Explainer

What’s in the Dutch Coalition Agreement

Investments in climate, child care and defense; nuclear power and government-funded weed.

Mark Rutte Justin Trudeau
Canadian prime minister Justin Trudeau speaks with members of the Dutch government in The Hague, October 29 (PMO)

Prime Minister Mark Rutte’s liberal VVD (of which I am a member) has completed negotiations with the left-liberal D66 and two Christian democratic parties to form his fourth government in the Netherlands.

At 47 pages, the coalition agreement is short by Dutch standards. In some cases, the parties define the outlines of a compromise but leave it to the next cabinet to fill in the blanks. Rutte has to find nineteen ministers and ten junior ministers.

Yesterday, I listed the key policies at a high level, which was based on Dutch media reports and the draft of an agreement Christian Union leader Gert-Jan Segers forgot on a train in November. Now that I’ve read the full text, I can give you the details.

Agriculture

  • €25 billion in rural investment.
  • Subsidize forms of ecological farming.
  • Support the transition to circular agriculture through various regulations and subsidies.

Forced reductions in livestocks, favored by D66 and left-wing parties to cut pollution, did not make it into the agreement. Voluntary buyouts would be financed from the €25 billion fund.

Child care

  • Abolish child-care benefits.
  • Pay up to 95 percent of the costs of child care directly to providers.

Rutte’s last government resigned after it was revealed 20,000 families had been falsely accused of benefit fraud under the current system, which ties benefits to income, for often simple administrative errors, such as incorrectly filling out a form or forgetting to report monthly changes in their income. Many parents were financially ruined when they had to pay back tens of thousands of euros in benefits.

Climate

  • Cut CO₂ emissions 55 percent from 1990 by 2030.
  • Invest €35 billion over ten years, on top of existing subsidies, in green energy, housing, industry and mobility.

The agreement calls out carbon capture, green hydrogen, home insulation and synthetic kerosene.

Defense

  • Meet the European NATO spending average of 1.8 percent, with €11 billion in additional defense spending in this parliament.
  • Pool defense maintenance and procurement with other European countries.
  • Enhance military interoperability.

Spending falls just short of the NAT0 2-percent target but is still a victory for the right, which has argued for higher defense spending for years.

The Netherlands is a leading proponent of closer military integration in Europe. Under the Permanent Structured Cooperation (PESCO), it is the national coordinator for military mobility.

Drug policy

  • Expand experiments with government-funded cannabis cultivation to a major city.
  • Study legal status of XTC (MDMA).

These are victories for D66. The Christian parties are critical of the Netherlands’ liberal cannabis policy, which allows consumption but not cultivation. Experiments with government-funded cultivation are limited to small towns.

Drug use in the Netherlands is low compared to neighboring countries, except of XTC. The Netherlands is believed to be the world’s largest manufacturer.

D66 would decriminalize cannabis as well as XTC.

Education

  • Expand pre-school.
  • Facilitate full-day elementary and middle schools.
  • Raise teachers’ salaries.
  • Teach civics.

This is meant to close learning gaps. Children of low-income working parents, who are often of immigrant descent, are falling behind.

  • Invest an additional €5 billion in scientific research.
  • Return debt-free monthly stipends for all university students, with a premium for students from low-incomes families.

Only the VVD resisted abolishing student debt.

Energy

  • Phase out biomass.
  • Build two nuclear power plants.

The Netherlands has one. 60 percent of voters support nuclear power.

  • Phase out natural gas extraction in Groningen.
  • Drill for natural gas in the North Sea.
  • But not in the Wadden Sea.

The Netherlands, which sits on the largest natural gas field in Europe, has become an importer of gas. Drilling in Groningen caused earthquakes.

Foreign policy

  • “Modernize” the European Stability and Growth Pact.

The 3-percent deficit and 60-percent debt limits are no longer tenable, but don’t expect Rutte to become much more flexible in Brussels. The document conditions reform on: debt sustainability, upward economic convergence, and effective enforcement.

  • Switch to qualified majority voting on EU sanctions.

France and the new German government would abolish the need for unanimity in all foreign-policy decisions. That’s a bridge too far for the Dutch, but they don’t want one country to be able to block sanctions either.

  • Support for European aviation and carbon border taxes, and a minimum corporate tax.
  • Support for “strategic autonomy” in the EU.

Some good news for Emmanuel Macron: the Dutch support his campaign for European “autonomy” in digital and tech. But not if “strategic autonomy” means French dirigisme by the backdoor. Rutte blocked a French proposal to relax EU competition rules to allow big mergers.

Health care

  • Facilitate aging in place.
  • Free birth control for young adults.
  • Raise salaries in health care.
  • Raise taxes on sugary drinks and tobacco.
  • Reduce, and eventually eliminate, sales tax on fruits and vegetables.

Other parties wanted to reduce competition in health care. The farthest the coalition parties go is warn that they might force medical specialists to become salaried instead of self-employed workers if they don’t cut their rates.

The coalition agreement does not commit the parties to expanding euthanasia rights. The Christian parties are against it, but D66 and VVD could probably find a majority in parliament of left, liberal and far-right parties. Currently, assisted suicide is only legal when the patient suffers a chronic illness.

Housing

  • Build 100,000 homes per year, in- and outside cities.

Rabobank reckons the Netherlands needs to build 400,000 homes by 2025 to meet demand.

  • Eliminate rental tax.
  • Give renters of social housing a right to buy.

This should give non-profit rental associations, which own a quarter of Dutch homes, more money to build.

  • Reform rental benefits.
  • Tie rents in social housing to income.

Like child-care benefits, the parties want to get rid of income-dependent rental benefits, but it’s unclear how.

Rents in social housing are currently capped at €750 per month.

Labor law

The parties want to shrink the gap between workers with full-time contracts and full social benefits on the one hand, who are difficult to fire, and a “precariat” on the other, who go from short-term contract to short-term contract without paying into pension and unemployment insurance funds.

13 percent of Dutch workers are self-employed, up from 8 percent in 2003 and above the European average.

  • Enable a form of short time, modeled on the German Kurzarbeit, to reduce job losses in a recession.
  • Mandatory unemployment insurance for the self-employed.
  • Raise the minimum wage 7.5 percent.

Sick pay, which was raised from one year to two in 2004, isn’t cut. For small businesses, it’s often the main reason they are slow to hire workers full-time.

Migration

  • Allow asylum seekers to work (voluntarily).
  • Make deals with countries to host refugees, modeled on the EU agreement with Turkey.
  • Start Dutch language courses before asylum is granted.
  • Step up deportation of those who are denied asylum or a visa.

Net migration has been trending up for a decade and peaked at 108,000 in 2019.

The majority of asylum seekers who are rejected remain in the Netherlands illegally.

  • Improve regulation of labor migration.

Former Socialist Party leader Emile Roemer investigated abuses in labor migration for the government a year ago and recommended certifying employment agencies; fining companies that work with uncertified agencies; and decoupling health insurance, rent and work contracts, so labor migrants become less dependent on their employers. The ruling parties would adopt all his recommendations.

Mobility

  • Ambition to have an emissions-free car fleet by 2030.
  • Expand night trains to other European countries.
  • Switch from taxing car ownership to car use.

The devil will be in the details. The Netherlands twice tried to tax car use in the past, but it couldn’t find a way to do it without violating motorists’ privacy.

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