The money could not run out, or so it seemed in The Hague in recent years. Crisis after crisis, billion-dollar packages were set up by the cabinet. But that time is over, says Finance Minister Sigrid Kaag now. “The message is that not all wishes can be honored anymore.”
It is this message that Kaag, besides treasurer also deputy prime minister of the Rutte IV cabinet and party leader of D66, proclaims in the Spring Memorandum. In that Spring Memorandum, the interim adjustment to the annual national budget, she does something the cabinet has not done for years: cut spending.
Last year, the cabinet was still generous in the spring. Shortly after the Russian invasion of Ukraine, billions of euros extra went to Defense. The minimum wage accelerated to absorb the energy hit for low incomes. That same year, even more emergency measures followed to dampen the shocks of the energy crisis and high inflation. It was the tried and tested method with which the previous cabinet had previously tackled the corona crisis: with a lot of money, very quickly.
The Spring Memorandum of 2023 breaks with that young tradition. With the cheese slicer method, Kaag scrapes some of the expenses of almost every ministry. The almost free childcare will be postponed by two years, the STAP budget for further training will be scrapped and the personal contribution for the Social Support Act, for informal care and household help, will be reintroduced.
It is a “change of course”, says Kaag from Stockholm, where she meets with other European finance ministers. But one that is necessary.
A lot of money has been pumped into the economy by the government for years; these large expenses were always easy to absorb. Last year, the House of Representatives called on you not to look at cuts now. Why are you doing that anyway?
“We still adhere to the coalition agreement, but we also see a rapidly changing world around us. Interest rates have risen sharply. We’ve had the war in Ukraine, a support package for the energy crisis, there are a huge number of one-off and structural setbacks. That is why it is now important to get the budget back in order and to start living within our margins again.”
Still, this ‘change of course’ is striking, as the coalition agreement is less than a year and a half old.
“It was an expansive coalition agreement, with an expansive budget. We are already sailing very close to the wind. And that was when we assumed zero percent interest. Then it is not responsible to continue as if nothing had happened.”
The blows of the past crises have been very mixed. Corporate profits have been hit much less hard than citizens, the wealthy are doing fine. Why has the government not done much more to raise money there?
“It’s not saying we don’t. There will be discussions in the coming months about ways to better address corporate burdens and wealth inequality. And we will have to look at the budget again before Prinsjesdag and make choices. We are not done with this yet.”
Will it be austerity or higher taxes?
“That is up to the four coalition parties, they have different views on this. But choices will have to be made, that is clear. Also during this government’s term of office, due to the great global economic uncertainty and the assumption that interest rates will continue to rise.”
The government is sticking to ambitious nitrogen and climate plans. Will we soon have to deal with fewer subsidies and more compulsory and urgent measures?
“That could very well be. The question remains: how do you deal with public money? It is money earned by the taxpayer. And it is also evident that money is not the solution to all problems, in fact that is also a message that those who give in this Spring Memorandum.
“At the same time I say that it should be as efficient and as pleasant as possible. That means we also have to offer people reassurance and a safety net.”
Last year, after the Budget Memorandum, you said that the cabinet should consult itself about how to deal with the energy crisis. What did that reflection yield?
“We saw then that there was great uncertainty among people. The reassurance only followed when we announced a large package of measures. Finally, we have a big step, one bold move, by removing the uncertainty among citizens and energy-intensive companies and saying: we are going to do this. There are only one or two countries in Europe that have introduced a real price cap, and one of them is the Netherlands.
“But in that time we also noticed how complex the policy can sometimes be, that it takes time. As a citizen you don’t benefit from that. And that is something that we ourselves have to think about better: how can we provide more certainty?”
Wasn’t the need for an intervention clear early on?
“Our regulations are often very complicated, which makes implementation even more complex and slower. We also notice this now that we are looking at new forms of purchasing power support for the coming years. This often leads to the conclusion: if we do it, it must be before date X. Or: it has been investigated, but not feasible. Much of what we would like is not possible. And taking responsibility also means: don’t promise people things that can’t be done anyway.”
You said in March after the Provincial Council elections that it was time to calmly analyze what the voter had sent out. Now it sounds as if you believe that the government mainly has a communication problem.
“I’m not saying it’s a communication problem. It starts with the analysis of what we as a government can offer. Are we clear enough in advance about what is possible? And then we ask ourselves: is this clear? People need to know what they have in you.”
Don’t people also feel this lack of clarity because the brakes are being applied precisely within the cabinet and in the coalition? If the CDA slows down the nitrogen policy, then that feeling is not crazy, is it?
“A major transition very often evokes resistance and that is very understandable, because many changes are coming our way. And incidentally, these changes do not only evoke a strong feeling on one side. For example, climate change also frightens many young people. What is left of their future? Older people are by definition often more conservative.
“The conservative nature of people is also reflected when you look at nitrogen, at the future of the economy, at the speed of digitization. Jobs are disappearing, we are aging as a country. As a government, we must have good answers to that. And ultimately you have to dare to make difficult choices if you are convinced that you are on the right track. That’s the hardest question. And then people look at polls instead of perhaps looking in the mirror themselves.”
That’s what you say about the CDA?
“No, I’m not talking about anyone. I say that in a general sense, not about one or two parties. You can involve that criticism at all parties, including mine.”
A version of this article also appeared in the newspaper of April 29, 2023.