On Budget Day (known as ‘Prinsjesdag’, or ‘Prince’s Day’), the third Tuesday of September, the Dutch government announces its plans and ambitions for the coming year. King Willem-Alexander travels in the Glass Coach to the Hall of Knights in The Hague, where he reads the Speech from the Throne, officially opening the parliamentary year.

In addition, the Minister of Finance presents the government budget for the upcoming year, which will be followed by a cycle of parliamentary debates, lasting until the beginning of December.

Key message from this years King’s Speech is that the Netherlands is doing well (high economic growth, low unemployment), but that in the years to follow economic growth is expected to decrease (due to external factors like Brexit).

Key elements of the King’s Speech & Government budget 2020:

• The Dutch economy is still doing well: this year economic growth will be 1,8% and in 2020 it will be 1,5% of GDP.
• Overall the economy is still strong – with a national debt to decrease to less than 50% of GDP.
• Unemployment rate will increase slightly from 3,5 % this year.
• Factors that impact international trade continue to affect the Dutch economy, as the Netherlands’ internationally oriented economy is vulnerable to global market disturbances (like Brexit).
• Following the above the King made a warning to think about how the Netherlands can earn its money in the future (in both the short and the long term).
• Additional investments include measures to reduce costs for households, affordable housing, youth care, defence and the accelerated phasing out of Groningen gas production. The cabinet also wants to put the pension agreement and climate agreements into practice, to develop a sustainable country and a future-proof pension system.
• Additional budget will also be made available to get housing back on track (100 million euros annually and about one billion euros to build more houses in the coming years). The government is also working on a large investment fund that will include extra government loans.
• The health care premium will increase to an average of 1,421 euros per year (increase of an average of 37 euros per year).
• The government will investigate the possibilities for further investment in innovation, knowledge development and infrastructure, among other things. To this end, the government is working out the contours of an investment fund that will form the basis for ‘effective investments to increase the earning capacity in the long term’.
• The business community foots part of the bill and the government has accepted a smaller budget surplus (0.3% instead of 0,5% (as forecasted).
• Corporate income tax cuts will be delayed and won’t be as high as expected.
• From 2021 onwards, multinationals will be able to offset fewer international losses. The aim was to limit the so-called liquidation loss set-off, but the deduction option remains only for subsidiaries (at least 25% of shares, located in the EU and for a maximum of three years).
• The full King’s speech (in English) can be viewed via this link.

A recap of 2018/19 and what to expect next year

On 4 July the Dutch Parliament held their last plenary session before summer recess. Seems like a good moment for a quick recap of the political year 2018/19; who are the winners and losers? And what to expect next year?

Winners: Thierry Baudet and Frans Timmermans

On 20 March the Dutch took to the polls to vote for their provincial governments, which in turn are responsible for electing the senate. Euro- and climate sceptic Forum for Democracy was the biggest winner. The eccentric Thierry Baudet brought his party from 0 to 12 seats in Senate, which means they now share first place (12/75 seats) with PM Mark Rutte’s VVD. Consequently, the coalition government lost their majority in Senate.

On 23 May Frans Timmermans pulled his Labor’s EP-fraction to the number one position in the Netherlands by running as Spitzenkandidat for S&D – delivering a solid 6 seats. Over the last week however, it became clear that this is probably not enough to secure Commission Presidency – as the Council proposed Von der Leyen as Juncker’s successor. Despite heavy EP criticism, a majority is still expected to agree with Von der Leyen’s candidature. Along with S&D, the Greens in particular have taken a critical stance towards Von der Leyen. Next week, the EP will continue to debate the presidency.

Losers: Geert Wilders and some others

It is no coincidence that the Party for Freedom (PVV) of Geert Wilders is the big loser this year, after many voters switched to Forum for Democracy. The Socialist Party – led by Lilian Marijnissen – has been in trouble for longer, having lost seats in four consecutive elections (national, municipal, provincial and European). In the past parliamentary year, the socialists surrendered five seats. They now have seven seats in the Lower House of Parliament, which is exactly a half of what they had in March 2017. Both the PVV and SP are now no longer represented in the EP.

