The government’s plans for 2020
Below is an overview of the plans for 2020 presented by the third Rutte government.
The economy and public finances
We are living in economically uncertain times. In neighbouring countries, economic growth is stalling and there is even a risk of contraction. International trade tensions are creating ongoing uncertainty. Brexit is looming. Despite these turbulent times, the Netherlands remains in good shape. That said, in the Netherlands too, the tide is beginning to turn after years of strong economic growth. However, the Dutch economy is proving robust. At 1.8% this year and 1.5% in 2020, rates of growth in the Netherlands are in line with what we would expect.
The public finances are also healthy, with a budget balance of 1.3% of Gross Domestic Product (GDP) in 2019 and a projected 0.2% of GDP in 2020. Government debt as a percentage of GDP will fall to 44.7%. The coalition agreement included a pledge to make significant investments in public services such as defence, the police, healthcare and education. In addition, extra investments will be made in youth care, the housing market and the justice system. We are preparing for the future and examining what is needed in the long term, so that the economy can continue to grow over the next 20 or 30 years.
The government will continue to invest in public services:
An additional € 51 million will be allocated to defence in the year ahead. Additional investments will continue to increase in subsequent years. By investing in defence, the Netherlands is moving one step closer to achieving the NATO objective for defence spending of at least 2% of a country’s GDP.
Municipalities will receive an additional € 300 million for youth care in the year ahead. Investments in youth care will enable municipalities to keep providing high-quality care. In the meantime, a study is being carried out into the causes of the issues currently affecting youth care.
In 2020, an additional € 134 million will be made available to improve the asylum and immigration system.
An additional € 61 million will be allocated to the justice system in 2020 in order to strengthen the rule of law.
Gas extraction in the province of Groningen will be scaled back more quickly. In the next gas year, less than 12 billion cubic metres will be extracted. From mid-2022 onwards, gas extraction in Groningen will cease altogether, except in years when winter temperatures fall far below average.
In the years ahead the government will invest € 2 billion in bolstering the housing market The policy is primarily focused on first-time buyers/renters and middle-income groups.
Additional measures will be taken to ease the tax burden on households.
The government will also look into what is needed in terms of policy and public investment to ensure the Dutch economy prospers over the next 20 to 30 years. The government will also present plans for establishing an investment fund.
Purchasing power and easing the tax burden
The government will further ease the tax burden next year, for working people in particular. This will allow people to keep more of what they earn and increase the financial incentive to work (or work more). This will be offset by an increase in the tax burden for businesses as of 2021. Additional investments will also be made in healthcare benefit and housing benefit. Furthermore, significantly more people will be entitled to child budget or to larger child budget payments. However, these are forecasts rather than pledges. There is always the possibility that the economy will move in a different direction than expected. It should also be noted that changes in people’s personal circumstances always have a significantly greater effect on household budgets than government policy or developments in the economy.
- The government will bring forward measures set out in the coalition agreement and make available an extra € 3 billion on a structural basis to ease the tax burden.
- For example, the income tax system will be changed to a two-bracket system in 2020 instead of 2021. The basic rate of income tax will be increased, while the top rate will be reduced. This means that anyone earning € 40,000 or more per year will have more disposal income.
- The general tax credit will be raised by €194.
- The maximum employment tax credit will be subject to a policy-based increase of € 364, raising it to € 3,819 (the amount of employment tax credit a person receives depends on their income).
- More families will be entitled to child budget. And around 300,000 sets of parents may receive additional child budget.
- To provide additional support to people on low incomes, healthcare benefit will be subject to a slight annual increase of € 37. This is on top of the normal increase in light of rising health insurance premiums.
- The strict income threshold for housing benefit will be scrapped, so that entitlement does not suddenly stop altogether when a person starts earning slightly more.
- In 2020 the average household will pay less energy tax.
Investing in public services
The coalition agreement sets out significant investments in public services, notably defence, the police, healthcare and education. On top of those set out in the coalition agreement, additional investments will be made to tackle urgent problems that have arisen since the government took office e.g. in the areas of youth care, the housing market, the asylum and immigration system and the justice system. Money will be made available to implement the National Climate Agreement and the pension agreement.
- Compared to the previous budget, an extra € 3 billion will be available for healthcare, meaning a total investment of € 88 billion in 2020. This will be used to resolve problems in youth care and improve care for older people. Money will also be spent on ensuring the care sector has a sufficient number of professionals at its disposal. Funds will also be made available to municipalities so they can provide care for people with psychiatric disorders in familiar surroundings.
