Jetten braced for more tough negotiations to pass budget bill

Prinsjesdag, the first day of the Dutch parliamentary year, should be a high point in the finance minister’s calendar, when he or she sets down the next year’s budget plans in a neat pile and unties the ribbons.

This year, however, Eelco Heinen looks more like a man whose papers have been blown around in a gale, forcing him to scramble around to recover them and tie them up with loose bits of string.

Heinen and Rob Jetten’s hopes of doing a deal with opposition parties before Budget Day on September 15 have been dashed, meaning the minority coalition will now have to find the votes as the bills pass through parliament.

Jetten wanted to agree a package of measures with opposition parties on both left and right, to avoid the “yo-yo politics” that hamstrung his predecessor as prime minister, Dick Schoof.

The talks broke down partly because both sides demanded a high price, but also because the coalition parties were split on what concessions to make.

The outcome is a fudge that appeals to nobody’s taste. And as Jetten has said, the budget that will be presented to parliament next Tuesday is “not the end”. Without an advance deal, the minority coalition will have to keep negotiating to find the 10 seats it needs in the lower house and 16 in the senate.

Spending cuts delayed

Heinen’s party, the right-wing liberal VVD, has had to climb down on its insistence that the €6.5 billion of cuts to welfare spending outlined in the coalition agreement were non-negotiable.

The left-wing opposition party Pro, formerly the alliance of GroenLinks-PvdA, had campaigned to abandon the welfare cuts altogether, supported by the trade unions, who called a one-day nationwide transport workers’ strike last week.

The government wanted to reduce the maximum term for unemployment pay from two years to one, phase out the incapacity benefit IVA and reduce the maximum payment for a range of other benefits, including sick pay and maternity leave, by 20%.

But most of the measures have been postponed by a year rather than cancelled, prompting Pro leader Jesse Klaver to comment that the revised budget was “maybe worse than the original plans”. The unions have said the strikes will continue until the cuts are scrapped.

Cost of living

Klaver told a party congress at the weekend that his party was willing to discuss reforming the WIA incapacity benefit rules, but only if the cuts were taken off the table.

“Pro was founded to combat inequality and strengthen the welfare state,” he said. “You can’t ask us to help you take it apart.”

The left-wing opposition had already forced the cabinet to back down on a proposal to cut the pensions bill by raising the retirement age in step with life expectancy, rather than by eight months for every extra year, which would have saved €2.8 billion a year.

On the right, parties such as JA21 have pressed for the cabinet to make further savings on social security to fund tax cuts across the board and offset the rising cost of living. Inflation is running at 3.3%, driven by soaring fuel and energy prices.

The cabinet has agreed to extend the discount on fuel duty into next year to provide relief for motorists who are paying the highest petrol and diesel prices in Europe.

The cabinet has also allocated €1.7 million to offsetting rising living costs, a response to recent figures from the economic planning bureau CPB that projected a 0.3% drop in spending power next year.

Top earners

With the spending cuts watered down, the government found the money by raising an extra €750 million in income tax on high earners, as well as a small increase in the domestic water levy, according to documents leaked to the commercial broadcaster RTL.

Despite the cash injection, the graphics produced by the finance ministry show that most income groups will still experience a drop in spending power and those who benefit will be pensioners and people on the lowest incomes.

The Telegraaf reported last week that the finance ministry expects the average premium for universal healthcare to go up by €120 a year to €2,028.

The plan to increase the health insurance deductible, or excess, by €60 is also being delayed by a year. It will still rise with inflation for the first time in a decade, so patients will pay €395 up front for medical treatment, €10 more than this year.

Extended negotiation

Part of the reason the negotiations ran into difficulty is that Jetten and Heinen effectively ran parallel talks, with the prime minister trying to agree the political terms while Heinen concentrated on balancing the books.

The VVD finance minister reportedly “shocked” his coalition partners when he produced a draft document that was weighted heavily in favour of right-wing parties such as JA21 and the hardline Protestant SGP, but was unpalatable to the more centrist D66 and CDA, who wanted to bring Pro on board.

After a weekend of emergency talks within the coalition, a revised budget was agreed on Monday, August 31 – the last possible deadline for the draft to be sent to the Council of State for analysis, which is a legal requirement.

At first glance, the revised deal looks like a setback for the VVD, which campaigned during last year’s election and the coalition negotiations that followed on a platform of keeping Pro out of cabinet and marginalising its influence.

With the cabinet lacking a majority in parliament, Pro has a pivotal role as the largest opposition party. Its 20 seats in the Tweede Kamer would give the coalition parties a comfortable majority, while in the upper house the cabinet plus Pro are just two seats short.

Jetten is aware, however, that too many concessions to Pro will risk the balance within his coalition. At some point, Jesse Klaver’s party will have to settle on the welfare cuts, which could test his alliance with the trade unions.

BBB blockers

Another potential stumbling block is the farmers’ party BBB, which was frozen out of the talks because it refused to support the cabinet’s measures to cut nitrogen pollution, which all three coalition parties stand resolutely behind.

The BBB could form a blocking minority in the Senate, where they have 11 seats, and have already threatened to cause trouble over the cabinet’s plans to reform the asset tax system.

The right-wing opposition is larger but disjointed, with Geert Wilders’ PVV and Forum voor Democratie refusing to negotiate in the hope that they can force early elections.

The result is that while parliament has an in-built right-wing majority, it is the left who have had the upper hand in the negotiations so far.

As the budget bill goes through parliament, Rob Jetten faces the double-headed challenge of finding the votes he needs from the opposition while holding his battered coalition together.