Speech by the Minister of Finance, presenting the central government annual financial report
Speech by the Minister of Finance, Jeroen Dijsselbloem, presenting the central government annual financial report, Wednesday 17 May 2017.
This is the fifth time I’ve stood before you on Accountability Day.
And if you line up all my speeches and compare them, you’ll see a clear trend.
My message regarding 2012 was still rather sombre. It had been a hard slog and there was little to shout about.
By 2015 our public finances were in much better condition, but didn’t yet compare to a champion athlete like Dafne Schippers. If you’ll permit me to stay with a sporting metaphor: we might say our economy last year showed the same stamina as cyclist Tom Dumoulin. The public may not yet be displaying the cheerful optimism of that other great athlete, Churandy Martina, but after a long climb our stamina last year propelled us back to the front of the pack.
In 2016 the economic recovery continued unabated, with growth of 2.2%. And it was broad-based growth: domestic demand, exports and business investment were all strong. So there’s plenty of confidence in our economy.
A record number of 215,000 houses were sold, and the number of houses in negative equity fell rapidly. An extra 110,000 jobs were created, which meant that unemployment dropped from almost 7% in 2015 to 6% in 2016. Purchasing power also increased – by 2.7% for an average household.
In 2016 the public finances were far healthier than the government could have hoped for when it took office.
In our Introductory Memorandum in late 2012 we projected a 1.9% deficit in 2016. In fact, we had a surplus of 0.4%, or €2.9 billion.
And there is more good news: in 2016 the government debt fell to €434 billion, €32 billion lower than expected. As a percentage of GDP the debt, estimated at 70.4%, in fact fell to 62.3%. In addition, the Netherlands complied with all the budget rules we set ourselves and agreed with the EU member states. Expenditure on unemployment benefits last year was almost €1 billion lower than forecast.
Like every year, our expenditure on healthcare rose. We spent €72.6 billion in total. That’s a huge sum, but it’s €2 billion less than we anticipated.
The cost of healthcare also illustrates that the long-term sustainability of our public finances looks positive. Contrary to previous forecasts, the rise in healthcare expenditure in 2016 did not exceed our economic growth. This was remarkable, since rapidly rising healthcare spending had for years cast a shadow over our ability to sustain healthy public finances.
But implicit in this success story is a warning. Because sustainable finances require constant discipline. Given all the uncertainty in the world, caution is advisable, both now and in the future.
Last year the gap between expectations and reality often had a positive impact on the budget. But not always. We also had to make some necessary choices, regardless of their budgetary implications. The government decided, for example, to further reduce the extraction of natural gas in Groningen, in the interest of promoting safety and preventing damage. Partly as a result of that decision, our gas revenues last year were €3.8 billion lower than budgeted. And compared with the Introductory Memorandum of 2012 the total was more than €13 billion lower than expected.
Madam President, let me now move to financial management. Last year, central government’s revenues and expenditures met the 99% regularity norm we always set ourselves. The regularity of virtually all of central government’s commitments, receipts and expenditures was not in question.
And so to the Tax and Customs Administration, which in 2016 collected more tax revenue than ever before: €258.8 billion. It achieved this despite its considerable organisational issues. That is reassuring, but it is not enough. As the Borstlap and Joustra Committee made clear, there are still serious shortcomings in the organisation. The Committee’s findings and recommendations are reflected in the eight shortcomings identified by the Netherlands Court of Audit. The Tax and Customs Administration requires more drastic repairs than we foresaw a few years back. We still have a great deal to do. And that goes for the other ministries at which the Court of Audit identified shortcomings too.
At the same time I would note that the three ‘serious shortcomings’ identified last year have now been addressed.
Over the past four years my Accountability Day speeches have grown steadily more positive in tone. With each change of season the figures have moved further in the right direction. With each passing year the economy has gained in strength.
But the job is not finished. It will never be finished. How do we create more opportunities for our economy? And more importantly, how do we create more opportunities for all? In the year ahead we will continue working on that. Because this year can be even better than last.
Certainly, the stamina our economy showed in 2016 bodes well for the future. But we must remain vigilant, create opportunities for all, and – like Tom Dumoulin – stay at the front of the pack.
And with that in mind I am pleased to present to you the central government annual financial report for 2016, and the other accountability documents.