The government’s plans for 2019
The plans for 2019 presented by the third Rutte government on Budget Day are summarised below.
The Dutch economy and public finances are in good shape. All the indicators are favourable: this year the economy will grow by 2.6% and next year the budget surplus will rise to 1.0%, while unemployment will fall to 3.5%, its lowest level since 2001.
The government wants people to feel the benefits in their pockets. This economic growth presents an opportunity to invest in, for example, education, nursing home care, the police, the armed forces and infrastructure.
At the same time, it is necessary in good times to build up reserves for when times are harder. Brexit, a looming trade conflict, and geopolitical tensions in other parts of the world could trigger a sudden economic downturn and a deterioration of our public finances.
The government will work to make the province of Groningen safer, by investing at least €1 billion in the Groningen Future Fund. The cost of phasing out gas extraction will be €300 million in 2019, rising to €1.5 billion on a structural basis by 2023.
Purchasing power and taxes
Unemployment is at its lowest level for 17 years. Unemployed people who find a job now will notice this economic prosperity directly in their pockets. But others will notice it as well: 96% of people are expected to be better off next year. The average household will have €500 more to spend in 2019, with those in work benefiting the most from the government's measures. Most people will pay less tax on their salaries. The first step will be taken towards a two-bracket system with lower tax rates.
- The general tax credit and employed person's tax credit will be raised.
- Child benefit and childcare benefit will be higher.
- The low rate of VAT will be increased from 6% to 9%.
To make sustainable energy options more attractive, the government intends to green the tax system and increase taxes on consumption. It will also take measures to combat tax evasion and avoidance.
The government wants the Netherlands to attract international businesses that make a genuine contribution to the economy. A package of measures will include a reduction in corporation tax and the abolition of dividend tax. In addition, the government will make €100 million available for small and medium-sized enterprises (SMEs) on a structural basis as from 2020. On balance, nearly all businesses will benefit during the government's term of office.
Investing in public services
Our economic growth must also be reflected in the quality of public services. The budget provides €8 billion for additional expenditure in 2019. Of this amount, €6 billion will be invested in public services. Among other things, this money will be spent on:
- Public safety and national security. To tackle crime that undermines society, the government will invest €100 million in strengthening the police force, eventually appointing 1,100 new police officers. Cybersecurity will be made a top priority. The government will revitalise and modernise the armed forces in order to protect the Netherlands from global threats and instability.
- Education. The government will invest in teachers: the average primary school teacher will earn 8.5% more this year and an additional €350 gross annually from 2019. A lot of money - rising to €430 million on a structural basis - will be made available to relieve work pressure in primary schools. Furthermore, the government will halve the tuition fees paid by new students at university and in higher professional education. An additional €248 million will be spent on science and innovation.
- Personal care for the elderly. In 2019 the government will invest €1.2 billion in nursing home care. The additional funding for elderly care will rise to about €3 billion a year in total during the government's term in office, so that elderly people can count on receiving the time, attention and care they deserve, whether at home or in a nursing home.
- High-quality infrastructure. The government will invest an additional €1 billion in 2019 to improve the main road network, maintain roads, remove rail bottlenecks, provide cycling facilities and improve access to Amsterdam Airport Schiphol.
Agenda for the future
The standard of living in the Netherlands is high, and the government wants to keep it that way. It is therefore rising to challenges such as climate change and demographic ageing. They won't be fixed overnight but the government is working hard to address them. It is also specifically seeking more public and political support for these efforts.
The government is working on a broad-based, affordable climate agreement. Within the EU, it is seeking a 55% reduction in emissions by 2030. Coal-fired power stations will be closed; the two oldest will be shut down in 2024. To encourage renewable energy production, the government will invest €300 million a year in measures to cut CO2 emissions in the Netherlands. To achieve its goal of reducing CO2 emissions to almost zero by 2050, the government will take measures to phase out natural gas in the Netherlands. Towards the end of the government's term of office, 30,000-50,000 homes will stop using natural gas every year. Innovation policy will focus on the challenges facing society.
