Government Continues to Grow despite Cuts
THE HAGUE, 19/09/13 - Despite record budget cuts, practically nothing of government expenditure has been reduced. A deal whereby civil servants are the only group to receive 2 percent purchasing power compensation is a notable case in point.
Corrected for inflation the collective government expenditure was 275 billion euros just before the crisis in 2008. This year the figure reached 307 billion euros. This is a reduction only when compared with the record expenditure of 311 billion euros in 2011.
Collective government expenditure equates to roughly half of gross domestic product. Before the crisis the figure was 45 percent. The government policy bureau CPB estimates that collective government spending will be gradually reduced to 48 percent in 2017.
The high government expenditure is remarkable because successive cabinets from 2008 have announced cuts and tax hikes totalling 54 billion euros. The CPB says half of this (27 billion euros) has been realized. Of this, 14 billion euros was raised by higher taxes and only 13 billion euros through spending cuts. Of the 27 billion euros yet to be raised, 7 billion euros will be derived from higher taxes.
The biggest culprits are health care and social security. Expenditure on health care rose to 66 billion euros this year from 55 billion euros in 2008. Costs for social security rose to 82 billion euros from 70 billion euros in the same period. The two sectors account for nearly half of collective expenditure.
The only ministries to succeed in spending less in recent years are Defence, Infrastructure and Development aid. Subsidies to the business sector have also fallen. These four accounted for savings of 4 billion euros.
On Monday, the government agreed to a 2 percent increase in purchasing power for civil servants in 2014. The overall decline in purchasing power for the Dutch is 0.25 percent.