19 May 2009 Prime Minister's Office

Government Coalition Platform of the Social Democratic Alliance and Left-Green Movement

This is a translation – in case of any discrepancies, the Icelandic original prevails.

The government coalition of the Social Democratic Alliance and the Left-Green Movement has been formed to ensure economic and social stability, and to seek national unity on Iceland's path to reconstruction – a new stability pact.

The positive co-operation of the two parties in the previous coalition has formed the basis for the new government. In just over 80 days, a foundation has been laid enabling the country to shift from retreat to advance in most areas of endeavour, despite the exceptionally difficult circumstances which prevail in Iceland and in the global economy.

In the national elections just concluded, a majority of voters gave social democratic and left-wing parties a clear mandate to continue, and to prioritise new values of equality, social justice, solidarity, sustainable development, gender equality, moral reform and democracy in Iceland. The new government, guided by these values, aims at creating a Nordic welfare society in Iceland, where collective interests take precedence over particular interests. Foremost among its tasks is to revive confidence in the domestic community and rebuild Iceland's international reputation.

The coalition will promote open government, increased transparency and democratic reform. It will make every effort to foster in Iceland an open and creative environment, comparable to the best in neighbouring European countries in both economic terms and in the quality of life. In this regard we look especially to our Nordic sister nations.

As the economic recession continues throughout the world, the situation could clearly deteriorate further still before the tide turns. It is equally evident that the nation's economy will not automatically get back on track – to achieve this society needs to work together to resolve the problem. Everyone must make a contribution, and in proportion to his or her capacity. This government will not pass on the problem to those members of the community who are least well off, nor place the burden on the shoulders of our children by postponing action. Every effort will be made to protect low-income earners and those who are most vulnerable, and to distribute the burden fairly, equitably and justly.

If the government's economic and fiscal plans are successfully implemented, there is a good possibility of acceptable economic growth, low inflation, a stable currency and lower unemployment by the end of its term. In parallel to this reconstruction, it is important to devote a concerted effort, at all levels of society, toward laying the foundation for renewed economic advance and a better society, one which will rank among the best in creating value, prosperity, welfare and real quality of life.

The government formed by the Social Democratic Alliance and Left-Green Movement intends to be a Nordic welfare government in the truest sense of the word.

Economic Issues

In economic affairs, the primary tasks are to regain fiscal balance, rebuild the financial system, reach a national consensus on key objectives and wide-reaching economic measures, and negotiate a settlement with neighbouring countries following the collapse of the Icelandic financial system. These tasks need to be accomplished to bring the economy and industry out of the current economic trough, create macroeconomic stability once more and instil confidence in Iceland once more in the international community. It is also important to conclude as soon as possible agreements on deposit guarantees with neighbouring countries as soon as possible and the settlement between the old and new banks. These matters are a prerequisite for Iceland once more gaining access to foreign credit markets.

The cornerstones of the government's economic policy are a credible economic programme and four-year fiscal strategy which aims at balancing the budget within an acceptable period, together with co-operation with the social partners on a new stability pact.

To ensure the effective implementation of the government's economic measures and to restore confidence in the country's financial system, the government will undertake administrative restructuring, including the establishment of special Ministry of Business and the Economy. The Monetary Policy Committee of the Central Bank of Iceland will be asked to review the advantages and disadvantages of altering monetary policy, assessing Iceland's currency options and making proposals to the government based on this assessment. Furthermore, the Central Bank of Iceland will be requested to assess the optimal means of reducing the use of inflation indexation in the Icelandic economy.

In order to restore trust in the financial system, both domestically and abroad, the Financial Supervisory Authority (FME) needs to be reinforced, given more authority to enforce its objections and recommendations, and both FME and other regulatory bodies need broader authorisation to make their suggestions public. Rules need to be adopted to restrain banks' credit growth and oblige them to increase reserves during economic upswings. Stricter rules are needed on large credit exposures and loans to related parties. Definitive limits need to be set to prevent the renewed development of incentive remuneration in financial institutions encouraging high appetite for risk.

The Prime Minister will also have a survey prepared of the status and development of key indicators on economic and social issues, to define more clearly the problems to be dealt with and future options, for instance, in fiscal matters, currency issues, business and industry, housing, gender equality, regional policy, law enforcement and other important social areas. Expert organisations and academic specialists and researchers will be involved in this task. An assessment of this sort will provide an important baseline for measuring the success achieved in the next few years against the background and developments of recent years.

The government will make every effort to ensure energetic and effective investigation of economic crime and that the conclusions of both this investigation and the outcome of the parliamentary investigation committee will be followed up without compromise. Accurate and comprehensive information on the situation, together with a just and honest reassessment of the materialist values which led to the collapse, are a key premise for restoring social cohesion to build society for the future.

Difficult economic environment

The global economic situation has clearly deteriorated further since the autumn. Forecasts for growth this year and in 2010 have been cut back repeatedly as the months have passed. According to a recent IMF forecast, output in industrialised countries will contract by close to 4% this year and remain stagnant in 2010. These figures are roughly in line with new forecasts from the EU, our main trading partner, which predicts a similar contraction in 2009 and an additional slight contraction in 2010. Global GDP is expected to shrink for the first time since the end of World War II. There is no doubt that the highly unfavourable economic climate will to some extent aggravate the recession in Iceland and delay the country's economic recovery. This is already visible in the price development of and demand for Icelandic main exports.

