The Conservative Party and Progress Party announced the deal after more than three weeks of talks that saw the two junior coalition partners, the Christian Democrats and the Liberals, drop out, after failing to reach agreement.
"There are areas where we disagree but fewer than many would have believed," incoming Prime Minister Erna Solberg told a news conference. ”We will decentralise more power – the best policy comes from below.”
Siv Jensen, leader of the Progress Party, promised that her party would seek to have a large impact on policy.
“Much of what we have fought for 40 years we are now able to carry out. Now we have the ability to control."
The parties announced a string of eye-catching proposals in their 75-page political platform (see translated here), underlining the coalition's liberalising agenda.
These included allowing: Sunday opening for shops; roads with a maximum speed limit of 130km/hr (up from 100km/hr); jet-skis; Segway self-balancing scooters; poker tournaments; and professional boxing.
The coalition promised a surge in infrastructure spending, saying they would set up a 100 billion kroner ($17bn) fund to invest in infrastructure such as roads and communications, one of the key issues in the campaign.
But they stopped shorting of loosening the strict rules which limit Norway to spending less than four percent of its oil revenues, as the Progress party proposed during the election campaign.
"The idea behind the rule has always been to invest more in infrastructure, tax reduction and innovation,” Jensen said. “Even within the 4 per cent rule it’s a huge amount of flexibility — it depends on how you invest the money."
The infrastructure proposal came along with a promise to cut taxes, most notably doing away with inheritance tax completely, leading to criticism from the outgoing centre-left administration.
"They promise a lot but say little about where they will find the money," Jens Stoltenberg, the country's outgoing Prime Minister said. "Rather, they promise large tax cuts, and then there will be less money for education, health and care."
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Stoltenberg also criticised proposals to increase the number of free schools in Norway, which he said had been shown to lower quality and increase segregation in other countries that have tried it.
The new government indicated a tougher approach to law and order, allowing police to carry guns, and announcing that it would build more prisons.
They also announced a series of policies aimed at reducing immigration, showing the influence of the populist Progress Party.
The new government will take power on October 18, five weeks after the parties won a general election on September 9.