point to some huge advances in harnessing the IT revolution. Norway “now has one of the most digitised public sectors in the world,” he says. Yet, there remain thorny challenges, including further breaking down the efficiency-harming silos between ministries as well as between national and local governments so they can work together seamlessly, and making the transition to a post-carbon economy that, along with demographic shifts, will bring fiscal constraints that this oil and gas exporting nation has got used to largely living without.
This work of modernisation is being undertaken from a position of strength that would be the envy of governments in most of the world. Ranked 6th in the latest Chandler Good Government Index, Norway is one of several countries in its neighborhood that always seem near the top of the various best country rankings. The country’s tripartite model — built on a formalised process of openness, consultation and collaboration between government, business and trade unions — continues to enjoy a high level of public trust that stands out from the global trend of slumping trust in political and other leadership. The building of this public trust is aided immensely by the attitude of the politicians. As Astrup says: “Politicians in Norway are ordinary people. We walk in the streets with everybody else. We don’t hide. And we bring that perspective into our governance model.”
He believes that this was a model that worked at its best during the pandemic, which the country came through with relatively few deaths, high vaccination rates (and few anti-vaxxers), and a swift economic recovery. “Trust was built because we had the experts on the epidemic and the health officials and the politicians all standing side by side. Some countries had health experts giving one advice and then the politicians saying something else,” explains Astrup. “We scrutinised all the different vaccines and we actually said ‘no’ to the
AstraZeneca vaccine, which helped build trust in the remaining options.”
He adds that the government’s openness was crucial to building trust: “When we have information that they should have, we will give it to them. We gave the public a clear impression that we were not holding back.”
Embracing the Digital Revolution
This trust has also helped Norway embrace the digital revolution in government. As digitalisation minister, Astrup was convinced that “artificial intelligence, the Internet of things (IoT), and 5G constituted a perfect storm of opportunities,” making it possible to “go from sort of the gradual improvements that we’ve been having for decades, to radical innovation… to deliver services and do our business, both in government and in the private sector, in completely new ways.”
After consulting widely, issuing a white paper on innovation in the public sector and another on innovation in the data-driven economy, he started developing a national strategy on artificial intelligence (AI) that has led to the creation of an innovative ‘regulatory sandbox’ to experiment with policy on privacy and AI.
His signature initiative is a new strategy to digitise the public sector, with the goal of creating seamless digital services across all parts of government, national and local, focusing on seven key life events, from having a child to setting up and running a business.
To open a restaurant in Oslo, Astrup explains, you typically had to liaise with 16 to 17 different local and national government agencies, sending in applications and submitting essentially the same data many times.
Astrup says that with the new strategy “it feels like it is one actor you are liaising with; we only ask for the information once and then we have to share the data among us, on the government side, to make sure that this is a swift process.” He adds: “Similarly, some people may think that it only takes two people to have a child. But actually, we have about 60 different government, state, and private actors involved in the whole process of school and kindergarten, health care, etc. And making this whole process seamless is a huge project.”
This is only possible if different government bodies are willing — and can be trusted — to share data with each other which, while arguably less of a challenge in Norway than in many other countries, was by no means easy. “A lot of people will agree in theory that we don’t want these silos at all,” says Astrup. “But the reality often is the opposite, isn’t it?”
Astrup eventually got a mandate from the prime minister to work across silos, which has been crucial to advancing the digitalisation strategy for services related to the seven key life events. And he thinks similar cross-cutting coordination roles are needed to advance the work on innovation, sustainability, climate change and the UN Sustainable Development Goals for 2030, of which he was in charge of national follow-up, and will require collaboration not just across government silos, but also business, academia, and civil society.
Some 90% of Norwegian households now have access to high-speed internet. The government invested heavily in the technical infrastructure to enable this data sharing, the core of which is a hub whose name translates as ‘all in’, and is the platform for launching new innovations that provide seamless government services. One of Astrup’s favorite examples of what is now possible was the launch a couple of years ago of a digital driver’s license that was downloaded by 700,000 Norwegians (around one-fifth of the adult population) in the first 24 hours.
We’re a small country. So our view is that we need to make sure that both our regions and our municipalities have the ability to deliver services in accordance with the public’s expectations. And that sometimes means that you need to realise that you’re too small on your own, and cooperating with your neighbour will make you strong.
Astrup would like to see similar data sharing across European borders — “a coordinated European approach, not one giant system, but interoperability” — but is not especially optimistic. “Sadly, I think governments, including Norway’s, haven’t realised the full potential of data sharing.”
A Balancing Act
Another modernising challenge that remains a work in progress has been to strike the right balance between quality and presence in delivering public services. “You can’t have a hospital in every village if you want the hospital to be a good one,” says Astrup. A financing framework set by the national government that requires municipalities to adhere to best practice was not efficient enough, on its own. So, Norway has been merging its municipalities, reducing them from a total of 423 to 356. It also trimmed the number of regions from 19 to 11.