Broad consensus on the goal of stability

The most urgent tasks facing the government on the economic front in the coming 100 days concern fiscal policy, banking issues and resolving corporate and household debt problems. The premises for further rapid decrease in interest rates need to be ensured and a focused effort directed at relaxing currency controls. The objective is to lay the foundation for economic growth as early as next year. Each of these tasks reinforces the others and they are interconnected in various ways. A credible fiscal policy is necessary to support the banking system, shore up the ISK exchange rate and provide the basis for normal FX trading.

Furthermore, the government will lay out a clear policy on ownership, defining the state's long-term emphases regarding its bank ownership and how it intends to implement them. The aim is to provide an informed, transparent and solid foundation for public involvement in business and industry. The strategy will state, for instance, intentions concerning bank ownership, possible participation of foreign creditors and a vision of the banks' broad shareholder base in the longer term. It will also provide for the advertisement of the positions of bank heads and for the expertise of senior management. Care must also be taken to ensure that the takeover of individual companies by state banks does not jeopardise competition. It must be ensured that their disposal will be carried out through a professional and transparent process.

The government welcomes the initiative shown by the social partners and public employees' associations in consulting and co-operating with state and local authorities to achieve a stability pact. The government regards it as an economic management priority to achieve broad consensus on a strategic plan for the economy, wages and social issues based on the foundation which has already been laid through the joint efforts of the above parties.

The government declares its willingness to discuss the key objectives laid out in the above collaboration and to direct its efforts toward securing a broad consensus, which can serve as a basis on which to construct new economic and social stability in Iceland. This includes reaching agreement on:

a plan to create the conditions for relaxation of currency controls and a rapid lowering of interest rates;
favourable operating conditions for businesses, in order to safeguard jobs and create the premises for their increase once more;
fiscal objectives, in accordance with the joint programme agreed by the government and IMF;
defending the welfare system as far as possible.

Clearly, the above objectives cannot be achieved without a co-ordinated effort to achieve strong and steady economic growth. For this to be possible, it is necessary to:

boost confidence and trust in Icelandic business and industry;
stimulate domestic investment in industry;
encourage foreign direct investment;
restore normal credit relationships with foreign banks.

Fiscal measures

The key to the reconstruction of the Icelandic economy lies in wide-reaching fiscal measures, aimed at meeting the major income shortfall in Treasury finances resulting from to the economic collapse and high debt which it has brought.

Fiscal policy must be applied to preserve basic welfare services and boost income equality, while at the same time meeting the Treasury's commitments and contributing as far as possible to combating unemployment and stimulating domestic industry throughout Iceland.

Options to increase state revenues will be examined in collaboration with stakeholders and having regard to the experience of other countries which have struggled with similar problems. It is essential to ensure that increased taxation affects primarily those who are in a better position to bear an increased burden without, however, limiting people's ability to work their way out of the difficulties ahead. Focused efforts will continue the work already begun by the coalition parties directed at preventing tax evasion.

The first fiscal policy steps will be taken immediately. Another priority of the new government in fiscal policy will be the preparation of a medium-term budget strategy for the next four years. This strategy will set the framework for the task ahead, both in cutting public spending and increasing revenue. The aim is to balance the state budget by 2013. The strategy will ensure essential social services and its target for the budget period is to have state primary expenditure, i.e. expenses net of interest income, as a proportion of GDP not exceed the level of recent years, despite the sharp drop in GDP. The tax burden is expected to be similar to or lower during the budget period than it has been in recent years and will be adapted to the treasury's expenditure level in stages. A programme to achieve fiscal balance will be announced publicly in early summer and then discussed, for instance, with the social partners.

Changes will be made to the preparation of the budget and its follow-up. Supervision of budget allocations will be reinforced in order to prevent expenditure exceeding authorisations.

A fiscal project management group will be established, led by a ministerial committee, to co-ordinate cost-cutting actions and set priorities for public services, in consultation with service providers and representatives of public service users.

In determining the framework for expenditure for the next four years, decisions will be based on this prioritisation and emphasis placed on consensus on urgent welfare tasks, job protection, gender equality and regional impact. Gender budgeting will be a key concern in budget preparation and economic policy.

All decisions, in each expert field, must be based on best practice and consultation had with both experts and consumers in cost-containment measures.

Decisions on cutbacks or merger of institutions must always be based on risk assessment, taking into consideration the risk of increasing long-term expense.

Performance assessment in the public services will be reinforced to facilitate decisions on prioritisation.

No across-the-board cuts will be applied but instead focused decisions taken on economising and cost-efficiency measures.

New objectives will be adopted on public procurement to increase savings and cost-efficiency.

A major economy campaign will be launched in the entire public service, involving employees, management and public service users. A cost-containment team will be set up to work with all ministries and their respective public institutions on economising measures, both within individual institutions and by restructuring tasks among institutions and transecting the lines of ministerial responsibility.

