The third Tuesday of September is called Prinsjesdag in the Netherlands. The head of state then delivers the troonrede: a speech to the United Assembly of the States-General, that is the House of Representatives (Tweede Kamer) and Senate (Eerste Kamer).In the speech, the government indicates in general terms what government policy will be for the coming year. At the same time, the national budget for the following year is presented on that day.
A historical event
Traditionally, the King and the other working members of the Royal Family travel by carriage from Noordeinde Palace to the Ridderzaal (Hall of Knights) in the Binnenhof in The Hague, the seat of the national government. However, due to ongoing renovations, the speech was delivered this year in the Royal Theatre. Arriving at the theatre, the King is greeted by the chair of the Tweede Kamer, after which he proceeds to the throne and reads the speech written by the government – the King has no say in the contents of the speech, nor, of course, any influence over the government’s plans.
The Royal Household have a large selection of carriages to choose from. For a long time, they travelled in the Golden Carriage, built in the late 19th century. This carriage has since come under scrutiny, since one of the panels shows the colonies doing homage to the Netherlands – message that’s no longer acceptable in the modern Netherlands. Since 2015, the Glass Carriage has therefore been used.
Another first: Crown Princess Amalia was present for the first time during the speech, having turned 18 last December.
Plans for 2022: money is scarce
When the government started its job in January 2022, it had ambitious plans to tackle large problems, such as climate change, nitrogen emissions, housing shortage and better relations between government and its citizens. However, these ambitious plans have been put on the backburner due to the immediate challenges resulting from the cost of living crisis. The number of people who can barely make ends meet has risen from 35 percent last year to 43 percent now. The percentage of Dutch people who say they can easily make ends meet has decreased in one year from 57 to 44 percent. The dissatisfaction of many citizens was clearly visible and audible during the King’s tour through The Hague, with wolf-whistles heard all around, as well as upside-down flags shown in many places.
This year, the challenges facing the government are more serious than they have been for a long time. The invasion of Ukraine, rising prices for energy, and the accompanying inflation mean that an unprecedented number of Dutch people risk dropping below the poverty line, having to choose between eating and heating. Thus, most of the government’s new budget focuses on keeping up the citizens’ buying power, instead of investing in solving long-term problems.
The King’s speech this year emphasized the uncertainty that the country is facing, since our current lifestyle is simply not sustainable and calls for sacrifices. He called upon the people and government to show flexibility and strength in uncertain circumstances, working together with all friendly countries in the world. At the same time, he called for more understanding between people with different opinions and an end to polarisation. He asked for support for the government’s plans to work on a sustainable future for all groups in Dutch society.
The immediate aim of the new budget is to reduce the risk of poverty for as many people as possible – while the minister of Finance, Sigrid Kaag, warns that most people will still experience a drop in buying power of no less than 6,8%. The government invests no less than 17 billion euros to improve the citizens’ financial power – 5 billion in structural investment, 12 billion in one-time measures.
Structural investments to reduce the impact of the economic downturn include:
- The minimum wage will rise by 10%, as well as unemployment benefits and the national pension for the elderly.
- People will pay less tax on the first € 70,000 they earn.
- Rent benefits will rise by € 16,94 per month.
- Student loans will rise by € 165 per month.
One-off investments to reduce the impact of the economic downturn include:
- Healthcare benefits will rise temporarily by about € 400 per year.
- The temporary reduction of VAT on energy prices and fuel will end, but taxes on energy will be reduced. Taxes for petrol and diesel will remain lower until 1 July 2023.
- The poorest households will receive a one-off € 1300 payment to help pay heating bills.
- Energy companies will have to pay more taxes.
- An emergency fund is created for people whose heating will be cut off if they can’t pay the bills
- A price cap will be set on gas and electricity.
How does the government pay for all this?
Paradoxically, also because of rising prices. The national gas reserves, owned by the state, of course yield higher prices. VAT income is also higher as a result of rising consumer prices. Therefore, the state does not have to borrow in order to pay for these emergency measures. Furthermore, the economy is still growing: by 4,6 % in 2022 and by an estimated 1,5% next year.
The general vision behind the new budget is to make labour cheaper for workers and employers, while imposing higher taxes on assets and profits. Assets (such as savings and ownership of second homes) will be taxed at a rate of 34%, up from 31%. However, ‘small savers’ will have to pay no tax on the first € 57,000 they own, up from € 50,000. Companies will have to pay 19% tax on profits, up from 14%; smaller and medium businesses will profit from this by cheaper disability insurance for employees.
In total, the government expects to have an income of € 366,4 billion, while spending € 395 billion. Of all government departments, the ministry of Healthcare, Wellbeing and Sport will receive the most money, but in the long term the government aims to reduce the cost of healthcare through the recently published national healthcare agreement, which is still being discussed by al parties, such as representations of doctors and nurses, health insurers and the government.
€1 billion is assigned to reducing inequality of opportunities, as well as € 1 billion for improving the quality of education and another € 800 million for investments in school teachers, managers and educational support staff. The government has earmarked € 100 million for measures to prevent vulnerable young people from getting involved in crime. The same amount is reserved for a more efficient fight against drug crime. Furthermore, spending on the military will make up 2 percent of GDP, amounting to approximately € 5 billion. The government continues to invest in the Climate Fund to stimulate the production of sustainable hydrogen (€ 145 million), offshore wind (€ 180 million) and heat networks (€ 200 million). Money will also be made available in 2023 for measures to curb Covid; a total of € 5.2 billion has been earmarked for this purpose. A noticeable point is € 3,9 billion support for Ukraine, most of which is spent on supporting refugees in the Netherlands, but € 70 million is assigned to humanitarian aid and reconstruction in Ukraine itself. In order to relieve the refugee crisis, the government has set aside € 1 billion for the next five years.
Even with these measures, it is estimated that 4,9% of all Dutch people – 6,7% of all children – will live below the poverty line in 2023. The outlook for 2023 is very uncertain: if energy prices remain high, more and more people will be at risk of poverty. The Central Planning Office (CPB), which calculates the various scenarios and forecasts the financial results of government policy, projects that energy prices will remain high, although they will stop rising at some point.
These measures, moreover, are mostly aimed at individuals. Businesses can expect less support, although there is talk of an emergency fund for small businesses leaving many to struggle with the rising energy bills. For example, Van Roon bakery in Delft, in business for over 30 years, will close its doors on 15 October. A large motivation behind this are rising energy costs, which have gone up from € 1500 to almost € 10000 a month. The business had not even fully recovered from the Covid pandemic, and this new crisis is the last straw. Community services are similarly under threat: it is estimated that about one third of public swimming pools and ice rinks in the country may have to close due to rising energy costs. Private associations, such as sports clubs, experience the same problems: many have had to raise fees by 50% or more. For museums it’s the same: the number of visitors is still not back at the pre-pandemic level, and probably will not fully recover because people simply don’t have the money to spend on outings. At the same time, museums face rising costs to maintain their buildings. All this makes sports and leisure less accessible for a large group of Dutch citizens – leaving us all poorer in spirit, if not in cash.
Written by Saskia Roselaar