PM makes pledge over energy cost compensation

22 September 2005

AMSTERDAM — Prime Minister Jan Peter Balkenende dismissed criticism of the 2006 Budget on Thursday and committed his government to compensating the public if oil prices push up energy costs next year.

Balkenende admitted high oil prices could “upset” the centre-right coalition’s measures designed to boost spending power in 2006. If this happens, the public will be compensated.

It is unclear what form the compensation will take. One idea is to increase the tax-free allowance portion of electricity bills.

Ministers are no keen on the suggestions that the compensation should take the form of lower taxes on fuel prices or by regulating fuel prices. The Cabinet argues the latter would remove the impulse to moderate energy use.

Balkenende indicated during the budget debate on Thursday that the government would take a decision in December when it has the latest estimates from the macroeconomic think tank CPB.

Finance Minister Gerrit Zalm played down talk of compensation on Wednesday, saying he did not want to commit to signing blank cheques the government would have to honour at a later stage.

Balkenende also spent a lot of time during his speech on Thursday on news that the public has little confidence in his administration. Rejecting negative findings in recent opinion polls, he said: “The real level of public’s confidence will be determined by the voter in the election in 2007”.

Subject: Dutch news