The utmost economy will be practiced in all state activities, remuneration for committee work will be reduced or eliminated, restrictions placed on external consultancy services purchased and a policy adopted of having no public sector salary higher than that of the Prime Minister. Co-ordinated rules will be adopted for all ministries concerning cutbacks in travel, hospitality and vehicle expenditure. Clear rules on wage policy and expenditure will be set for independent limited companies owned by the state.

The government's objective is to adapt state operations to the completely altered economic landscape. Previous measures in the direction of market operation and privatisation of public tasks and services will be revised if this could result in lower cost. Treasury expenditure resulting from various agreements concluded by the state, e.g. concerning real estate, will be reviewed and reassessed in view of the situation. Efforts will be made to reduce the cost to industry and local government resulting from supervision and various regulatory provisions.

Resolution of corporate debt problems

A bill on an asset management company will be submitted once more to the summer session of the Althingi. In addition, the government will request that the state banks draft a harmonised programme in response to corporate debt problems. Its objectives shall be to offer corporate debt resolution which is prompt, fair, transparent and cost-effective, and complies with internationally recognised practice. The guiding principle in corporate debt resolution is that the banks themselves should look after handling these issues. Emphasis should be placed in the first instance on resolving difficulties of companies other than holding companies to reduce the negative impact on the real economy and minimise unemployment. The government's aim is to have options for all SMEs to be available no later than by the end of September.

Household debt and payment difficulties

The deep economic contraction following the banks' collapse has created a mismatch between the debt burden and payment capacity of many Icelandic households. The mismatch has to be corrected by reducing the payment burden of those worst situated until economic value creation begins to rise once more. The government's objective is to prevent temporary payment difficulties from resulting in default and bankruptcy, for instance, by raising and modifying mortgage interest rebates and rent rebates. Ensuring families and individuals are secure in their homes is a key concern. Payment smoothing which is applied to both indexed and foreign-denominated loans makes it possible to adjust the payment burden to lower income. New legislation on payment modification, passed by the most recent session of the Althingi, makes debt relief possible where clearly the debtor's obligations and payments will exceed his or her resources in the longer term. Finally, freezing of payments offered to households by credit institutions enables them to respond to acute problems resulting from abrupt loss of income. The above remedies must be followed up diligently.

A special campaign will be launched to inform the public of the remedies already available to households in difficulties.
The Domestic Debt Advisory Service (Icel. Ráðgjafarstofa heimilanna) will be further reinforced if necessary to eliminate waiting lists for consultation and assistance in restructuring debts of households and individuals facing payment difficulties. Care will be taken specifically to ensure access by residents of non-urban areas to its services.
The situation of households and their capacity to make payments after expenses will be continuously reassessed, together with necessary actions to help households in difficulties.
An overall assessment of the need for further actions and proposals to this effect will be made following an evaluation by the Central Bank of Iceland on household income and debt which is to be available in late May. Decisions and proposals on further actions will be made in consultation with the social partners.

Welfare – now and in the future

A healthy welfare system and the struggle against long-term unemployment are important prerequisites for successful social reconstruction. The most urgent task of welfare services and the guiding principle determining prioritisation under current circumstances is to protect the situation of children and their families, together with those persons who are most vulnerable in the community. The government regards it as top priority to ensure that the consequences of economic contraction do not threaten families and individuals with losing their homes. Welfare issues include an effective universal health care service, a strong social insurance system and secure housing.

To ensure better utilisation of funding for welfare services, remedies need to be systematically integrated between institutions and levels of government. Emphasis will be placed on the importance of consultation and co-operation between all parties involved in public welfare in Iceland, and the welfare monitoring group (Icel. velferðarvakt) will serve as a model in this respect.

Health care services will be reviewed with the formulation of an overall strategy. The aim is to reduce the cost of health care service and utilise funding rationally. This review must involve health care workers, patient organisations and experts to set up and achieve consensus on secure health care service throughout Iceland.

The objectives of all reform of health care services and the social insurance system should be equality, good access, quality, security and cost-efficiency.

The social consequences of unemployment and financial difficulties will be met with concerted co-operation and consultation between the state, local authorities, social partners and NGOs.

Social remedies will be applied to prevent long-term consequences of the recession. Emphasis will be placed on health promotion as a preventive measure against illness and a means of improving the quality of life.

Suitable health care services will be provided at the appropriate level, regardless of financial situation or residence.

The role of local authorities in providing welfare services for children, the handicapped, seniors and families will be expanded by transferring responsibilities from the state to local authorities.

Primary health care services throughout Iceland will be emphasised as the first stop in the health care system.

An action plan for children and youth will be implemented.

People will be assisted in living in their own homes as long as they wish to and are able to do so, for instance, by integrating in-home services and home nursing. The plan of action to provide new care facilities for the elderly will be put into practice.

A review of the social insurance system will be completed, with the objective of making it simpler and more equitable and preventing negative interaction and consequences. Efforts will be directed at merging institutions in the area of social insurance and occupational welfare into a single work and welfare institution. At the same time, a new structure will be considered for handicapped affairs and rehabilitation, taking ability and possibilities into consideration rather than merely diagnosis and impairment.

Increased emphasis will be placed on rehabilitation of persons receiving benefits to ensure their active participation, for instance, by implementing provisions of UN conventions on rights of disabled persons.

