Green parties threaten to blow up part of state reform agreement

The Minister-President of the government of Flanders, Kris Peeters CD&V, estimates that the impact of federal spending cuts on the 2012 Flemish budget could be as much as 450 million euros, and that it could increase to 979 million euros within two years. In addition there is a dispute among Flemish politicians about the transfer of a series of green measures from the federal government to the regions. These  include tax rebates on various energy-saving measures such as the purchase of new boilers, double-glazing, solar panels and roof insulation. The new finance act makes provision for 333.2 million euros to be transferred, but federal negotiators have already cut this back by  253 million, which leaves only 80 million euros for roof insulation only. Opposition parties Groen! and Ecolo, who were forced to leave the negotiations after reaching an agreement on state reform with the remaining six negotiating parties, now feel cheated as the new financing act – which forms part of state reform – mentions the transfer to the regions of these tax-deductible energy-saving measures amounting to 333.2 million euros. Minister-President Kris Peeters’ estimates exclude the transfer of the budget which is usually attached to the regionalisation of the powers. According to Groen! this violates the agreements on state reform contained in the so-called ‘Butterfly Agreement’. “The financing act should allocate those funds to Flanders even if next year’s budget is reduced,” says Groen! party leader Stefaan Van Hecke. “If not, we have a problem and we will refuse to approve the new financing act.” Likewise the Walloon Minister Jean-Marc Nollet Ecolo has also threatened to veto the reform of the financing act. The six negotiating parties need the support of the green parties to reach a two-thirds majority required for state reform. The Butterfly Agreement clearly stipulates that the federal government may reset fiscal stimulants for the 2012 budget, but according to the green parties this only applies to the rebate on the invoice for green vehicles. In view of the federal government’s decision to stop the green tax rebates on January 1 next year, Flemish Energy Minister Freya Van den Bossche SP.A wants to include federal savings in her current budget. It may however be expected that the market for energy saving will implode until the new Flemish policy has gained momentum. A proper adjustment could only be realised via the Flemish Budget control in February next year. There is some interest to continue the support for double-glazing or solar boilers. Flanders is currently offering subsidies to promote energy efficiency. When the tax rebates are dropped they could be replaced by Flemish subsidies.