Austerity package formally published to mixed reactions

While most of the details had already leaked out days ago, the five-party agreement to cut the budget deficit in line with EU rules was finally presented to parliament on Friday.


Pensioners with a private pension and commuters will be hardest hit by the measures, which form the basis for the government’s 2013 spending plans.
Richer pensioners will have 3.25% less to spend next year, while people on social security benefits will see their spending power cut by 1.5%. The introduction of a tax on travel expenses will hit commuters by an additional 1.5%.
Eurozone
The austerity package is aimed at reducing the budget deficit to below 3%, in line with eurozone monetary union rules. It includes higher taxes, changes to mortgage tax relieve and higher healthcare fees.
The measures were drawn up by the minority government plus the D66 Liberals, greens GroenLinks and minor Christian party ChristenUnie. They stepped in to fill the breach after Geert Wilders pulled the plug on the alliance with the government.
Not all the details have been finalised. For example, officials are looking at how to help small firms which could face financial ruin by being forced to pay the first six months of unemployment benefit to sacked staff.
Demolished
D66 leader Alexander Pechtold told reporters the austerity package ‘demolished Wilders’ policies’. ‘We have to stop the extremes on the right and left and build a bridge to the middle,’ he said.
Wilders said the agreement leaves ‘hard-working Dutch men and women in the lurch’ and is a ‘left-wing celebration’.
Stef Blok, who leads the VVD Liberals in parliament and was part of the negotiating team, said the deal is ‘painful’ in places. In particular the tax on travel expenses was difficult to deal with and the VVD will focus on reducing the tax burden during the election campaign.
Recession
Labour leader Diederick Samsom said the deal will not help the economy grow. ‘Rather, it will prolong the recession,’ he told Nos television. And Socialist leader Emile Roemer, currently riding high in the opinion polls, said the package is aimed at improving the reputation of the Netherlands in Brussels.
‘We are paying a high price for this, the economy is in lock-down, insecurity is growing and confidence in the economic and politicians has been further undermined,’ Roemer said.
In a statement, employers organisation VNO-NCW said some of the measures were painful but necessary to ensure the Netherlands’ strong financial reputation remains intact.
In particular, the rise in value-added tax from 19% to 21% and the tax on travel expenses require close study, a spokesman told news agency ANP.
Despite the agreement, some of the measures may never come into effect, given that the Netherlands will elect a new parliament on September 12 and those MPs will have to pass the 2013 spending plans.
The main measures


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