The possibilities offered by health tourism will be considered, with the aim of putting the expertise and energy of the Icelandic health care system to good advantage while at the same time reinforcing its foundations.

It is important to ensure that individuals and their families are not threatened with losing their homes..

New housing arrangements will be introduced to provide the public with housing security and options comparable to those in other Nordic countries. The objective is to offer people seeking a home options of home ownership, rental or co-operative housing, whether they are first-time buyers or at a later stage in life. Different forms of housing occupancy will be treated equally.

The Housing Financing Fund, non-profit organisations and NGOs providing housing on favourable terms will be protected.

The prevalence of indexation in credit will be reduced in tandem with an increase in the supply of non-indexed housing mortgages.

Education leads the way

Education, science and culture are important aspects of rebuilding Iceland. Creative and critical thinking, together with increased emphasis on democracy and human rights have an important place in the nation's education. One of the tasks of schools is to involve children and youth in active community participation. Emphasis needs to be placed on research funds, which are important for the advance of science and technology in Iceland. Cultural activities throughout the country, emphasising works by Icelanders, need to be fostered. A major aspect of strengthening education, science and culture is to ensure equal opportunity in education and focus on child and youth welfare.

Maintaining the nation's high educational level is very important. Universal basic education without charge is the key to long-term social equality and success as a nation.

Efforts will be made to ensure the welfare and well-being of children and youths in pre-schools and compulsory schools with effective co-operation between central and local governments, affirming the commitment to the ideology of inclusive education.

Support allowances upon which the Icelandic Students' Loan Fund bases its loans will be reviewed with the aim of increasing this in stages; the current guarantor system will be removed immediately at the summer Althingi session.

Extensive and varied adult education options must be ensured, including Icelandic language instruction for foreign nationals, and the unemployed encouraged to avail themselves of suitable additional studies.

Curriculum guides for all levels of education will be reformulated, in part, with the aim of boosting creative and critical thinking at all levels of education and raising democratic consciousness.

After the rapid growth of tertiary level education, a reassessment is needed of universities' structure and operations, possibilities for co-operation, infrastructure and financing, studies offered and increased distance learning options. It is important that this work be carried out through consultation between government and the academic community.

Competitive grant funding will be maintained and continuing energetic research efforts ensured in Iceland.

A long-term cultural strategy will be formulated in consultation with artists and others active in cultural affairs.
Work will be begun on implementing proposals concerning an Icelandic language strategy.

The government will work with stakeholders in preparation for recognising sign language during the electoral term. A decision will be taken as to how sign language will be recognised and what this implies.

Employment affairs

The principal task facing the government in employment issues will be to reduce unemployment through focused actions, eliminate long-term unemployment and create a stronger foundation for Icelandic business and industry in the future. Emphasis will be placed on diversified industry, stable and steady growth, innovation and sustainable resource utilisation both on land and sea.

The government has inherited a situation where unemployment is at an historical high and industry is hard pressed in the wake of the financial system's collapse. Without effective measures, thousands of Icelanders will be put out of action on the labour market for an extended period, with serious social consequences. It is important that people have opportunities to utilise their talent, expertise and ambition, and to put willing hands to work through a variety of labour market remedies and educational options. While taking action to increase jobs, it is important to preserve existing jobs. All actions must have regard for the different situation of the respective genders and varying regional impacts.

The government will promote the formulation of an overall industrial strategy for Iceland, based on equality of industrial sectors, gender equality, sound business practices and green industrial development, complying with the ideology of sustainable development. Furthermore, attention will be directed to the international competitiveness of Icelandic business and industry. The strategy will be drafted in formal co-operation between the state, local authorities, the social partners and the academic community.

Emergency action to combat unemployment

The government has already undertaken urgent action to constrain the growth of unemployment which will provide 6000 man-years in coming months and quarters. In addition, a variety of job creation programmes will be launched, including the following actions:

Remedies available to the Directorate of Labour and Innovation Centre Iceland (NMI) will be increased, enabling the hiring of registered unemployed workers temporarily with support from the Unemployment Insurance Fund. This could include contracts for on-the-job training, provisional employment, education as a labour-market action, vocational rehabilitation, start-up development, innovation work within companies and special projects of limited duration.
Public funding bodies and grant-making funds will contribute to job creation by having regard to job creation in allocating funding, without lowering professional requirements, however.
The environment for start-ups and innovative companies will be improved by amending taxation legislation to reward R&D. In addition, a temporary tax deduction will be made available for investment in start-ups and innovative companies.
State procurement, including ecological purchasing, will have regard, for instance, for efforts to support domestic undertakings and innovation.
Prioritising of state projects should be in favour of labour-intensive projects, such as maintenance of public buildings. Special attention will be directed at improving the accessibility of public buildings throughout Iceland. Ways will be sought to expedite the design process of public sector construction.
Public sector jobs will be safeguarded, not least in welfare services and educational institutions, and to this end actions taken to increase wage equality in state administration and in state corporations and institutions.
New employment opportunities will be created for young people, e.g. by bolstering the University Students' Innovation Fund and launching summer projects for upper secondary school students.
The state will seek the co-operation of local authorities, NGOs and the Directorate of Labour in creating more summer jobs on environmentally beneficial projects, such as land reclamation and development of tourist areas.
The rules of the Icelandic Students' Loan Fund will be altered to facilitate students who wish to begin studying and cease active job-seeking to obtain student loans.
Special emphasis will be placed on preventing long-term unemployment from becoming entrenched by applying a variety of remedies of the Directorate of Labour and encouraging re-education of job seekers.

