What could the cabinet not have spent those billions on? You could hear the then Member of Parliament Tjebbe van Oostenbruggen (NSC) thinking when he fluttered with A3 papers in October in the large debate hall of the Lower House. There were graphs on those papers, which showed that the economic outlook is too gloomy year after year. The prospects learn the cabinet how much money it has to distribute. If this spring it is clear at the latest how those models can be improved, then we also have more money, the thought was.
A few months later, this Friday, it turned out that vain hope. An expert group ‘realistic windows’ led by André de Jong, a former top official at the Ministry of Finance, published a study into economic prospects. The group of experts, set after the NSC questions about the figures, also finds that the outlook is gloomy. They see possibilities for improvement, but a large pot of money that can be distributed about the financial problems that this cabinet stands for has not found the group.
In fact. It not only provides economic predictors, but also the coalition itself homework.
That is a disappointment for coalition parties, NSC first. The cabinet is looking hard for money, because it is negotiating for the spring memorandum. That is an update of the current budget and an important preview of the years that follow. The list of saved problems is long. From making climate goals feasible to financing for prisons. And there has been a major potential cost item in recent weeks: Defense. You could hear in the coalition: perhaps a more realistic estimate offers us financial room for defense expenditure.
Russia
NSC was partly right from the expert group. It is true that the outlook has become more gloomy recently, the committee notes. Over the past twenty years, the estimates for the budget deficit are an average of 0.4 percentage points. That is around 4 billion euros. From 2021 that deviation is greater and it is 2.7 percentage point on average per year, in billions almost 30 billion euros.
But the calculation masters cannot do much about the main cause. The experts describe that the deviations in the prospects for the most part, for sixty percent, are due to shocks on the economy that could not be foreseen. They call the Coronapandemie, the raid of Russia in Ukraine and the gas prices that rose as a result.
The CPB and the Ministry of Finance will also receive homework
For the remaining forty percent, the main reason for the deviation is: money that remains on the shelf. The government simply does not succeed in actually spending money it intends to spend. Mainly due to a shortage of staff. If ministries spend less, the difference between income and expenditure becomes greater and it may be as if there is more money left. But the policy goals have not been achieved because the work has not yet been carried out. Later the cabinet will still have to incur costs for this.
To prevent this in the future, politics must learn to plan better, according to the research by the experts. They would find it wise if independent experts would provide advice in the formation about the question to what extent the way in which plans are booked are realistic are realistic.
Gain
The economic ramers of the Central Planning Bureau and the Ministry of Finance also get homework. The most important point at which the economic outlook can improve lies with the tax that companies have to pay on their profit, corporation tax. This is structurally too low compared to reality. The researchers write that the tax is difficult to windows, because the income fluctuates considerably per year. They recommend looking for statistics that better match reality to predict the income.
The expert group sees two other smaller reasons, which means that the estimates are less accurate. The economic outlook is partly determined on the basis of data from, for example, the Tax Authorities on the income of households. That does not always help the prospects, the expert group sees. Moreover, the government has too little insight into the finances of provinces and municipalities. The experts also make improvement suggestions for that.
When implementing those points, does the cabinet not have any more money to distribute? No. The expert group also writes that it will take time to implement improvements on these points. Moreover, the researchers warn, you cannot say in advance to what extent the estimates become more accurate. And they warn of the uncertain geopolitical times. Unexpected events from outside can also omit the prospects this year.
It reads as a warning for the negotiations about the Spring Memorandum, which the cabinet hopes to have on 11 April: Coalition, do not make the mistake of thinking with this research that you can spend billions extra, because the estimates are always too pessimistic.