Economic inequality cannot be assessed based on financial statements alone

Mayor Avaaraq Olsen (IA) responds to the recent debate about inequality and differences in the economy and demographics of municipalities, which has been raised by member of Inatsisartut Anders Olsen (S) through a number of Section 37 questions, saying that, - the inequality is so great that it can no longer be ignored.

Here, Anders Olsen (S) and Qeqqata Municipality Mayor Malik Berthelsen (S) are calling for clearer political prioritization of development in municipalities outside Nuuk - including by moving self-government-owned workplaces to the coast.

But according to Avaaraq Olsen, it gives a simplified picture to conclude inequality solely based on Kommuneqarfik Sermersooq's total accounting profit and high level of investment.

- Economic inequality can be calculated in many ways. There is no single, unambiguous method, and the assessment depends on which criteria you choose to use as a basis, says Avaaraq Olsen (IA), referring to the Ministry of Finance's own assessments.

One-off effect explains high capital costs

Naalakkersuisoq for Finance's paragraph 37 response to Anders Olsen about the municipalities' economy and demographics shows that Kommuneqarfik Sermersooq has had a total operating surplus of 1.9 billion DKK over five years and significantly higher capital expenditures than the other municipalities.

According to the mayor, however, a significant part of this is due to a specific and temporary event.

– The large deviations can largely be explained by the municipality's takeover of Nuuk City Development in 2022. This had a significant one-time effect because the municipality had to buy schools, daycare centers and other buildings from the company and finance the costs with loans, explains Avaaraq Olsen.

When adjusted for this takeover, Sermersooq's capital expenditure per capita is, according to the mayor, on par with the other municipalities.

- This underlines why drawing far-reaching conclusions based on total accounting figures alone can be misleading, she says.

Significant but opaque compensation

The mayor also denies that there is no real financial equalization between the municipalities - an impression that she believes the debate may leave.

– There is significant equalization happening today, but the system is complex and unfortunately not particularly transparent, she says.

She points out, among other things, that around 90 million kroner is redistributed annually from Kommuneqarfik Sermersooq to the other municipalities via the block grant. Sermersooq has approximately 43 percent of the population, but only receives around 38 percent of the block grant, because demographics and dependency burden are taken into account.

In addition, around 113 million kroner in personal taxes is redistributed via the equalization scheme, and according to the municipality's own estimates, Sermersooq's citizens pay around 400 million kroner to the joint municipal tax equalization, but only receive around 80 million kroner in return.

– These are just some examples of the existing compensation, says Avaaraq Olsen.

Centralization is a national political issue

Anders Olsen (S) has, among other things, criticized the Greenlandic Government for not creating development in other municipalities, and that there is a great deal of centralization in Nuuk by pointing out that both Royal Greenland's administration and the Arctic Command are located in Nuuk, and he has received support from Qeqqata Municipality's mayor Malik Berthelsen (S), who warns against "brainwashing" that a good life can only be lived in the capital.

According to Avaaraq Olsen, however, centralization is not a problem that municipalities can solve alone.

- It is closely linked to overall national political priorities regarding the location of workplaces, educational opportunities and institutions supporting society, she says.

The Chairman of the Economic Council, Torben M. Andersen, has previously called the debate important and emphasized that the Government of Greenland must take a political position on how development should be created throughout the country.

Looking forward to municipal reform

Avaaraq Olsen points out that political processes are already underway. The budget speech for 2026 states that a future local government reform is expected to include a reassessment of the financial equalization between municipalities with a view to more equal conditions.

– It is a process that Kommuneqarfik Sermersooq looks forward to participating in – in a constructive dialogue with all parties and on an informed and transparent basis, says the mayor.

She concludes with a clear call:

– I would very much like to continue the conversation about the municipalities' financial conditions. But the facts need to be on the table so that the debate is not based on simplified representations that do not give the full picture – neither of Kommuneqarfik Sermersooq nor of the situation of the other municipalities.