Time to split the Ministry of Finance?

Author: Peter van Keulen. This article appeared on Montesquieu Instituut on 19 May 2021.

There is a new housing shortage in the Netherlands. More houses need to be built and one of the problems is the lack of building sites. Municipalities are economising on their internal organisation – including spatial planning officials – and are subordinating the social problem of the housing shortage to their own (political) considerations. The savings made by the municipality of Amsterdam are an example of this. Remarkably, the 11 secretaries-general (SGs) did exactly the same in the lobbying letter they recently sent to the then informateur Herman Tjeenk Willink i. The SGs argue that departmental reorganisations are not the solution for solving social issues because civil servants “already work in teams across the boundaries of their own departments”.

The secretaries-general conveniently forget that the organisation of central government is a crucial factor in the attention given to a social issue. Spatial planning and housing production, for example, have fallen further out of the picture since they were brought under the Ministry of the Interior and Kingdom Relations (BZK). A new Ministry of Spatial Planning and Housing with its own Minister and State Secretary will accelerate housing construction, but also the energy transition that requires space. Such a new ministry also prevents internal discussions at the Ministry of the Interior from having to balance spatial planning and housing construction with other Ministry dossiers.

The fact that secretaries-general state that they are “used to working in teams across departmental boundaries” is not borne out by the example described: the benefits affair. It is precisely this affair that shows how no cooperation took place. Let alone “across borders”. The Ministry of Social Affairs and Employment, and the Ministry of Finance operated independently of each other while the Tax and Customs Administration had repeatedly pointed out the undesirable results of the harsh policy. It is a regrettable example that cooperation is not the norm in the compartmentalised work within and between the ministries. This does not seem to be recognised by the secretaries-general.

This is also the case at the Ministry of Finance, where the mismatch between social reality on the one hand and implementation logic on the other has become apparent. The Tax and Customs Administration has been in trouble for 15 years. This has to do with the way the Ministry of Finance manages the Tax Authority. It is impossible for a public organisation to have been in trouble for 15 years without the context and preconditions being the cause of it. Among other things, the inability to repair the problems with Toeslagen shows that the Ministry of Finance is not capable of changing this. It is precisely here that a departmental reorganisation could help: set up a Ministry of Taxation and Fiscal Affairs such as exists in many neighbouring countries. This new ministry would give taxation in the Netherlands the attention it needs to put its services in order. The remaining parts of the Ministry of Finance can then be transformed into a Ministry of National Budget and Financial Markets. Without creating compartmentalisation. As a consequence, the income side of the national budget (taxes) and expenditure side (departmental budgets) will be separated. This will benefit decision-making and political support: separate decision-making on the income and expenditure sides will give the States-General the opportunity to decide on the Tax Plan without time pressure. And not under high time pressure at the end of the year, as is currently the case. This also benefits the support base among businesses and citizens who, in the current situation, do not know until 1 January what their tax obligations will be in the new year. Incidentally, the Ministry of Finance is the only Hague ministry whose organisation and structure has never really changed since it was established in 1789.

It is a good thing that the administrative leadership of ministries openly intervenes in the administrative organisation of the country. However, their own internal concerns must be made subordinate to the social problems that must be tackled. So departmental reorganisations should not be ruled out at the outset: after all, the civil service organisation must adapt to the social issues and not the other way round.

Picture by Ivo N via Pexels