A strategy for long-term advance

The government will arrange broad consultation under the direction of the Prime Minister's office pro-active plans to boost long-term employment and quality of life in all areas of Iceland. The objective is to elicit a joint future vision and integrate plans in transport, communications, tourism and regional development, together with programmes to expand local government responsibilities and various growth agreements, with plans for public works projects which are likely to be revised in the wake of the economic collapse.
The government wishes to encourage green industry, including projects where clean, renewable energy is utilised sustainably to create value and employment. Emphasis will be placed on mapping out Iceland's opportunities in environmentally clean industrial production and on encouraging investment through temporary incentives and favourable energy prices.
The government wishes to boost research, development and production of domestic, environmentally friendly fuel and increase the number of alternative energy outlets. The aim is to enable Iceland to lead the way in coming years in experiments and production of environmentally friendly energy sources, in part by supporting research and development and building up infrastructure.
The government will protect domestic agriculture and ensure the nation's food production and security, safeguarding jobs in the foodstuffs industry. Icelandic agriculture will be strengthened by emphasising full processing of food products and marketing efforts both domestically and abroad. Support for agriculture will be reviewed with an emphasis on facilitating the entry of new individuals in the sector. Producers scope for home production, product development and direct sale to consumer with origin labelling will be increased and utilised to advantage in the travel industry. A major campaign will be launched in organic faming and farmers ensured adaptation support if they transfer from traditional to organic production.
The support network for industrial development, research and innovation will be reinforced, for instance, by building up funding sources, industrial development companies and enterpreneurial efforts throughout Iceland.
Marketing in the travel industry will be strengthened, by merging promotion of the country under the umbrella of a new office; Promote Iceland. Emphasis will be placed on further developing tourist locations and year-round travel services. Support will be provided for increased R&D and innovation in the travel industry. Additional effort will be placed on developing and marketing cultural tourism services and Icelandic cuisine.
Iceland's possibilities in the field of health tourism will be utilised, by taking advantage of the country's unspoiled nature and healthy image to boost travel services involving spa treatment, health and fitness, rehabilitation and general lifestyle modification.
The operation and development of national parks will be expanded insofar as possible, including support for employment creation, for instance, in travel services in rural areas in parallel with nature protection.
A marketing campaign will be launched abroad to promote arts and culture, design and technology. Support will be provided for innovative projects.
Emphasis will be placed on recycling and reprocessing aimed at creating jobs and value.
Better energy utilisation will be encouraged, for instance, by developing industrial parks and factories, horticulture stations, recycling and other activities utilising the steam energy of sustainable geothermal plants.
Co-operation will be sought with the social partners in pro-active labour market actions to combat unemployment, which will evaluate, for instance, the advantages of a shorter work week and flexible retirement options for persons wishing to take advantage of such options.

Fisheries

The objective of the government's fisheries policy is to ensure cost-efficient fisheries in Icelandic waters which create value and jobs while also being sustainable and environmentally friendly, in compliance with international commitments to protect ecosystems, the biosphere and the seabed. Harvest rights shall be determined by a utilisation policy based on a catch rule in each case. Icelandic fisheries will play a key role in the economic recovery ahead. It is therefore extremely important to create the best possible operating environment for the sector, and in so doing reinforce its long-term operating basis, while at the same time seeking to resolve conflicts over fisheries management.

A national resource and human rights

A specific provision in the constitution will underline that the fishing stocks surrounding Iceland are the nation's common asset. Allocation of catch quotas is a provisional right of utilisation and under no circumstances creates a right of ownership or irrevocable control of quotas by individual parties.

Further action is required on the opinion from the UN Commission on Human Rights, for instance, by honouring freedom of employment and ensuring equality in allocation of utilisation rights and access to the common resource.

Urgent actions

Press for further processing of catch in Iceland, for instance, by examining a moderate export levy on fish and/or having unprocessed catch placed on a domestic market.
Limit transfer of catch quotas, increase fishing obligation and review movements of quotas between years.
Set up a resource fund which will handle the disposition of fishing rights owned by the nation. Profit on the fund's operation will go towards industrial development.
Protect inshore areas. Possibilities of increasing limits on fishing by high-capacity vessels in inshore areas and in fjords will be examined with the aim of preserving the inshore areas as the fishing grounds for smaller vessels and environmentally more favourable fishing.
Appoint consultative bodies of vessel operators and fishermen to advise on fishing and utilisation of marine resources and the condition of the marine biosphere.
Authorise unrestricted handline fishing by small boats during the summer months.

Review of fisheries management legislation
An overall review of the Act on Fisheries Management will be carried out with the aim of:

encouraging the protection of fishing stocks;
encouraging cost-efficient utilisation of marine resources;
preserving jobs;
reinforcing regional settlement;
resolving conflicts among Icelanders on ownership and utilisation of marine resources;
laying the basis for recalling and reallocating catch quotas over a 20-year period in accordance with the policy of both parties.

