200th anniversary of the Ministry of Finance
Finland obtained its own central administration in 1809. Rules of procedure were issued to the Governing Council in August 1809, which started operating in October of the same year. The Governing Council (from 1816 the Imperial Finnish Senate) consisted of two divisions: an Economic Division, which was in charge of civil administration and economic affairs of the country, and a Judicial Division, which functioned in the capacity of court of highest instance. Soon after independence, towards the end of 1918, the Economic Division of the Senate became Government, the administrative departments were converted into ministries while the Judicial Division of the Senate served as the supreme court.
The Economic Division of the Senate was divided into five administrative departments: chancery, treasury, financial affairs, military affairs and ecclesiastical affairs department. Three of these were responsible for the management of financial affairs. The department for financial affairs formulated the Budget and took decisions on budget expenditure within the perimeters of the budget. It was also in charge of affairs for trade and industry until they were delegated to the newly founded department for trade and industry in 1888. The treasury was responsible for overall supervision of tax levies and for auditing the state accounts. The treasury was discontinued in November 1917 and all its functions were transferred to the financial affairs department. The department for military affairs handled matters related to state finances too, being in charge of the financial affairs of soldiers who had served in the army during the time it was financed based on an allotment system, a system that was then terminated. The military affairs department was responsible for levying certain taxes, for bookkeeping and for assigning termination wages and pensions. The department was discontinued in 1841, when all its functions were transferred to the department for financial affairs.
The anniversary of the Ministry of Finance is also the bicentennial of Finland’s fiscal autonomy. In the Diet of Porvoo in 1809, the Emperor of Russia and Grand Duke of Finland Alexander I solemnly declared that all taxes levied in Finland would be used solely to meet the nation’s own needs. As an autonomous Grand Duchy, Finland’s position made it possible to build its own government structures and pursue its own policies. The autonomous economic structures paved the way for political independence.
Changes in the Ministry of Finance in 2013
The Ministry of Finance's management system was overhauled in 2013. As the most senior public servant in the Ministry of Finance, the Permanent Secretary is directly assisted in the management of the Ministry by the Permanent State Under-Secretary, the Director of Administrative Governance and Development and the Economic Policy Coordinator. At the same time, the economic policy management system was streamlined and leadership of administrative and HR policy and internal administration was centralised. The reorganisation included the establishment of the new post of Economic Policy Coordinator and the steering group structure was revised.
The Economic Policy Coordinator is tasked with assisting the Permanent Secretary by coordinating the preparation of issues related to the Economic Policy Cost Centre. He or she assists the Permanent Secretary by developing and coordinating matters within the remit of the Economics Department, the Budget Department and the Tax Department, all belonging to the Economic Policy Cost Centre. He or she also assists the Permanent Secretary in the preparation of matters related to tools for monitoring the stability of the central government finances, under the Department for Local Government and Regional Administration. In addition, the Economic Policy Coordinator directs the preparation of matters relating to non-Budget funds.
The remit of the Permanent State Under-Secretary was further specified with respect to the direction of international affairs. In particular, he or she assists the Permanent Secretary by leading and coordinating the preparation of matters within the scope of duties performed by the Financial Markets Department, the Secretariat for International Affairs and the Euro Crisis Group, and for consideration by the Economic and Financial Committee.
The Director of Administrative Governance and Development is responsible for the preparation of issues under the remit of the Personnel and Governance Policy Department, the Department for Local Government and Regional Administration and Public Sector ICT, and which fall within the Administrative Policy Cost Centre. He or she is also in charge of the preparation of joint financial, office and premises management issues belonging to the Budget Department. In addition, he or she develops and is in charge of administrative performance management and ownership steering, as well as internal operations, the internal organisation and HR policy within the Ministry. The Director of Administrative Governance and Development is also in charge of the performance management of agencies and institutes within the Ministry's administrative branch and directs the preparation of matters relating to affiliated companies and state enterprises. Communications have been transferred under Administrative Governance and Development. The Communications function is tasked with assisting senior staff and departments within the Ministry with internal and external communications, and coordinates and develops the Ministry's communications.
