Budget leak: cuts to heal ‘sick’ Holland

16 September 2004

AMSTERDAM — The harsh spending cuts the government intends to implement next year are necessary to prevent the “heavy flu” the Netherlands is suffering from turning into a “chronic illness”, according to a draft of next Tuesday’s budget speech which was leaked to the media.

Finance Minister Gerrit Zalm is set to tell Parliament next Tuesday that the economic recovery in the Netherlands is proceeding very slowly and that the government’s austerity measures — which have already eaten into consumer purchasing power — must continue.

This is because excessive high wage increases in recent years have led to the country being in “arrears” to its competitors, according to the document leaked to RTL Nieuws parliamentary correspondent Frits Wester on Wednesday.

The economy, the speech notes, shrank by 0.9 percent last year and will grow by a modest 1.25 percent this year. Next year the growth is expected to be 1.5 percent.

Under the government’s plans, the budget deficit will drop from 3 percent of Gross Domestic Product (GDP) to 2.7 percent next year.

Zalm will tell MPs that giving the economy an artificial boost is not a real option and most government departments will have to make do with spending cuts.

The most vulnerable sections of society will be spared the full impact of the cuts by targeted intervention by the government.

But unemployment will rise from 505,000 this year to 550,000 in 2005.

One of the few beneficiaries of the government’s largesse will be security and policing. The large cities in the Netherlands are to get a total of EUR 120 million extra to help combat habitual offenders and domestic violence.

There will be an extra EUR 70 million to provide more cells to lock up repeat offenders and the police and the state security service AIVD will get funds to hire 100 additional officers.

It comes as little surprise to anyone in the Netherlands that the coalition Christian Democrat CDA, Liberal VVD and Democrat D66 government of Prime Minister Jan Peter Balkenende intends to continue its stringent economic policies.

Leaks of selective extracts of the budget are nothing new either. What is new is that Wester has got his hands on the entire budget speech, outlining the government’s entire budget strategy for 2005.

The government information service RVD traditionally gives the media embargoed copies of the speech on the Friday to allow them to prepare their stories for publication on Prinsjesdag on the third Tuesday of September, the budget is delivered.

The chairman of the Lower House of Parliament, Frans Weisglas, has described the leak of the entire speech to Wester as a scandal. He said he deeply regretted that the government’s plans were already public knowledge days before budget day.

Other politicians also expressed surprise at the extent of the leak, but most were more philosophical than Weisglas, saying the leak was just another “political game”.

Asked on RTL Nieuws where he got the document, Wester declined to answer. But he did point out that ministers are often more than willing to let favourable items from the budget reach the public in advance of budget day.

Finance Ministry officials also tried to play down the leak, stressing the document Wester received was a “very early” draft version and the final document might contain considerable alterations.

[Copyright Expatica News 2004]

Subject: Dutch news, Dutch budget