The review will be carried out in consultation with fisheries stakeholders, with the aim of having a programme for revocation and reallocation come into effect at the beginning of the fishing year commencing 1 September 2010. A working group will be appointed to work on this review and invite stakeholders and experts to participate.

Ecological fishing – research, etc.

In the government's opinion, it is urgent to enshrine ethical attitudes towards the ocean and marine resources, having regard for the fact that man is part of nature and must treat it with respect.
The contribution of fishermen and vessel operations must be utilised in marine research to increase data gathering and improve research projects in which they participate.
Education and instruction in fisheries will be mapped out with the aim of raising the educational level in the sector.
Icelanders reserve the right, now as before, to utilise marine resources in compliance with international commitments. The premises for catching and utilising marine mammals, seals and whales, will be reviewed thoroughly with regard for sustainability and economic significance for the economy as a whole, as well as for international commitments and Iceland's image.

Environment and resources

Common ownership of the nation's natural resources must be safeguarded. One of the cornerstones of the government's environmental policy is to utilise these resources sustainably. The constitution of the Republic of Iceland needs to be amended to provide the basis for long-term environmental protection. The government's environmental policy is based on the principles of environmental law, such as the precautionary principle and principle that the “polluter pays”, as defined in international conventions to which Iceland is a party. Environmental protection guided by sustainable social and economic development is the foundation upon which the government's new industrial and resource policy is based. In so doing, important steps will be taken towards a new, green economy which will provide even growth while ensuring that the resource base is not depleted.

Natural protection will be placed in the forefront and its status in government offices raised definitively. The Natural Protection Act will be reviewed, provisions on protection reinforced and the right of the public ensured. Special attention will be given to natural protection of coastal regions and protection of ocean areas.

The protected area of Þjórsárver will be enlarged and its legal protection concluded as soon as possible. A new nature protection programme until 2013 will be dealt with by the spring session of the Althingi.

The operation and expansion of national parks and protected areas will be reviewed, with the aim of merging their administration, improving their situation and supporting creation of diversified employment throughout Iceland.

The possibility will be examined of levying environmental fees connected to travel services, which would be earmarked for development of national parks and other popular protected travellers' destinations and of the travel industry.

The EU Water Framework Directive will be transposed and adapted to Icelandic conditions with a new bill of freshwater legislation, ensuring the protection and sustainable utilisation of freshwater and defining access to water as a basic human right.

An action plan on reducing greenhouse gas emissions by 50-75% by 2050, including specific dated and quantified benchmarks, will be completed no later than by the spring of 2010. The plan will place special emphasis in reducing emissions from transport and fishing vessels.

Quotas for greenhouse gas emissions will be priced and trading in quotas enabled.

A new Planning and Building Act will be submitted to the Althingi after consultation with local authorities. It will provide a national planning strategy, formulated in co-operation between the state and local authorities, and viewing the country as a single entity.

Emphasis will be placed on laying down a policy for biodiversity and protection of species habitats, with the aim of ensuring protection of ecosystem biodiversity on land, in freshwater and in the sea.

The European Landscape Convention will be adopted with the aim of protecting whole landscapes and untouched wildernesses.

Acts and regulations on waste disposal and recycling will be reviewed, having regard for the needs of the public and the environment, to achieve the objective of reducing ground fill and increasing recycling.

A plan for sustainable transportation will be prepared, in co-operation with local authorities, aimed at reducing the need for private automobiles. Such a strategy will materially boost public transportation throughout Iceland and make it easier for people to travel by foot or bicycle. Public transportation will become a natural part of transportation plans.

The transposition of the Aarhus Convention into Icelandic law will be expedited and the required legislative amendments presented to the 2009 autumn session of the Althingi.

Public and corporate education on ecological purchasing, environmentally labelled products and the value of sustainable consumption will be increased, with the aim of ensuring the state's newly adopted ecological procurement policy will take root in society as a whole.

Genetically modified foodstuffs must be labelled clearly so that consumers are aware of their contents when buying.

A comprehensive energy strategy will be formulated, aimed at having renewable energy sources replace imported energy. A precautionary and protective approach will be followed in hydroelectric and geothermal energy production. The energy strategy will support diversified industry, emphasising the development of ecologically beneficial high-tech industry. The energy strategy will aim at sustainable utilisation, avoiding for instance aggressive utilisation of geothermal areas.

Iceland will fulfil its climate commitments and submit an ambitious climate programme to the UN Climate Change Conference in Copenhagen in December 2009.

An energy conservation plan for both commercial enterprises and households will be prepared.

Strong emphasis is placed on finalising the Master Plan for Utilisation of Renewable Energy Resources as soon as possible and presenting it to the Althingi this coming winter so that it will acquire the status of an official document. No further decisions will be taken concerning power development on the lower reaches of the River Þjórsá until the Master Plan is available.

Transparency in agreements for energy sale will be promoted and ways sought to remove secrecy surrounding energy prices to foreign industrial corporations. The aim will be equitable pricing of electricity for different industrial sectors.