The steering groups belonging to the Ministry were reorganised in the summer. As the senior public servant in the Ministry of Finance, the Permanent Secretary is assisted by and directs a Coordinating Steering Group and a Public Servant Steering Group. Membership of the Coordinating Steering Group includes the Permanent State Under-Secretary, the Director of Administrative Governance and Development, the Economic Policy Coordinator and the Director of Communications. Membership of the Public Servant Steering Group includes the Permanent State Under-Secretary, the Director of Administrative Governance and Development, the Economic Policy Coordinator, the Director of Communications, the heads of departments and other public servants appointed by the Permanent Secretary in his or her capacity as the most senior public servant within the Ministry. The Permanent Secretary also appoints an Economic Policy and HR Policy Steering Group, an International Affairs Steering Group and an Administrative Sector Performance Management Group. As the most senior public servant within the Ministry, the Permanent Secretary chairs the Economic Policy Steering Group, with the help of the Economic Policy Coordinator, the Permanent State Under-Secretary chairs the International Affairs Steering Committee and the Director of Administrative Governance and Development chairs the HR Policy Steering Group and the Administrative Sector Performance Management Group.
In response to the emergence of the euro area crisis, in 2011 the Ministry of Finance established the temporary Euro Area Crisis Group, which answered directly to the Permanent State Under-Secretary in charge of international affairs. Since, from the viewpoint of the Ministry of Finance, issues related to the European economic crisis are of strategic importance and no end is in prospect for the need to prepare the related measures, at the end of 2013 permanent arrangements were made for managing the crisis by disbanding the interim Euro Area Crisis Group and establishing a new auxiliary body, the Euro Area Stability Unit.
History from 1809
1809 A Financial Affairs Board responsible for fiscal management is set up in the Finance Department of the Governing Council of the Grand Duchy of Finland, which as of 1816 becomes the Imperial Finnish Senate. Its first head is Erik E. Tulindberg and its first Referendary Secretary J. Fr. Stichaeus. Legislation on State financial affairs dating back to Swedish rule remains in force under Russian rule. Finland gains independence in State finances and budgetary autonomy.
1841 The State budget takes on a new form; revenue is classified into headings and expenditure into main titles.
1862 The Budget is published in the Statute Book of Finland.
1899 A decree is issued on the reorganisation of the Treasury Cash and Accounts Section, which includes provisions on the principle of gross budgeting and working budget appropriations. The decree separates State revenue and expenditure into an ordinary and a supplementary budget.
1917 The Cabinet Finance Committee is set up. Advance fiscal supervision, carried out by the Government, is gradually delegated to the Committee.
1918 The Senate is renamed the Council of State (government), the boards become Ministries and the Senators are designated Ministers; the Financial Affairs Board becomes the Ministry of Finance.
1919 Provisions in the Constitution concerning State finances enter into force; an integrated budget replaces the numerous funds of the earlier State budget system.
1931 An act is passed on the principles to be applied in the Budget and financial statements. Revenue is separated into regular income and capital income, and expenditure into regular expenses and capital expenses. State commercial operations are budgeted on a net basis.
A division into departments is introduced in the Ministry: the General Affairs Department, the Budgeting Department, the Customs and Taxation Affairs Department as well as the Auditing Department are formed, of which the latter closes down two years later. This department's tasks are delegated to the Budgeting Department, renamed the Budgeting and Auditing Department. The name Budgeting Department is reintroduced in 1963.
1941 The Customs and Taxation Affairs Department is split into two departments. The Customs Department closes down in 1949, while the name of the remaining Taxation Affairs Department becomes the Tax Department in 1963.
1942 The Economics Department is established for economic policy planning.
1943 The post of Official Affairs Delegate is set up, with the task of rationalising State administration. A Co-ordinating Department is set up in 1947, renamed the Public Management Department in 1990.
1945-47 A Compensation Department operates at the Ministry to deal with matters involving property lost during the war.
1947 Ministerial committees (Cabinet committees) on general economic affairs are gradually appointed at the Government.
1955 The Payments and Pensions Department is set up, renamed the Payments Department in 1963 and the Personnel Department in 1990.
Since 1973 the Department has functioned as the State Employer's Office.