- On top of the measures set out in the coalition agreement, additional investments will be made next year in science and technology education in higher education and secondary vocational education (MBO) institutions. In addition, an extra € 10.6 million will be invested in the grant scheme for practical education over the next five years, and in 2020 € 10 million will be made available to tackle the issue of secondary schools in areas affected by population shrinkage.
- € 2 billion will be invested in the housing market. This policy is primarily focused on creating affordable housing for first-time buyers/renters and people in middle-income groups.
- The government is making additional funds available that will be invested in several defence-related NATO capabilities. Since 2014 the defence budget has increased by almost € 3 billion. In 2020 an extra € 51 million will be earmarked for personnel and materiel.
- We will continue to strengthen the police force, as set out in the coalition agreement. Funds will also be made available to strengthen the justice system, in addition to € 23 million for improving the legal aid system, so that legal assistance continues to be accessible to all.
- The Immigration and Naturalisation Service (IND) will receive a € 65 million structural increase as well as € 34.6 million extra in 2020 for reorganisation to enable it to process at least 90% of asylum cases within the statutory time limit.
- The Netherlands has world-class infrastructure but significant additional efforts are needed to maintain and manage it. In 2020 € 2.9 billion will be invested in the main road network, € 2.6 billion in the railway network and €1 billion in the main waterway network.
Making the Netherlands future-proof
The Netherlands is doing well. But that doesn’t mean we can rest on our laurels. A lot is going on around us and global uncertainties also affect our country. Uncertainties like Brexit and international trade conflicts. We have made agreements at international level on tackling climate change and carbon emissions. And in our own country we have an ageing population, as well as a changing labour market, new technologies and lower productivity.
- Until the end of 2030, € 300 million will be made available each year to reduce carbon emissions in the Netherlands. The government has set aside an additional € 110 million for this purpose in 2020. This money will be used for the Energy Retrofit Fund, the industry relief fund, agriculture, tackling nitrogen emissions, bicycle parking and electric vehicles.
- Agreements have been made with employers and staff on making the pension system future-proof. The most immediate thing that people will notice is that the state pension age will be frozen for the next two years, so that it remains at 66 years and 4 months.
- The Borstlap Committee is currently researching what the future of work could look like and what legislation would best meet its needs. The government has set aside € 600 million in order to implement the committee’s recommendations, which will be published in 2019.
- The government will be looking ahead and attempting to answer the question: how will the Netherlands earn its keep in 2050 and what can the government do to strengthen its revenue model? Research will be carried out to see how setting up an investment fund could strengthen the revenue model.
- The government will work to solve problems faced by implementing organisations. Government services must be in order and must meet the changing needs of the public over the course of their lives.
The Netherlands in the world
The government believes that international cooperation is in our national interest. This is because, in many areas, we believe it is impossible to solve issues alone. That’s why we work with our partners within the United Nations, NATO and the European Union and are continuing to strengthen cooperation on diplomacy, defence and development.
- Since 2014 the defence budget been increased by almost € 3 billion. In 2020 an extra €51 million will be allocated for personnel and materiel.
- The government is working hard to combat impunity. Action is being undertaken on the world stage to establish an international mechanism to bring IS fighters to justice. At the same time efforts are being made within the EU to ensure the EU human rights sanctions regime is implemented swiftly.
- Participation in international missions will continue, including in Afghanistan (NATO), the Sahel (UN/EU), Iraq (anti-ISIS coalition/NATO/EU), the Middle East (EU/UN) and Lithuania (NATO).
- Cybersecurity is an important issue and, as such, investments are being made to create a network of cyberdiplomats. We aim to issue the first cybersanctions in 2020. We will increase the capacity of the Netherlands Defence Intelligence and Security Service (MIVD) and Defence Cyber Command.
- Criminal proceedings against MH17 suspects will begin in the Netherlands next year.
- The government is working at EU level to maintain and modernise the multilateral trade system and to conclude sustainable bilateral trade agreements with third countries.
- With regard to Brexit, the government is striving to create an ambitious future relationship between the EU and the United Kingdom.
- 2020 will see the establishment of the 24/7 International Desk, a one-stop shop for Dutch nationals abroad offering as many digital government services as possible.