This political year had a rocky start for PM Rutte, who desperately attempted to push his dividend tax reform. Losing support on all sides, it was Rutte against the rest. Central in the debate was the possible relocation of Unilever’s head offices to Rotterdam. Early October, Unilever CEO Paul Polman informed Rutte of the company’s decision to stay in London by text message – supposedly the final straw for Rutte to announce the dividend tax reform was off the table at last. This high profile twist is commonly known as the first real scratch on Rutte’s premiership.

Minister for Economic Affairs and Climate, Eric Wiebes (VVD/Liberal Conservatives) also had a rough year. The gas extraction dossier in the Groningen province proved to be too large for him to handle without receiving some serious blows to his position. Since Wiebes is also the minister responsible for the execution of the ambitious plans in the recently presented Climate Agreement – the Dutch are starting to wonder whether Wiebes will reach the finish line for this cabinet.

Speaking of which – 2019 saw one political casualty in the form of the state secretary responsible for asylum. Mark Harbers (VVD) was forced to take political responsibility once it became clear that his department knowingly obscured statistics related to crimes committed by asylum seekers. In such a controversial subject there was apparantly no room for error and he was succeeded by 72 year old Ankie Broekers-Knol (VVD), former chairwoman of the Senate.

What else happened?

After D66 (Liberal Democrats) leader Alexander Pechtold’s departure in 2018, CDA (Christian Democrats) leader Sybrand Buma resigned on 21 May. His successor, Pieter Heerma, has assumed the role until the next parliamentary elections planned for 2021. He has repeatedly stated he does not want to lead the party afterwards.

Parliamentary pressure: over the past parliamentary year, record numbers of debates (566) were held and motions (over 4000) were tabled. On the long term agenda there are even requests for debates originating in March 2018 which haven’t been dealt with yet. The parliamentary agenda has exploded, warned chairwoman Arib: “We’re driving ourselves and each other crazy.”

What to expect next year?

Budget day 2019: next up on the political calendar is ‘Prinsjesdag,’ or Budget Day, during which the Cabinet will present their new plans and proposed budgets for 2019-2020.

Next elections: if the Cabinet holds, the next national elections in the Netherlands will take place in May 2021 – but chances that Dutch voters would need to go to the polls at an earlier date. The challenging process of implementing the Climate Agreement, the new Pension Agreement, and major (geo)political shifts of balance will try and test the fragile coalition government, possibly to the point of breaking.

As theDutch lib-dems recently calledfor additional competition regulation for tech companies, the ministry for Economic Affairs also switched from fostering digital platforms for the Dutch ecosystem to a more critical position on their market share.

EU guardrails for digital platforms

The Dutch deputy minister for Economic Affairs, Mona Keijzer (Christian-Democrats), calls for EU guardrails for digital platforms. In a letter to the Dutch parliament, she advocates to extend the authorization of the Directorate-General Competition.

The Dutch government wishes to extend the guidelines used by DG Competition and will actively search for support from other member states. This should be one of the objectives for the new European Commission.

The letter to the Dutch parliament mentions:

• Specific concerns about technology companies that act as gatekeepers for consumers and businesses;
• Wish for ex ante intervention by the Commission on EU level. For instance in tech acquisitions;
• Current EU competition regulation provides sufficient tools and does not need to be adapted. But, the guidelines should be adapted.
• DG Competition should be able to force digital platforms to share data on reasonable conditions or to actively offer options of other providers when platforms are used for cross-selling;
• Thresholds in the current guidelines are aimed at turnover and market-share. These thresholds should be adapted as tech-acquisitions are not flagged based on the current guidelines. For instance, the EC could look at the value of a transaction in acquisitions.

The Dutch deputy-minister is likely to discuss this in the EU Competition Council on May 27/28.

Questions or request for more intel, shoot me an email atpwalraven@publicmatters.nl

Yesterday (20 March, 2019) the provincial elections took place in the Netherlands

About 56% of eligible voters went to the polls and voted for 12 provincial councils, which are in turn responsible for electing the senate (on 27 May this year). These elections were considered critical for the majority of the current coalition parties, including VVD (Liberal Conservatives) of Prime Minister Rutte.

Huge win Forum for Democracy

The most remarkable result is the huge win of Forum for Democracy (FvD), a right-wing and Eurosceptic party led by Thierry Baudet. Where FvD gained two seats in the lower house in 2017, according to the most recent exit-polls they are set to become the biggest party in Senate (14,4%). Although most polls put them at 8 seats in senate (which would already have been an incredible achievement), they are now set to gain 12 seats. FvD is known for its scepticisms, regarding the EU (pro-Nexit) and climate change.

