Cabinet restart: opposition parties agree to €6bn austerity deal

Three opposition parties have agreed to support the cabinet’s austerity drive, giving the coalition an essential but narrow majority of just one in the upper house of parliament.

The D66 Liberal democrats and minor Christian parties ChristenUnie and SGP finalised their deal with ministers on Friday night. They have agreed to throw their weight behind the government in return for policy concessions.

These include significant shifts in cabinet plans. For example, the decision to phase out the basic income tax break for high earners will go, there is €600m extra for education, cuts in child benefit will be scrapped and the value-added tax reduction on home and garden maintenance will be extended throughout 2014.

Funding

To fund these changes the cabinet has agreed to extra cuts in some ministerial budgets, higher taxes on mains water and cars and a €500m subsidy cut for industry.

They have also agreed to bring forward cuts in unemployment benefit by six months to July 2015 and to speed up some other measures agreed between unions, employers and ministers earlier this year.

On balance, household spending power will not go down next year by as much as had been forecast, Nos television said. Some households will be better off.

The new partnership will run for one year but the five parties have also agreed to look together at the cabinet’s pension reforms, which have run into trouble in the senate.

Broad support

‘We have made some concessions,’ said Labour leader Diederik Samsom. ‘But this broad support shows the Netherlands that we can move on.’

‘The most important thing is that we can remove the uncertainty and create political calm,’ said Halbe Zijlstra, leader of the VVD in the lower house of parliament.

D66 leader Alexander Pechtold said his party remains in the opposition but that he is willing to help the cabinet where possible. This agreement is based on three D66 fundamentals, he said: lower taxes, more money for education and more jobs by speeding up labour market reforms.