UPDATE DUTCH POLITICS: a new Coalition Agreement – finally!

It took them 273 days – the longest formation in Dutch history.

Today, four parties – Liberal Conservatives (VVD), Liberal Democrats (D66), Christian Democrats (CDA) and the Christian Union (ChristenUnie), presented the new Coalition Agreement for the period of 2021-2025. After 273 days of formation and negotiation talks, cabinet Rutte IV could be installed soon, and the “rebirth” of the current coalition could be a fact.

‘Looking out for one another and looking forward to the future’

• The Coalition Agreement’s slogan is “Looking out for one another and looking forward to the future”. The goal is “a sustainably prosperous country for current and future generations, in which all residents can participate to the best of their ability. With the foundation of social security for everyone and the prospect of progress in life (together).” For this purpose, many billions are set aside. This makes this Cabinet one of the biggest investor-cabinets in years.
• The current formation is the longest in Dutch parliamentary history. The previous record was held by the Rutte III cabinet that needed 225 days for the formation. The formation was held up for months by disrupted relations and doubts about Rutte’s position as prime minister of a new cabinet, and a turning point only followed by the end of September. The first substantive talks took off only after D66-leader Sigrid Kaag had lifted her bargaining block against the Christian Union, which was primarily based on disagreements on medical-ethical issues between the two parties.
• On October 6, informants Remkes and Koolmees (tasked with leading the negotiations) promised that they would proceed the negotiations by working on a thin coalition agreement. The result as presented today is a 47-page document, which is significantly thinner than previous agreements – but could still be seen as a ‘regular agreement’.
  The agreement will be worked out by the new ministers in so-called “coalition programs” on various topics, such as nitrogen, climate, labor market and education. These programs will be debated separately in parliament.

What’s next?

• Although the parties involved have now presented their Coalition Agreement, the Rutte IV cabinet cannot yet take off. The Agreement will first be debated in parliament, after which VVD leader and caretaker Prime Minister Mark Rutte can start putting together a new cabinet.
• In the most optimistic scenario, Rutte can start negotiations with potential ministers and state secretaries as of December 20. After being screened and setting aside any business interests, the new members of governments can get to work.
• A new group of ministers is expected to present itself traditionally at the Noordeinde Palace in The Hague – early January at the earliest.

Highlights:

Climate:

• €35 bln will be available over the next 10 years for the realisation of a climate and transit fund, which must achieve a 55% reduction in CO2 emissions by 2030. To make sure the Netherlands achieves the 55% target, the Coalition will aim for 60%. A dedicated Minister for Climate and Energy will be responsible for this fund.
• The CO2 levy for industry will be tightened. Binding agreements will be made with the 10 to 20 largest greenhouse gas emitters.
• The government will take preparatory steps for the construction of two new nuclear power plants.
• In 2030, a ‘pay-as-you-drive’ tax scheme will be introduced for all automobility, regarding which legislation etc. will be prepared the coming years..
• A cumulative amount of €25 bln will be made available until 2035 – for the establishment of a transition fund to address, among others, the nitrogen challenge.

Taxes:

• The Netherlands is taking a leading role in making the EU more decisive, economically stronger, greener and safer. It’s working intensively with like-minded countries and, where necessary, forming front runner groups to find solutions, for instance in the areas of climate, migration, security, trade and combating tax evasion.
• The Netherlands is working towards a digital services tax, an aviation tax, a CO2 border tax and a minimum rate for profit tax in order to prevent unfair competition between Member States. In principle, these will be collected nationally. Member States will be working together against tax evasion.
• Companies (and their directors) which facilitate subversive crime, money laundering and are guilty of environmental crime will be tackled more firmly.

Mobility:

• Resources will be set aside from Regional and European funds to co-finance the construction of the Lely Line (train between Lelystad and Groningen).
• €1.25 billion will be made available structurally for catching up with the backlogs in the management and maintenance of roads, railroads, bridges, viaducts and waterways, and for maintaining, renovating and replacing them in the future.

Labor market:

• €500 mln per year will be invested in reforming the labor market. The differences between permanent and flexible labor will be reduced.

Healthcare:

• €300 mln will be invested in pandemic preparedness on a structural basis, which includes a scale up of ICU capacity.
  Increased spending on development cooperation – €500 mln on a structural basis – which includes investment in the global COVAX vaccination program.

Education

• In the academic year 2023/2024 the basic grant is reintroduced for all students and there will also be a means-tested supplementary grant. The loan system will be abolished.
• In total, the government is structurally investing €1 billion per year to strengthen the quality of education.
• The Cabinet will invest in research and development by establishing a fund of €5 billion.

Housing:

• Housing construction will be accelerated to around 100,000 homes per year. A dedicated Minister for Housing & Spatial Planning (VRO) will support municipalities and provinces in determining housing locations and will make performance agreements. Focus will be on starters, seniors and middle-income earners.
• The government will make a total of €7.5 bln available in the next 10 years for the proper accessibility of new housing in the 14 urbanization areas and beyond.