“We’re a small country, so our view is that we need to make sure that our regions and our municipalities have the ability to deliver services in accordance with the public’s expectations. And that sometimes means realising that you’re too small on your own, and cooperating with your neighbour will make you strong,” he explains, before conceding, “it’s not without controversy. And with the new government coming in, we might see a couple of the new regions split up again.”
Certainly, one big merger on the edge of Oslo was so unpopular that it probably contributed to the change of government in this year’s election, along with growing concerns about the country’s climate change strategy.
Riffing off the old joke that the stone age didn’t end because the world ran out of stones, Astrup says he has “no doubt that the oil age will end before the Norwegian continental shelf is empty.” There will be a transition to a post-carbon economy, he says, and “the Norwegian model is quite well-suited to make this long-term transition. We know that’s going to be necessary; we know that we need to speed up as well.”
Answering Climate Concerns
There are growing calls from climate activists, at home and abroad, for Norway to show leadership by rapidly reducing its production of oil and gas, starting by developing new fields. But for Astrup, that would be empty symbolism. Far better would be for other countries to follow Norway’s lead in regulating its domestic carbon use. “If every other country in the world set their carbon taxes as high as we have, then I think the problem will be largely resolved,” he argues. There are many other positive examples: Norway has the highest carbon taxes in the world, with (for an oil producing country) extremely high petrol prices. In September, 77%, of all new cars sold in Norway were electric cars. The industrial sector has reduced emissions by 40% since 1990. Astrup continues: “We have, by law, said that we’re going to cut our emissions by 90% to 95% in 2050. We are committed to the EU system where we are going to cut our emissions by 50% to 55% by 2030.” Add to that Norway’s active role in helping save the rainforests from deforestation and forest degradation.
“If Norway says we’re going to shut down our production tomorrow, which is 2% of the world’s production, there’s plenty of hydrocarbons in the world to replace it,” says Astrup, noting that the production processes of those alternative suppliers are more polluting than Norway’s.
If every other country in the world set their carbon taxes as high as we have, then I think the problem will be largely resolved.
Rather than unilaterally reduce its oil and gas production, Astrup contends that the better strategy is to persuade consuming countries to adopt policies that reduce the demand for carbon and invest in developing other cheaper renewable alternatives. “When the green option is the cheap option and the better option then, as we say, in Norway, as the snowball starts rolling, it won’t be stopped. It will grow bigger and bigger.”
Meanwhile he thinks, “we need to have a responsible transition, where we use the competence and expertise of our Norwegian oil industry in these new green areas. For instance, in offshore wind, the competence from the oil and gas sector is invaluable. It’s just priceless because we know how to do advanced operations offshore, in the deep sea or close to shore. So we are world leaders in that area.”
One of the key pillars of the Norwegian governance model is the sovereign wealth fund created to invest the proceeds of its oil and gas reserves for future generations, which is now the world’s biggest fund of its kind, looked to as a guidestar by many of the rest. The oil and gas sector is, of course, important to the Norwegian economy. As a country, Norway is “actually living off the proceeds of the sovereign wealth fund more than the oil itself,” Astrup notes, a trend that will surely continue as the transition from carbon accelerates.
“We already produce less oil than before on the Norwegian continental shelf. That has been mainly replaced by gas. But both for climate reasons and because the Norwegian shelf is mature, we will produce less oil and gas in the years to come.” That will have significant implications for an economy in which income per worker in the gas sector is much higher than the income in any other sector. “But because we have made a wise choice to not spend all the money, and instead put it aside, that will ease the transition from being an oil-based economy to having other work and jobs with more normal returns on capital.”
This shift will be made harder, however, by what Astrup recognises is a Europe-wide issue and not just a Norwegian one, “Our population is getting older. It’s happening in the rural areas faster than the rest of the country, but it’s going to happen across the whole country. It’s a good thing that people live long and happy lives but it does mean that tax income goes down, and that fewer people support more people in retirement. When you have the welfare system that we have in Norway, this will be an economic challenge for any government. And it will happen at the same time that revenue from the oil and gas sector goes down.”
Astrup thinks Norwegian politicians are not used to making tough choices when there are competing priorities, and that has to change. “It’s going to be interesting to see how they adapt to these new circumstances,” he concludes. For the time being, he returns to the parliamentary opposition, and steering Norway’s governance model through these challenges will be in the hands of the incoming government.
Nikolai Astrup has served as Norwegian Minister of International Development, Minister of Digitalisation, and Minister of Local Government and Modernisation. He has been a Member of Parliament since 2009, representing the Conservative Party, and is currently a Member of the Standing Committee on Energy and the Environment. He also served on the UN Secretary General’s High-Level Panel on Digital Cooperation.
Matthew Bishop is a journalist and practitioner who wrote some of the earliest articles about both philanthropy and impact investing in “The Economist”, where he spent 25 years as a writer and editor. He is the co-author of “Philanthrocapitalism: How Giving Can Save the World”, which Michael Bloomberg described as the “definitive guide to a new generation of philanthropists who understand innovation and risk-taking.”