Yesterday was Prinsjesdag, it falls on the third Tuesday in September and it’s the day on which the Queen addresses the Senate and the House of Representatives, and the budget is presented. Most years it’s not a particularly interesting day, the Dutch economy is relatively strong and stable (well apart from the crisis).
But this year there’s been a lot of discussion about the budget. Most of the Dutch papers this morning were apparently very scathing in their opinions.
The outlook is grim, we’re in a global crisis, but specifically for the Netherlands the outlook includes;
- state debt to reach 65.7% of GDP in 2010
- budget deficit to reach 4.8% of GDP in 2009, 6.2% in 2010
- no economic growth next year
- unemployment to hit 8% end of 2010 (NL has a high rate of long term illness which masks some unemployment, that means the real rate of unemployment is probably 3 percentage points higher)
- spending power to go down by an average of 0.25%
The Budget measures announced are fairly undramatic and rather ho-hum, the cuts include;
- Aid budget cut by €600M to €4.6bn, still 0.8%GDP
- Child benefit and student grants frozen
- €75M less for workforce reintegration
Changes on the spending side include;
- €220M in extra tax breaks for innovation
- €1bn extra or part-time jobless benefits
- €150M extra for urban renewal
- €416M extra to combat youth unemployment
- €300M extra for waterways and coastal protection
- 300 “family and child” centres to open nationwide by end-2010
In the miscellaneous pile, new mobile frequencies will be auctioned and the 60W lightbulb will be phased out.
The measures announced don’t sound like they’re in response to a crisis – they sound very much business as usual. Wouter Bos, Minister of Finance, has said that the government will need to cut spending in 2011, he says that by delaying cutbacks for a year the government hopes to establish a ‘broad social and political debate’ next year on how to proceed.
Hmm, that sounds a lot like “we don’t know what to do, give us a year and we’ll think of something”. There’s strong element of consensus-driven decision making in Dutch culture and indeed in the political system. Most of the time I like it, and although decision making can be slower, action post decision is usually quick.
However in a crisis it’s not the right way to work. Doctors working A&E don’t spend a lot of time discussing each patient’s case and getting the Nurses agreement on what to do. The Doctors make decisions and tell others what will be done.
I agree with the Council of State, the government’s highest advisory body, who said that “the cabinet’s decision to spend another six months looking into areas where cuts can be made does not reflect the urgency of the situation.”