1958 Advance fiscal supervision is transferred from the Cabinet Finance Committee to the Ministry; the Ministry of Finance now runs financial affairs.
1963 A State Accountancy Planning Unit is established, renamed the Planning Secretariat in 1970. The Unit closes down in 1990 and its functions are handed over to the Government Institute for Economic Research.
1967-68 A budget reform takes place; operational and economic plans in State finances are now made. Advance fiscal supervision and planning of State liquidity are stepped up.
1969 The post of Permanent Secretary of State is established and that of Secretary General terminated.
1970 The Act on Collective Agreements for State Civil Servants enters into force.
1973 The Act on the Basis for Determining the Payment for State Services, issued in 1974, harmonises State payment principles and makes broad application of the principles viable.
1977 The Cabinet Committee on Economic Policy becomes a standing committee.
1979 The Economic Council is transferred from the Government to the Ministry of Finance. The management of administrative affairs in the Ministry takes place in the Bureau of Management, renamed the Management Unit in 1993.
1986 State civil servant legislation is amended, entering into force in 1988. The position of Permanent Under Secretary of State is established.
1987 The Act on State-owned Enterprises, which enters into force in 1988, allows the State production and service functions to be moved outside budgetary finances, though they remain results-managed. A Committee of Ministers on Public Management Reform operates between 1987 and 1995.
1988 An act and decree on the State Budget are passed. The Act requires government departments to draft operational and financial plans.
Projects on management by results and results-based budgeting are launched.
1991 The provisions on the State economy in the Constitution are reformed. The new provisions enter into force on 1 March 1992. Budget legislation is revised due to changes in the Constitution. Restricted net budgeting is introduced. A Cabinet Committee on Tax Policy is established (1991-1995).
1992 The Finnish term for the State Budget is changed. A new Act on the Basis for Determining the Payment for State Services enters into force; its scope of application is extended. The Government adopts budgetary guidelines and ceilings.
1993 The Constitution is amended to permit Parliament decisions on expenditure cuts to be made by majority vote. The Ministry is restructured and duties within the Units are revised. The General Department is terminated while a Financing Unit and a Financial Markets Unit is set up. The Budgeting Department becomes the Budget Department.
1994 A Secretariat for European Union Affairs is introduced in the Ministry. An amended Civil Servants Act enters into force.
1995 Finland joins the European Union. A second post of Permanent Under-Secretary (economic affairs) is established. A Ministerial Working Group on Public Management Reform is formed.
1996 The EMU Project is launched. Finland joins the European Exchange Rate Mechanism (ERM).
1998 State borrowing and debt servicing are handed over to the State Treasury. The Financial Unit and the Financial Markets Unit merge to become the Financial Markets Department.
1999 Stage Three of Economic and Monetary Union (EMU) starts; Finland joined EMU from the outset. Finland holds Presidency of the European Union for the first time in July 1999.
2001 The Senior Management Unit/Ownership Policy and the Press and Information Unit begin work as 'staff units' directly under senior management.
2002 The euro comes into use as a cash currency and the EMU Project is wound up. The Government Information Management Unit begins work.
2003 The Secretariat for EU Affairs became the Secretariat for International Affairs
2004 The Government financial controller’s function and the official posts of Government Controller-General and Deputy Government Controller-General were established in the Ministry of Finance. The financial controller’s function is to serve the Government’s joint operationally independent supervisor of government finances and financial performance. It also serves the Government at the highest level as advisor in issues related to financial and administrative control, the quality of the reporting system, ensuring financial accountability, internal supervision and risk management and assessment of financial performance.
2005 On the submission of the Ministry of Finance, the Government submitted the first final accounts report in renewed form to Parliament. The report on the final accounts contains the most significant information on central government activities in the development of social effectiveness and the development of performance across different branches of administration and the final central government accounts together with their appendices.
2008 The administrative branch changed on January 1, 2008, when the Department for Municipal Affairs, the Department for Development of Regions and Public Administration and the Local Government IT Management Unit were transferred from the Ministry of the Interior to the Ministry of Finance. The provincial, registry and State local district administrations were also transferred to the Ministry of Finance's administrative branch.