Democracy and human rights

The coalition will promote open government, increased transparency and democratic reform. Increased emphasis will be placed on human rights education and gender equality.

A code of ethics will be adopted for the government and public administration. Legislation on political party finances will be reviewed and revised in the light of experience.
A bill of legislation on a constitutional congress – a national assembly – will be submitted to the spring session of the Althingi. Elections to the assembly will take place no later than in tandem with municipal elections in 2010. In preparation for this gathering and during the period preceding the elections, extensive debate will be promoted in society on the principal issues of contention and subjects of the constitutional review.
A bill will be presented to the Althingi providing for the selection of individual candidates on party lists in elections, and local authorities consulted on how this should be implemented in connection with the upcoming municipal elections.
Efforts will be made to strengthen the Althingi, for instance, with a review of provisions in the Act on Parliamentary Procedure on its supervisory role, and work underway on reviewing legislation on ministerial responsibility and the Court of Impeachment.
Legislation on appointment of judges to the Supreme Court and District Courts will be reviewed.
General legislation on referenda will be adopted.
Comprehensive legislation on mass media will be adopted to ensure editorial independence and journalists' rights.
Local authorities will be strengthened by transferring tasks from central to local government in handicapped and senior citizens' affairs and health care services. Rules on relations between central and local government will be enshrined in law to promote disciplined and formal communication. Consultation between the state and local authorities on economic matters will be increased. A revenue review committee will be established to draft proposals on extending and reinforcing local government revenue sources. Proposals will be prepared to reinforce democracy at local government level in co-operation with local authorities and residents in all areas of Iceland. In addition, provisions on the composition of a code of ethics at local government level will be adopted.
Changes to the Elections Act will be prepared, aimed at equalising the weighting of votes and responding to recommendations made by the Organisation for Security and Co-operation in Europe concerning elections.
The Information Act will be reviewed, and access by the public and the media to information will be increased.
Human Rights Conventions signed and ratified by Iceland will be transposed into Icelandic law and a programme in human rights matters drafted following Nordic models. Education in human rights will be increased at all levels of education.
Equal rights issues will be given increased attention within public administration. The Centre for Gender Equality will be expanded and its independence increased.
Responsibility for equal rights will be transferred to the Prime Minister's Office. Women's influence in the country's recovery will be ensured. The government will therefore make every effort to promote gender equality at all levels of society, instituting specific measures to this end if necessary. Furthermore, gender perspectives will guide job creation efforts, in order that they can benefit both men and women from varied backgrounds.
The government will take action to eliminate gender-linked wage inequality in co-operation with interest groups and the social partners. The preparation of equal rights standards will be completed during the electoral term and the work of ministerial equal rights officers expanded. Proposals from Equal Rights Monitoring (Icel. jafnréttisvakt) will be acted on.
The government will take action to eliminated gender-linked violence, for instance, by enshrining the Austrian method of violence prevention in legislation, so that perpetrators of violence are removed from their homes, and striptease prohibited. The action programme to combat people trafficking, gender-linked violence and domestic violence will be implemented. Special attention will be devoted to preventive measures and a response plan for rising domestic violence in parallel to the economic downturn.
A single marriage act will be adopted. An effort will be made to improve the legal situation of transsexuals in accordance with recommendations from the Althingi Ombudsman.
Major emphasis will be placed on ensuring the rights and participation of people of foreign origin and asylum legislation reviewed. New legislation will be adopted on immigration.

Foreign affairs and European issues

The government emphasises an independent Icelandic foreign policy. The major changes which have taken place in recent years in foreign affairs and security, which now include trade, politics and environmental issues, call for a new vision and new approach to foreign policy. The government wishes to make every effort to have the international community: promote global security by new means; encourage new regulations concerning financial markets and anti-corruption actions; conclude a new climate change convention; to ensure that international law is applied to Arctic issues; and agree on necessary and equitable actions to combat the global recession.

Nordic co-operation will continue to be one of the cornerstones of Icelandic foreign policy, but emphasis will also be placed on European issues, Arctic co-operation and sustainable resource utilisation, and international co-operation through the UN and its agencies. Among the main tasks of the foreign service in coming years will be to repair Iceland's international reputation, rebuild the image of the country and nation based emphasising our expertise, culture and human capital, and support marketing efforts by Icelandic companies abroad.
The government emphasises working for human rights and gender equality, peace and disarmament and combating poverty, social injustice, inequality and famine, for instance, with focused foreign aid. Iceland's contribution to international peacekeeping efforts will be primarily in the area of reconciliation, development of civil institutions, gender equality and humanitarian aid.

Efforts will continue, based on new legislation, in development co-operation and action plans in broad co-operation with NGOs and the academic community. Icelanders must show ambition in formulating policy for development aid and utilise their expertise in realistic projects in developing countries.
The government will support the adoption of a new international climate convention in Copenhagen and do its part to export Iceland's expertise and experience in the field of renewable energy.

Arctic co-operation will be given priority; issues in this region need to be resolved on the basis of existing international agreements, through international institutions and regional co-operation. Emphasis will be placed on protecting the sensitive biosphere of the region, on sustainable resource utilisation and increased co-operation with Nordic countries on preparedness against environmental threats and accidents in Arctic waters and search and rescue.

