Normalising public finances in the Netherlands. OECD meeting of Senior Budget Officials Maaike Adema

Transcription

1 Normalising public finances in the Netherlands OECD meeting of Senior Budget Officials Maaike Adema

2 Contents Impact of the crisis Dutch response to the crisis Fundamental policy review Implementation challenges

3 Revised economic indicators for 2009 (%) sep-08 dec-08 feb-09 jun-09 sep-09 Economic growth 1¼ -1¼ -3½ - 4¾ - 4¾ EMU-balance 1,2-1,2-2,8-4,1-4,8 EMU-debt Unemployment 4½ 4½ 5½ 5½ 5¼ 3

4 Economic growth (% GDP)

5 EMU balance (% GDP) 3,0 2,0 1,0 0,0-1,0-2,0-3,0-4,0-5,0-6,0-7,0 5

6 EMU debt (% GDP) 80,0 75,0 70,0 65,0 60,0 55,0 50,0 45,0 40,

7 Decomposition of debt increase 70% 60% 50% 40% 30% 20% Other Automatic stabilisation Stimulus package Interventions financial sector EMU-debt BM % 0% % 7

8 Unemployment 11,0 10,0 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 8

9 Dutch response: addendum to coalition agreement Short term : Stabilising the economy Interventions in financial sector (13.5% GDP); Stimulus package (1% GDP); Automatic stabilisation (6.2% GDP). Medium term from 2011: Restoring public finances Start consolidation in 2011 conditional on economic recovery; Stability and Growth Pact; Trade-off Deficit Reduction Act; Fundamental policy reviews. Long term: Improving sustainability Raising the retirement age to 67 (0.7% GDP); Improving efficiency in health care (0.4% GDP); Higher taxes on houses > 1 million (0.2% GDP). 9

10 History: growth paths after financial crisis Finland Zw eden Japan

11 Scenario s for recovery (EMU-deficit) 2% 0% -2% -4% -6% -8% -10%

12 Medium term: restoring public finances Structural expenditure cuts starting from 2011» Conditional on economic recovery Stability and Growth Pact» Excessive Deficit Procedure» Recommendation by Council: deficit < 3% in 2013 Deficit Reduction Act» Based on SGP requirements» Yearly improvement of the structural deficit by at least 0.5% GDP until MTO is met Fundamental policy reviews 12

13 Fundamental policy reviews Official exercise by order of the cabinet Based on similar exercise in 80 s and existing interdepartmental policy review instrument Subjects chosen by the cabinet (no pet subjects) Comprehensive (including tax expenditures) Gain insight in different cutback options and their effects Provide ample possibilities (aim 6% of GDP) (politicians must be allowed to choose) Political decisionmaking in June/July

14 Rules of play Expert studygroups (inside and outside the public sector) Chairperson not in charge of policymaking in the area to be reviewed Compulsory 20% reduction option No opinion on desirability No political interventions Non-veto Delivery May/June

15 Subjects 1. Energy and climate change 2. Environment 3. Transport and watermanagement 4. Housing 5. Productivity in education 6. Higher education 7. Child benefits 8. Innovation and applied research 9. Income support 10. Unemployment benefits 11. Cure 12. Care 13. Development aid 14. Immigration, integration and asylum 15. Public safety and terrorism 16. Tax administration 17. Administration of income support 18. Public administration 19. Operational management 20. (Defence) 15

16 Implementation challenges: political commitment Is the momentum still there? General elections in May 2011 Economic recovery: Medium Term Outlook 2010 Majority of the public does not experience the crisis (yet?) 16

17 Thank you!