Photo Pertti Nisonen
By Johanna Lemola
Helsinki Finance Director Tuula Saxholm outlines some of the city’s current challenges, potential solutions, and how Helsinki will prosper.
Tuula Saxholm is on wheels despite the summer holiday season. Not only does the normal City of Helsinki budgeting process keep the City Finance Director busy, many concerns of national politics put an extra burden on the City management: the pending re-organization of metropolitan administration and the long-expected social services and health care reform put many major question marks on the City’s horizons.
Saxholm says, “Decisions on these questions may mean that we’ll no longer be able to decide alone on a huge share of affairs that directly affect us, and our financial independence decreases.
“At the same time, the national economy is facing major challenges, going through the third year of negative growth. As a result, State subsidies to municipalities decrease, but the responsibilities of municipalities so far have not decreased. The macro-economy necessarily and dramatically affects municipal affairs.”
Helsinki stays on the path of growth
Despite voicing concerns, Saxholm maintains a truly positive outlook on the city’s future. “Our realities in Helsinki are, in fact, quite promising,” she affirms.
Helsinki keeps moving on the path charted years ago, developing vast new areas into attractive and competitive districts for people and business – Jätkäsaari and Kalasatama on land vacated by the Port of Helsinki, Central Pasila being built into a major transport and commercial hub, and Kruunuvuorenranta at the site of a former oil terminal.
“The development of the new areas is both a challenge and a huge opportunity at the same time.
“For example, the City invests about 250 million euro in the Central Pasila infrastructure development – a necessary investment to make further investment possible. But the total investment in Central Pasila will be approximately 5 billion, and it will be tens of billions in all the new areas! The total investment consists of some public but mostly private money including some from international investors.
“When the new areas are realized, the City’s investment into them will have been small, and the result will have a huge positive impact on both Helsinki and the national economy.”
More new residents, foreign investment, and a positive image
Saxholm continues on Helsinki’s strengths: “Helsinki keeps attracting new residents. For example, last year Helsinki’s population grew by the fast rate of 1.5 percent thanks to immigration from other parts of the Helsinki Metropolitan Area and Finland. Also, families increasingly stay in the city centre, rather than moving to suburbs, which is further proof that Helsinki is a good place to live.”
“Helsinki is also a more and more attractive place for foreign investment,” Saxholm adds, explaining that Helsinki has attracted more foreign direct investment in recent years than Helsinki’s competitor cities in Northern Europe.
“Helsinki has recently profiled itself as a ‘city of events’, and the City of Helsinki has helped to make a variety of events possible. The activity has gained priceless name recognition for the city, the value of which is impossible to assess in euros.”
How Helsinki faces challenges
Saxholm points out, “Our competitiveness is dependent on how well the city functions. This involves social services and health care, education, safety, and reasonably priced and good-quality housing. Our transport infrastructure has to be good.”
Helsinki has set a ceiling to annual investments, which must not exceed 450 million euro. “Streets, parks and other basic facilities in the new areas alone take about 100 million of the total,” Saxholm comments. She adds, however, that Helsinki City Transport’s annual investments average approximately 120 million, and they have a huge positive impact on Helsinki.
How does Helsinki manage to keep building the city and the city’s competitiveness?
The first solution is tight financial oversight. Saxholm explains that over the recent years of recession Helsinki has gone more deeply into debt, but the City now seeks to limit further increases in debt. Spending must not grow faster than the population.
“An important solution is more efficient use of space. This may involve such unpopular measures as shutting down some service locations, for example, small local schools. Helsinki still has a great deal to achieve in this regard. It has nothing to do with reducing the quality of services.
“Also, we will have to re-assess the role of the City as a provider of many services including sports, culture and other leisure-time activities. The City may have to increase fees. Citizens can also turn to private services. Overall, citizens will have to assume more financial responsibility.”
“We can no longer afford the previous levels of prosperity,” Saxholm asserts, admitting that her role in the City administration can sometimes be unpleasant. “At the same time, I have to defend all aspects that keep making Helsinki more competitive.”
Frustrated by some overly negative remarks about City finances and cuts, she exclaims, “Nothing of real importance has ever been left undone in Helsinki!”
Helsinki ranked second in Europe in its potential to attract foreign direct investment
The Financial Times’ fDi Intelligence unit places Helsinki in second place in a ranking of the European cities in its recent report European Cities and Regions of the Future 2014/15. The report assesses cities and regions in terms of their potential to attract foreign direct investment (FDI). Helsinki is included among the Top 25 European cities listing for the first time and immediately hails to second place. London takes the top slot in Europe.
According to the report, “Finland’s capital has been receiving increased attention for its efforts to attract FDI and scored particularly well for FDI Strategy”. The report ranks Helsinki’s Invest In as the third best investment promotion strategy in Europe. The strategy is used to attract research, development and innovation activities to the Helsinki region; international venture capital and private equity for the region’s growth businesses; and international business activities that utilize the region’s good transport connections. Greater Helsinki Promotion Oy, an organization specializing in attracting foreign direct investment to the Helsinki region, seeks to put the region among the five most favoured investment locations in Europe by 2020.
The report ranks 468 locations, both cities and regions, in five categories: Economic Potential, Human Capital and Lifestyle, Cost Effectiveness, Infrastructure, and Business Friendliness. In addi¬tion, surveys were collected under a sixth category, FDI Strategy. Helsinki ranks close to the top in all categories.
Helsinki attracts new residents
Helsinki was home to 612,664 permanent residents at the turn of the year 2014, up by 8,696 from the year before. The Helsinki population showed exceptionally fast growth.
Migration from other parts of the Helsinki Metropolitan Area and elsewhere in Finland produced a net gain of 3,800 new residents. The net gain is due to a marked decline in migration away from Helsinki. Immigrants from abroad produced a net gain of 2,900 new residents.
Helsinki-info on Facebook