Coalition loses majority in senate

The current coalition government is likely to lose its majority in senate; the VVD will lose just one seat, but its coalition partners CDA (Christian Democrats) and D66 (Liberal Democrats) are also set to lose seats (CDA from 12 to 9 seats and D66 from 10 to 6 seats). Coalition partner Christian Union (CU) is set to gain one seat, from 3 to 4. This shift in balance for the coalition means it might be harder to pass bills in senate and there are only two parties big enough to help them reach majorities – Forum for Democracy and GroenLinks (Green Left).

Senate elections on 27 May

The provincial councils will elect the senate on 27 May this year and the new senators are to be installed on 11 June. After the European elections in May this year, the next elections concern the lower house – in 2021.

The overview below shows the preliminary results of yesterday’s provincial elections (# seats) – compared to the results of 2015. It should be taken into account that these figures are preliminary – not all votes have been processed so far.

• FvD – Forum for Democracy = 12 seats (14,4% – N/A in 2015)
• VVD – Liberal Conservatives = 12 seats (13,8% – 13 in 2015)
• CDA – Christian Democrats = 9 seats (12 in 2015)
• D66 – Liberal Democrats = 6 seats (10 in 2015)
• PVV – Freedom Party = 5 seats (9 in 2015)
• SP – Socialist Party = 4 seats (9 in 2015)
• PvdA – Social Democrats = 7 seats (8 in 2015)
• GroenLinks – Greens = 9 seats (4 in 2015)
• ChristenUnie – Christian Conservatives = 4 seats (3 in 2015)
• Partij voor de Dieren – Animal Party = 3 seats (2 in 2015)
• SGP – Christian Conservatives = 2 seats (2 in 2015)
• 50PLUS – Elderly Party = 0 seats (N/A in 2015)
• DENK – Pro-immirant Party = 0 seats (N/A in 2015)
• OSF – Independent Senate Party = 0 seats (1 in 2015)

Never a dull moment in Dutch politics! The current coalition government is sticking together, but looking back at 2018 and ahead to 2019, cracks seem to appear.

2018 – What has happened?

• GroenLinks/Greens and local parties were the big winners of the municipal elections (in March). GroenLinks even became the biggest party in two main cities (Amsterdam and Utrecht) and local parties gained over 32% of the votes.
• Support for the coalition government has dropped significantly, possibly due to a lack of tangible results.
• Prime Minister Rutte has suffered a blow after being forced to cancel the planned repeal of dividend tax, only just surviving a vote of no confidence in a parliamentary debate.
• Alexander Pechtold, leader of D66/Liberal Democrats, resigned after almost 13 years, to be succeeded by the ‘young and unexperienced’ Rob Jetten (31 years of age).
• Following long negotiations involving many stakeholders (companies, NGOs, etc.) a comprehensive National Climate Agreement was presented in December. Now the government needs to agree on its execution, which could be difficult. Views differ significantly, mainly regarding the question who will foot the bill of the proposed measures. Last week VVD-leader Klaas Dijkhoff even publicly distanced himself from the agreement.

2019 – The coalition government has a bumpy ride ahead

• The provincial elections (20 March) will be a serious test for the government; the to be elected provincial councilors in the 12 provinces will in turn elect the senate on 27 May. Key question is whether the government will keep its current slight majority in Senate.
• The European elections (23 May) will be the next benchmark for the popularity of government; due to Brexit, 29 seats in the European Parliament are now at stake (instead of the current 26).
• The reform of the pension system, as announced in the coalition agreement, is probably the hottest potato for the government. In 2018 initial talks with stakeholders have proven unsuccessful – talks between unions and employers were ceased – and now the minister of Social Affairs has to come up with a new plan.
• The government also plans to reform the labor market (strengthen the position of freelancers, prepare workers for the future, etc.) which will not be an easy political ride either.
• Although currently the Dutch economy doing well, it will be a challenge for the government to manage the negative impact of Brexit on the Dutch economy, which is closely tied to Britain. A no-deal Brexit could even cost the Netherlands at least €34bn up to 2030 (which is €164 per resident per year).

Photo: Rijksoverheid by Valerie Kuypers