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Thursday, 7 November 2013

Ernst’s Economy in discussion at BNR Newsroom – Contemplating upon one year Cabinet Rutte II

Last Monday, I had the pleasure of being present again at BNR Newsroom, the semi-live radio talkshow with its savvy and distinguished anchorman Paul van Liempt.

Paul van Liempt of BNR News Radio
Photo copyright of: Ernst Labruyère
Click to enlarge
The topic on hand was the first birthday of Cabinet Mark Rutte II, the cabinet consisting of the liberal-conservative VVD and the social-democrat PvdA (Dutch labour party).

In spite of its wobbly start and the fact that the Cabinet still doesn’t have a majority in the Dutch First Chamber (i.e. Senate), the cabinet made it well through the first year.

You could even state that the Cabinet has been willing to deal with its adversaries and with the grassroots within employer’s organizations, labour unions and other societal special interest organizations. 

The blatant lack of "vision upon the future" of this cabinet has been compensated by ‘its desire to make things work’. However, the financial-economic and social problems that the cabinet has to deal with are still huge.

This week's show has been a peculiar one in the history of BNR Newsroom: the show actually has never been broadcasted on BNR radio, due to a technical malfunction during the recording process. This is a true shame, but sometimes things like this happen to the best of people.

Nevertheless, I considered this week’s topic of BNR Newsroom interestingly enough to give an extensive summary of this broadcast-to-be. 

For this summary, I had to dig in my memory, as I also didn’t make a recording from last Monday’s show. Therefore I hope that the protagonists of this show forgive me, if my memory served me wrong and put the wrong quotes in their mouths.

The guests of this week were:
  • Sylvester Eijffinger, Professor Financial Economy at the University of Tilburg;
  • MP Steven van Weyenberg of D66 (liberal party), spokesman for Social Affairs and Employment;
  • Jarico Vos, chairman of the JOVD: the young liberals party (part of the VVD);
  • Lieke Smits, chairwoman of Rood: the young socialist’s party (part of the SP);
  • Robin Linschoten, VVD member and State Secretary for Social Affairs and Employment in the first Purple Cabinet (PvdA, VVD and D66);
  • Rob Oudkerk, MP for the PvdA during the first and second Purple Cabinet. 

In the morning before the recording of BNR Newsroom, a group of renowned economists, including Sylvester Eijffinger, had given the Cabinet Rutte a 4 on a scale from 0 to 10.

Paul van Liempt’s first question to Sylvester Eijffinger was of course: why this bad note?!

Eijffinger: The Cabinet received this bad note for the false start and the messy first year. The Cabinet, consisting of VVD and PvdA, started with a huge fight with the VVD’s grassroots about the income-dependent healthcare premiums and other equalizing, “socialist” measures. 

The PvdA on their behalf were not happy at all with the austerity measures and measures that lowered social benefits and shortened the duration of Unemployment Benefit. Consequently, the Cabinet almost seemed to resign, before it was even well underway.

Sylvester Eijffinger - University of Tilburg
Photo copyright of: Ernst Labruyère
Click to enlarge
One more fatal error, according to Eijffinger, was that the Cabinet Rutte II failed to secure a majority in the First Chamber (senate), by negotiating with a third party for membership of the Cabinet.

They needlessly hurried through the negotiations in order to present a new cabinet in record time. In the process, the Cabinet reckoned that the opposition parties would support the ideas of the Cabinet in the Second (Commons) and First Chamber. However, the opposition was not very enthusiastic about this concept.

Further down the road, the Cabinet entered into a host of agreements with various social partners and other representatives of social interest organizations: 
  • the employers’ associations and the labour unions;
  • representatives for the healthcare industry;
  • the pension funds;
  • interest groups for the housing industry;
  • you virtually name a group and the cabinet negotiated with them. 
This clear vigour of the Cabinet turned itself against Rutte and especially Minister for Housing, Stef Blok, when the housing agreement needed to be reworked more than four times.

Eijffinger: People ask: Which housing agreement is the valid housing agreement now?! We don’t know anymore!

He also complained about the Cabinet’s pension plan that had been slaughtered in the First Chamber (“Dead on Arrival”) and the reluctancy of the Cabinet to do something about the locked-up housing market, the imploded domestic consumption and the approach towards unemployment.

Eijffinger: “Some people make jokes that economists can’t agree on anything at all. Well, let me say that thirty leading economists ALL agreed on necessary labour reforms to improve the Dutch employment situation. 

The same was true for the reforms of the Dutch pension system and the Dutch housing market. There is no difference whatsoever in opinion among the leading economists, when it comes to these subjects and the approach of Mark Rutte.

However, Rutte did some things good: he raised the retirement age to 67 in 2021 and he finally did something about the Dutch Mortgage Interest Deductability (MID), by slowly abolishing it within thirty years. 

On the other hand, there is still a huge difference in approach towards people who already own a house and people that want to buy their first house, the so-called starters". 

At that moment I asked Eijffinger: is thirty years for abolishing the MID not the same as “mañana” (i.e. tomorrow)?!. Should the MID not be abolished in maximum 5 years, to give houseowners a sense of urgency?!

Eijffinger answered that with a period of 30 years, the people would have a clear dot at the horizon about when the MID would be totally abolished. On the other hand, they will have enough time to take their measures against this abolishment of the MID.

Then Paul van Liempt asked Steven van Weyenberg of D66, if he didn’t see it as a missed opportunity for the Cabinet, that D66 was not invited in the initial talks?

Van Weyenberg: ‘Yes, of course it was. And to be frank, we were quite surprised about that. In the nineties, D66 had been a clear success factor for the first Purple Cabinet and (to a lesser degree) also to the second.