Work will continue on formulating a security policy for Iceland based on the country's own risk assessment in close co-operation with neighbouring nations and other allied states. The Icelandic Defence Agency will be reviewed, together with air space surveillance, having regard to the emphases in a risk assessment report for Iceland. Efforts will be based on a comprehensive concept of security, emphasising collective international security.

Emphasis will be placed on establishing political links with the Palestine Authority and Iceland's support for Palestinian right to self-determination and an independent state, with continued support for the Coalition of Palestinian and Israeli Women for Peace.

Iceland will offer to serve as a venue for peace talks and discussion, including international conferences and meetings by scholars and political leaders on this subject.

A decision on Iceland's accession to the European Union will be in the hands of the Icelandic nation, which will vote on the accession treaty following the conclusion of accession negotiations. The Foreign Minister will present a parliamentary resolution to the spring session of the Althingi proposing an application for EU membership. Support for the eventual treaty once it is available will depend on various conditions concerning Iceland's interests in fisheries, agriculture, regional policy, currency matters, environmental and resource issues, and public service. Extensive consultation will be carried out both within the Althingi and with stakeholders on the objectives and the basis for negotiations. The parties agree to respect the differing emphasis in each party concerning EU membership and their right to express their opinions and campaign in the wider community in accordance with their positions, and make provisos concerning the outcome of the negotiations as was the case in Norway in a similar situation.

Iceland will be declared a nuclear weapon free zone and the Icelandic government will support nuclear disarmament internationally.

Administrative Reform

The government will make considerable administrative changes and improvements in order use the financial resources available in each instance to provide optimal public services to households and corporations. Broad consultations will be had with employees, the general public and stakeholders, in an attempt to create general understanding and consensus on the necessity of these changes. Following the economic collapse re-examination of prioritisation of public administration tasks is necessary.

In addition to reforms in industrial sector administration and innovation, resources and economic management, special emphasis is placed on improvements in the area of human rights and democracy, promoting best practice in public administration and bolstering confidence in government institutions among the general public.

To this end the number of ministries is to be reduced in stages from 12 to 9, new prioritisation introduced where necessary and the division of responsibilities altered, combining tasks so as to achieve the greatest synergies. Emphasis will be placed on preparing the ground well for the changes. Direction of this undertaking is in the hands of the PM.

The Prime Minister's Office will acquire an increased role directing, managing and co-ordinating, for instance, in directing the ministerial co-ordinating committee. Furthermore, a permanent forum for consultation between the government and the social partners and other key stakeholder groups will be established. The ministry will direct policy formulation in the area of administrative reform and development, democratic and administrative development, Iceland's competitiveness and gender equality. Furthermore, co-ordination of legislation within ministerial offices will be done under its leadership. In order to make the above changes more effective, the Ministry's operations will be restructured, firstly, to handle the reform projects and, secondly, to manage social developments.

A new Ministry of Business and Economy will be responsible for general economic management, the legislative framework and surveillance of financial markets, and assessment of economic developments and outlook. Furthermore, it will handle matters related to the framework of Icelandic business.

A new Ministry of Industry and Innovation will cover all industrial sectors (with the exclusion of the financial market and the public sector), together with innovation and development in these sectors. Decisions on utilisation of natural resources will be based on research and advice from the Ministry of the Environment and Natural Resources.

In addition to its current responsibilities, the new Ministry of the Environment and Natural Resources will be entrusted with a key role in research, resource utilisation strategy, advice on and protection of natural resources. Work on the Master Plan for Utilisation of Renewable Energy Resources will be transferred to this Ministry.

All management of state property, including state-owned farms and property in designated defence and security areas, which is currently spread among a number of ministries, will be transferred to the Ministry of Finance. In the Ministry of Finance increased emphasis will be placed on implementing and assessing the success of administrative reforms, in consultation with the Prime Minister's Office.

A new Ministry of Education and Culture will, in addition to its previous tasks, take over supervision of cultural institutions and tasks currently under the auspices of the Prime Minister's Office.

The role of the Ministry of Foreign Affairs in international trade and investment agreements will be expanded, and the Secretariat for Nordic Co-operation will be transferred to this Ministry.

A new Ministry for Local Government, Transport and Communications and Regional Policy will, in addition to its previous tasks, be entrusted with strengthening the local government level, for instance, in connection with the transfer of tasks from central to local government, as well as policy formulation in regional development.

A new Ministry of Human Rights and Justice will, in addition to its previous tasks, handle primarily issues concerning democratic and human rights, in addition to all aspects of general elections, which are currently spread over three ministries. Consumer affairs will also be transferred to this Ministry.

The Ministries of Health and Social Security will be unchanged, with the exception that the intention is to increase co-operation between the two ministries for tasks under their joint mandate. In-home nursing services and all nursing home services for seniors will be transferred to the Ministry of Social Security. Responsibility for seniors' and handicapped affairs are to be transferred to local authorities in tandem with the merger of Ministries.

Before the conclusion of the electoral term, legal arrangements will be made for merging the Ministry of Local Government, Transport and Communication with the Ministry of Human Rights and Justice to form an new Ministry of the Interior.