Speech on the presentation of the 2020 Budget Memorandum
Speech to the Dutch parliament by the Minister of Finance, Wopke Hoekstra, on his presentation of the budget.
In September 1905 the Dutch Minister of Finance Theodoor Herman de Meester opened his speech on the presentation of the budget with the following words:
Ingevolge de machtiging door de Koning verleend, heb ik de eer de ontwerpen der algemene begrootingswetten voor koomend dienstjaar over te leggen. Mijnen indruk omtrent den gang der middelen zou ik aldus willen samenvatten, dat gelukkig over het algemeen nog steeds een geleidelijk accres valt waar te nemen, doch dat de tijden waarin de ontvangsten ook zonder belastingverhoging met sprongen vooruit gingen, voorloopig achter ons liggen…
By virtue of the authority vested in me by the King, I have the honour of presenting the general budget bills for the coming year. The state of the public finances can be characterised as follows. Fortunately the broad picture is still one of gradual accretion, but the days when receipts increased in leaps and bounds even without tax increases are for the time being behind us.]
These days, instead of addressing the House directly, we do so through the President, that is to say through you. And the first time this text was read out, there were only men in this chamber. The words are taken from the very first speech to be given on the presentation of the national budget. It was delivered by the then Minister of Finance, Theodoor Herman de Meester, in September 1905, and concerned the budget for 1906. So it was De Meester who started the tradition of giving a speech when presenting the budget to the President and the members of the House on Budget Day. It is an honour for me to maintain this tradition today.
Let me take you back briefly to the Netherlands of 1906.
Louis Couperus’ novel, Old People and the Things that Pass, a family drama, was published for the first time in book form. A reflection on the relentless march of time.
The Netherlands was not yet a true democracy in 1906. Nor did it have a system of social security. At that time, compared with other countries, it enjoyed a fair degree of freedom of expression, freedom of religion and equality between men and women. But certainly not to the extent we do today.
In 1906 Theodor de Meester fulfilled the functions of both finance minister and prime minister. He served in what was dubbed the ‘egg-shell china’ government due to its fragility. It had no permanent majority and was reliant on ad hoc parliamentary support.
One of the items that immediately catches the eye in the 1906 budget concerns ‘the additional costs entailed in establishing a separate Ministry of Agriculture, amounting to approximately 100,000 guilders’.
As you know, this would not be the last time that the costs of setting up the Ministry of Agriculture would appear in the budget. No wonder it’s said that history repeats itself.
The 1906 budget set out total expenditure of 181,714,219 guilders and – to be absolutely precise – 95 cents. Today, actual total expenditure is a little over 300 billion euros.
And while in 1906 total public expenditure was 11% of gross domestic product, it now stands at around 43%.
Time marches on relentlessly, so let me now return to the present day.
We live in economically changeable times. In the countries around us, economic growth is falling away and there is even a risk of contraction. International trade tensions are causing ongoing uncertainty. And Brexit is looming.
Yet despite the turbulence around us, the Dutch economy is still in good health. It is true that, after several years of growing vigorously, the economy is beginning to level off. But at 1.8% this year and an estimated 1.5% in 2020, we are still seeing rates of growth that we are accustomed to.
Employment, meanwhile, is higher than ever before. Many people who, until recently, looked for work every day, are now going to work every day. That is good news for many.
But... and here too I’d like to quote Couperus: ‘Certainly it is bliss to float in the sensuality of reminiscence. But then you drift off into slumber instead of living your life.’
This government does not intend to sit back and relax. On the contrary, we will continue unabated our pursuit of the objectives we set in the coalition agreement.
We therefore intend to keep investing in society.
And we will set aside extra money, over and above what was envisaged in the coalition agreement, for youth care, affordable homes and defence.
In addition, we will take further measures to ease the tax burden on households.
On top of the government’s previous measures, this Budget Memorandum will lower the burden on taxpayers by three billion euros on a structural basis.
This way we are ensuring that households, and especially people in work, profit more from the growth in prosperity.
We will also tackle the increasing uncertainty on the labour market. This involves improving the balance between employees and the self-employed. One of the steps we are taking here is cutting tax for employees so as to put them on a more equal footing with the self-employed on this point.
Besides introducing this and other measures in the relatively short term, we are of course also taking a long-term perspective. The National Climate Agreement and the Pension Agreement are important steps towards a sustainable Netherlands and a future-proof pension system. The practical details of these agreements will be further elaborated in the near future.
The relentless march of time...
It goes without saying that nobody here today can predict exactly what our world will look like in 30 to 40 years’ time. But we can identify several challenges that confront us and society at large.
Far-reaching changes mean that our society and economy will look very different in the future. And the way we earn our living will change too. New technologies will make increasing inroads into our lives. Technologies like artificial intelligence, algorithms and biotechnology, which will determine the way we live and work. Demographic ageing will increase, while productivity will grow more slowly. At the same time, public-sector spending is more likely to rise than fall due to increased demand for, among other things, healthcare and social security. And this, Madam President, will place a strain on the Netherlands’ earning capacity in the long term.
And then there is another challenge.
Interests rates have fallen to unprecedented lows.
That makes life complicated for savers and for pension funds, but it also opens up possibilities for investment in sustainable economic growth.
In order to overcome the challenges we will face over the coming decades, investment in R&D, knowledge development and infrastructure will be vital.
To that end, we will in the near future be working out the details of a fund for judicious investment to promote long-term economic growth.
Over the coming period we will make arrangements concerning the exact criteria and governance, to ensure that the investments do indeed benefit long-term earning capacity.
As politicians, we play a part – including by means of the Budget Memorandum – in establishing the framework within which we are able to shape the future. It wasn’t Theodoor de Meester but his namesake and one of my political heroes Theodore Roosevelt who once addressed a public meeting with the words ‘The government is us; we are the government, you and I.’
The task of shaping our future is not the sole preserve of the government and politicians. On the contrary. Our future will be shaped by you, by me, and by the Netherlands as a whole. Just as tax revenue belongs not to politicians but to the people, this Budget Memorandum is emphatically of the people, for the people.
I am therefore convinced that this budget will enable us all to take another step forward.
This Budget Memorandum gives us the means to achieve prosperity, not only for us all here and now, but also – especially – for future generations.
It is my pleasure to present you with the 2020 Budget Memorandum, and the new Blauwe Boekje, the booklet about the Dutch economy and public finances that has almost become a tradition. I hope that you will find it just as useful as last year’s edition.