Steven van Weyenberg of D66
Photo copyright of: Ernst Labruyère
Click to enlarge
When the PvdA and VVD, the biggest winners of the last elections, started their negotiations, we were surprised to learn that we were not invited. And we were even more (unpleasantly) surprised when we heard that the negotiations had been successful so quickly. 

The missing majority in the First Chamber was like “an accident waiting to happen”. It was really very naive of Mark Rutte to think that he could “easily massage that blemish away” ‘.

Further Van Weyenberg stated that it was important that D66, in combination with the ChristenUnie (progressive confessional party) and SGP (conservative confessional party), took its responsibility and helped the Cabinet with setting the budget for 2014. 

New elections would have been bad for the country; the political situation in The Netherlands had already been akin to the Italian situation, during the last 11 years: six different cabinets in little more than a decade.

Van Weyenberg blamed especially the Socialist Party for supporting a Motion of Distrust even before the most import debate of the year had started: the Financiële Beschouwingen (i.e. “Financial Considerations”).

Then the debate took place between the respective right and left wing youngsters Jarico Vos (JOVD) and Lieke Smits (ROOD (i.e. RED)):

Jarico Vos (JOVD) and Lieke Smits (ROOD)
Photo copyright of: Ernst Labruyère
Click to enlarge
Jarico Vos stated that he was not extremely happy about the achievements of the Cabinet Rutte II yet, but that he would give it a ‘sufficient’ (6 out of 10). 

Both he and Lieke Smits had their worries about the soaring (youth) unemployment and the current uncertain situation concerning the pensions: especially for the youngsters.

Also Jarico Vos blamed the SP for resigning from the ‘Financiële Beschouwingen’ through their Motion of Distrust (with Geert Wilders' PVV), before the debate even started. He stated that the SP had put itself offside for everything that happened during this Cabinet period.

Lieke Smits countered by stating that the plans of the cabinet had been so ‘anti-social’ and especially the social-democrat PvdA had been so submissive towards the VVD, that the SP was almost forced to use every opportunity to let the Cabinet stumble. 

This Motion of Distrust, deployed by the PVV had been such an opportunity.

Lieke told that the diminished build up rate for youngsters, concerning their future pension (plan of this cabinet: the maximum build up rate for a future pension is diminished by 0.4%) is extremely bad for youngsters: they pay a lot of money to let the current retirees enjoy their (partially state-financed) pension. 

However, when these youngsters have the age for retirement themselves, their built up, personal pension supply might be much too low to live from decently, as a consequence of this plan.

Finally, the old ‘partners in crime of the first Purple Cabinet’, Robin Linschoten (VVD) and Rob Oudkerk (PvdA) entered the stage.

Robin Linschoten (VVD) and Rob Oudkerk (PvdA)
Photo copyright of: Ernst Labruyère
Click to enlarge
They started a nice quarrel about the necessity of and compassion for the first Purple Cabinet.

Oudkerk stated that the PvdA, VVD and D66 were oh so happy to guide the CDA to the sidelines in the early nineties, after having this party and its predecessors in almost all post-war cabinets. In Oudkerk’s eyes, Purple One had been a brilliant idea.

This presumed compassion of the VVD for Purple One was partially denied by Robin Linschoten.

“The PvdA had been the clear winner of the elections in 1994 and therefore they had the right to start the negotations. However, if we – as the VVD – would have had to negotiate with the CDA again, we would not have had any problem whatsoever to form a cabinet with them in those days. 

Therefore we didn’t feel the necessity and compassion for Purple One like the PvdA and D66 did”.

When asked by Paul van Liempt, Linschoten stated that he was not unhappy about Rutte II and that the cabinet did a helluva job in the toughest of times; therefore the cabinet deserved lots of credit. 

He also complimented the vigour of the Cabinet and the agreements that the cabinet made with the social partners and other societal interest groups.

However, he did regret the fact that the cabinet doesn’t have a majority in the First Chamber, which considerably toughens the task of the cabinet to find majorities there. 

On the other hand: this forced the cabinet to talk and negotiate with everybody, making this almost the most “democratic” cabinet in decades, as every party has had the chance to bring in its key points.

Former PvdA MP Rob Oudkerk wanted to reward Rutte with an 8 (out of 10)! This was a surprising outcome for me.

Oudkerk stated that Rutte and Asscher are extremely capable, friendly and talented politicians, who made the best of the situation in 2013. Rutte had been a very talented state secretary for Social Affairs and Employment and ditto as state secretary of Education, Culture and Science. 

Lodewijk Asscher, the vice-PM had been a very talented and extremely decisive alderman for Amsterdam.

Nevertheless, Oudkerk had to confess that the stars of Rutte and Asscher have started to fade, due to the difficult political situation within this (virtual minority) Cabinet.

He stated that Rutte should have run the gauntlet against the CDA and D66 in the First Chamber, by threatening with new elections when these parties would not approve of the government budget for 2014. New elections would have been in nobody’s interest, except for SP and PVV at the outer left and right wing of the political spectrum. Therefore Oudkerk thought that the CDA would have turned less hostile against Rutte eventually.

I asked Oudkerk, if this awkward stance of the Cabinet in the Second and First Chamber of Parliament had not been a consequence of the fact that VVD and PvdA didn’t even fight the battle for compromises with each other. 

Instead they created, what I called, the “quartet card game agreement”: “you can have this topic for your grassroots and I will get that topic for my grasroots. Now we are both happy”. 

This led to a government agreement that was neither fish nor flesh.

Oudkerk agreed that this had indeed been a structural weakness of this cabinet and one that would be very hard to overcome.

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