Coalition accord: higher incomes to pick up much of the bill

People with higher than average incomes will be hardest hit by the new coalition’s plans because they will have to pay more for healthcare, their children and their homes, analysts say on Tuesday.

The right-wing VVD and Labour party (PvdA) outlined their plans for government on Monday afternoon and both leaders were careful to spell out that ‘everyone will have to make sacrifices’.

The new cabinet is planning to raise nearly €23bn through cuts and extra taxes. Of this, extra spending will account for €7bn, leaving the net reduction in government spending at €16bn. Most of that will be earned by cuts in spending on the health service and social security.

Unemployment

According to the government’s macro-economic forecasting agency CPB, the new cabinet’s proposals mean unemployment will rise to 5.75% by 2017 while economic growth will average 1.25% a year.

At the same time, unemployment benefit (ww) will be cut to one year at 70% of last-earned income and one year at the level of the minimum wage. After that, household income and assets will be taken into account.

Spending power for those on average or low incomes will rise fractionally but those earning more than €100,000 will see their spending power go down by 0.6%. People earning more than €100,000 will also no longer be able to deduct pension premiums from tax.

Health

In particular, changes to the way the health service is funded will hit high earners. According to the Financieele Dagblad, the plans to make health insurance premiums reflect incomes will adversely hit those earning more than €66,000 a year.

The new cabinet is also cutting home help services for the better-off elderly and will reduce the amount of care covered in the basic package. People who visit hospital accident and emergency departments without a doctor’s referral will also face a €50 charge.

Immigration

The new government is also continuing the previous administration’s tough line on immigration and integration.

Although measures to eradicate dual nationality are no longer on the agenda, the new cabinet does plan to extend the residency period before immigrants can take Dutch nationality from five to seven years.

The residency requirement for voting in local elections is also to be extended to seven years. Speaking Dutch is to become a condition for receiving basic welfare (bijstand) payments and immigrants will not be allowed to claim welfare for seven years after they arrive.

The new cabinet also wants these changes to cover EU nationals.

Financial sector

Several measures in the cabinet’s plans will directly affect the Dutch financial services sector. Bankers will have to swear an oath of integrity and screening of bankers will be extended to all workers involved in major transactions.

At the same time, performance-related bonuses will be capped at 20% of fixed salary.

The agreement also states ABN Amro will not be privatised ‘until the financial markets are stable’.

What do the papers say?

The new coalition of right-wing VVD and Labour party (PvdA) outlined its strategy on Monday. The Dutch papers give the plans a mixed reaction.

The Telegraaf thinks the brunt of the cut backs announces in the new government accord will be borne by the higher income groups while the lower income groups will benefit. Unfair, the paper writes.

According to the paper this is the result of the formation give-and-take: the VVD can carry on cutting while Labour tries to soften the blow for those on low incomes.

The Financieele Dagblad agrees with the Telegraaf. ‘The bill for the crisis is going to be paid by the higher income groups and the elderly’ but the former at least have ‘the strongest shoulders’, the paper writes.

But even if the cabinet manages to stay the course, it is still looking at a financial black hole of €10bn, FD says. And the gap between what Brussels want and the government has to offer is €60bn.

Swotty

No bridge building there then, FD implies, although the AD thinks the coalition is doing too much to please the EU already: ‘The Netherlands is acting like the swotty kid in the class even without pressure from the European Union and the IMF’. The paper writes that the severity of the cutbacks bring with them the obligation to lighten people’s financial load as soon as the financial-economic situation changes for the better.

Trouw calls the accord ‘brave and without taboos’: Samsom and Rutte have not hesitated to tackle all the major issues and have managed to come up with ‘anything but a cheap compromise’. ‘Building bridges turned out to be more important than realising party political wishes’. The new government is a result of ten years of political instability: ‘The country was gasping for a stable coalition’, the paper writes

God

The Reformatorisch Dagblad and the Christelijk Dagblad don’t like the fact that there is nothing in the accord about changing the time limit for abortion or banning prostitution. There is not much room for god in the accord and ‘that is not a good thing for society’ , the papers opine.

In its editorial, the NRC comments on the age and presumed wisdom of the ministers: most are experienced politicians in their fifties, although the paper thinks that appointing Amsterdam council executive Lodewijk Asscher as the deputy prime minister is ‘politically risky’.

‘The key figure for Labour is a young, inexperienced politician’, the paper points out.

Source: Dutchnews October 30, 2012