Heinen warns “hard choices” are needed to secure future growth

Finance minister Eelco Heinen has said the Netherlands needs to build a “coalition for growth” to secure the future prosperity and security of the country.

Heinen said no one party had a monopoly on the answers and his own ideas on the role of markets and European co-operation had been forced to change in response to the challenges to the international order in recent years.

But he warned that the Netherlands also needed to cut its spending and reform social security and healthcare if it wanted to become “the best place to invest and grow”.

“International competition is becoming fiercer, our productivity is hardly growing and investment is lagging behind,” he said.

“Economic growth must become a national challenge, because a country that moves forwards is in everyone’s interest.”

Heinen, who represents the right-wing, fiscally conservative VVD party in the centre-right coalition, said the budget package had made space for the demands of opposition parties on both left and right.

Capital gains

Many of the original plans in the coalition agreement have been watered down or postponed as Heinen seeks support for a “common goal” that goes “beyond the next budget.”

The cabinet will bring forward plans to introduce capital gains tax system to replace the Box 3 asset tax, which the Supreme Court has said violates European human rights laws.

Heinen said the extended discount on fuel duty, cutting airport tax and making air travel more sustainable showed he was prepared to accommodate the wishes of opposition parties.

Social security

But his reference to “hard choices” were a clear signal that he is determined to press ahead with significant cuts to the social security and healthcare budgets, which the largest left-wing party Pro and the trade unions insist must be scrapped.

“Without reforms to social security and healthcare the money we spend today will hold back the growth of the future,” Heinen said.

The minister said the “handbrake” needed to be taken off investment, with the government increasing investment in helping startup businesses “get off the ground and stay here”.

Heinen said his ideas on international co-operation had changed in recent years as he saw the trend in the global economy turning from free trade to the agressive use of economic power.

European co-operation

“You know I believe strongly in the power of the market, but if the market comes up short and promising businesses can’t grow as a result, you have to be prepared to adapt your beliefs to reality,” he said.

International rules were no longer a guarantee of global security and the Netherlands needed to work on strengthening the European Union’s internal economic ties. “Yesterday’s world is not coming back,” he said.

“I will still be critical when Europa claims more influence than it needs or builds up more debts. But co-operation sometimes gives us more influence.

That’s why we must deepen European co-operation and make our internal market work better and improve our ties with countries outside Europe.”