The government believes people should be able to rely on receiving efficient, affordable and available healthcare, both now and in the future. It is therefore making agreements with healthcare providers to ensure that care is provided closer to home where possible and that prevention is a priority. The number of admissions to hospitals and healthcare institutions can then be reduced. This is more convenient for patients and will also save costs. The government is working hard to recruit more people into the healthcare profession and organise the work more efficiently, for example by allocating tasks differently and making smart use of new technologies.
Labour market and pension system
Unemployment is at its lowest level for 17 years. But some people in the labour market are still struggling to find work (e.g. older people, migrants, people with a work-limiting disability). What's more, the labour market is changing; some rules and institutions are too restrictive. The government is therefore working on a more evenly balanced labour market and a future-proof pension system. The Balanced Labour Market Act will be submitted to parliament this autumn to make it more attractive for employers to give workers a permanent contract.
Many people have difficulty finding an affordable home. About 75,000 extra homes a year will be needed in the years ahead. The government will make agreements with municipalities, provinces and other parties to speed up the construction of new housing. It wants, for example, to cut bureaucracy and shorten building-permit procedures. It will be easier for housing associations to build more mid-market rental accommodation. For housing associations the levy on landlords will be reduced by €100 million. A further €100 million will be available as a tax credit for sustainable investments.
The Netherlands and the world
The Netherlands is an advocate of global stability, security and prosperity. As a trading nation, it is particularly sensitive to the consequences of Brexit and trade conflicts. War and poverty elsewhere in the world also have an impact on our country. Jihadists are returning to the Netherlands; refugees and migrants are coming here in search of security or a better future.
To meet these challenges, the government is strengthening the Netherlands' diplomacy, defence and development cooperation. And it is advocating a European Union that achieves concrete results which benefit the people of the member states. In the UN and NATO, the government is working to spread peace and security in the world.
- There will be a sharper focus on the countries and regions that are the most relevant for the security of the Netherlands. The government is investing in expanding and strengthening its diplomatic network in the unstable regions around Europe and elsewhere with regard to migration, security, economic growth and European cooperation. An additional €40 million a year will be available for these measures as from 2021.
- The Netherlands is taking part in international missions, including Resolute Support Afghanistan (to the end of 2021), the NATO presence in Lithuania (to the end of 2020), the NATO capacity-building mission in Iraq and the anti-ISIS coalition.
- The government is working on a common EU approach to migration, with agreements on stronger external borders, disembarkation arrangements on the North African coast and controlled processing centres on the southern European coast, and a revision of the common asylum system.
- The government is pressing for the successful completion of the Brexit negotiations, with a view to an ambitious agreement on the future relationship. But we are preparing for all scenarios (including additional capacity for the customs authorities and the Netherlands Food and Consumer Products Safety Authority).
- In the negotiations for a new Multiannual Financial Framework (2021-2027), the government is pressing for a modern budget that shares the burdens evenly.
- For a robust EMU, it is essential that EU budget rules are observed and agreements are kept. In addition, the government wants the banking union to be completed in order to minimise risks to taxpayers.
- The government is stepping up its cooperation with countries in unstable regions (West Africa and the Sahel, the Horn of Africa, the Middle East and North Africa) in order to remove the causes of poverty, conflict (and related refugee issues), migration and climate change.
- €128 million a year is available for the regional reception of refugees and vulnerable migrants. The government is prioritising humanitarian aid to alleviate the consequences of major crises (€290 million extra a year).
- The government is investing in education and entrepreneurship in order to increase opportunities and jobs for women and young people (€60 million extra a year).
- The government is stepping up its climate policy financing (additional funds will rise to €80 million a year).
- The Dutch investment institution Invest-NL will provide €2.5 billion to help businesses sell products on the international market and to finance international projects.
- Through the EU and other organisations, the government is working to safeguard the multilateral trade system and oppose protectionism.