Dutch parties agree on government formation

Friday, February 9, 2007

Prime Minister Balkenende will remain in office in the next government.

The leading political parties in the Netherlands have agreed on a work program, part of an effort to form a coalition government after the splintered verdict of the elections held in November 2006. The parties have yet to agree on who gets the top jobs in government.

The main parties of the left, the Labour Party (PvdA) and Socialist Party (SP) won 58 seats in the 150 strong Tweede Kamer, the lower house of parliament, while the more splintered right wing parties led by the Christian Democrats (CDA) and ChristianUnion (CU) won 47 but with probable support from the 9 members of the Party for Freedom (PVV).

The parties announced their plans on Wednesday reaching a deal on the main issue of the election campaign, Mortgage Interest Relief, which split the SP from the other coalition partners. Mortgage Interest Relief, which is a significant factor in most people’s finances, with a marginal rate of 52%, had been threatened by the SP manifesto, but the compromise deal announced by the parties left Mortgage Interest Relief unchanged in return for a continuation of the tight legal restrictions on rent increases that had been threatened by the previous government.

In another key concession, the CDA reversed the hard line asylum policy that it introduced with its previous coalition partners, the VVD, and introduced an amnesty of all illegal immigrants who arrived in the country before 2001.

The publication of the government agenda (the “Coalitieakkoord”) outlines policies in a number of main areas:

  • Retirement: the CDA conceded changes to retirement benefit to introduce taxation on retirees with pensions over EUR 18,000 from 2011.
  • Work: the government will allocate EUR 700 million to facilitate unemployed and disabled people finding jobs.
  • Education: more money will be made available for schools in poorer areas or schools with substantial immigrant populations but, in return, the government will force everyone under 27 to either be in education or have a job. Those in high school education will be forced to gain a diploma before leaving high school and take a three-month “social internship” before leaving school.
  • Health: the CDA has compromised on Health too in reversing the 2003 policy of excluding dental care from basic health insurance and more money will be made available for staffing of health care outlets. The CDA’s stated policy of cutting budgets in a new government will be restricted to cost savings from elimination of waste and red tape.

Following the nomination of Balkenende as formateur of the new government the haggling of cabinet and government jobs will be the last element in sealing the deal. Balkenende will continue as Prime Minister for the CDA with Wouter Bos (leader of the PvdA) likely to become Finance Minister and CU leader André Rouvoet becoming Youth Minister.


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