By Thomas Escritt
THE HAGUE Oct 29 Dutch Prime Minister Mark
Rutte's Liberals agreed a coalition with the Labour Party on
Monday and vowed to follow a path of austerity.
Outlining nearly 16 billion euros ($20.65 billion) of cuts
over the next four years, the two party leaders said the
measures were needed to ensure a sustainable budget and meet
European Union deficit rules.
"We realise that this package will affect everyone in the
Netherlands, everyone will feel it," Rutte told a press
conference. "But we think it is necessary if our beautiful
country is to emerge stronger from the crisis."
Rutte announced the programme alongside Diederik Samsom
whose energetic campaign catapulted Labour to second place
behind the Liberals in a parliamentary election on Sept. 12.
The two parties reached a deal far more quickly than
expected, underlining the urgency given the euro zone crisis and
the fragile state of the Dutch economy.
The parties compromised on central elements of their
programmes in the interests of budgetary discipline.
Labour agreed to the pension age rising to 67 in 2021 from
65 while the Liberals allowed the scaling back of a mortgage tax
credit which is particularly popular with wealthier home owners.
The proposed fiscal policy will bring the budget deficit
down to 1.5 percent of GDP by 2017 after it peaked at 2.7
percent of GDP in 2014, the state agency charged with assessing
government economic policy said.
But it would reduce growth by some 0.2 percentage points a
year for the next four years in a country suffering rising
unemployment in a stagnant economy.
"We are staying within the 3 percent (EU) limit and bringing
the deficit steadily down," Rutte said.
The Netherlands, one of a handful of economies in the euro
zone still rated AAA, is already implementing a 12 billion-euro
austerity programme agreed in April. But a deterioration in the
economic climate means more cuts are needed.
'BRIDGE TO THE FUTURE'
Standing in front of a huge black and white picture of a
bridge - described by Samsom as the "bridge to the future" that
their coalition agreement represented - the two declined to be
drawn on who would be named ministers in the new government.
Agricultural economist and Labour MP Jeroen Dijsselbloem is
widely tipped to replace Jan Kees de Jager as finance minister.
Under Rutte and De Jager, a Christian Democrat whose party
lost heavily in the election, the Netherlands had been at the
forefront of countries calling for tight fiscal policies to
tackle the euro zone's debt crisis.
In their agreement, the parties did not rule out further aid
to indebted euro zone countries but stressed this would be tied
to reform efforts.
"There can be no question of support from countries that
take their responsibilities seriously towards those that do
not," the parties wrote.
The biggest spending cuts over the next four years will be
in health care, public administration and social security.
Economists say the Netherlands must also introduce structural
reforms in housing, the labour market and welfare benefits.
Samsom said the government would aim to protect those on
lower incomes and expect the wealthier to contribute more to
restoring a balanced budget.
Labour will hold a party conference on Nov. 3 to finalise