National Budget: "The government must actively stop the waste of money, energy and talent"

Published: 19th September 2022 Last updated: 20th September 2022

Energy, climate, labor market, housing shortage, health and healthcare, migration... The Netherlands are facing an accumulation of crises, and the unequal distribution in our country is increasingly affecting us. It is time for radical measures, some of our scientists argue. In response to next year's National Budget, presented traditionally on the third Tuesday of September, they provide recommendations for the cabinet. Strong government intervention to prevent waste of money, energy and talent. If necessary, with unorthodox measures. That is the message of professors Daniël van Vuuren, Reyer Gerlagh and Irmgard Borghouts.

"Social inequality has been an important social issue for years, but in 2022 I would say: there is nothing more important. Poverty was already a major problem, especially among families with young children. With rising energy prices, this problem becomes potentially huge," warns Professor of Economics Daniël van Vuuren. "Without additional government policies, about one in 10 Dutch children will grow up in poverty."

When basic needs of housing, food and energy are at stake the government can and should intervene firmly

Redistribution is key

"We are all getting poorer due to high inflation. That means the time is now to share the pain together as a society by redistribution from rich to poor. Here it is essential to prevent waste. The state pension (AOW in Dutch) is not a suitable instrument in that light. After all, it is also pocketed by rich elderly people. The waste quickly runs into billions of euros." 

Daniël van Vuuren

"It is completely bizarre, at a time when we are getting poorer as a whole, to give more money to people who need it the least. (As an aside, the compensation of savers in Box-3 will surely make legal sense, economically this is madness. How wasteful do we want it to be?) The "classic purchasing power buttons" - the parameters in our tax and social security system - seem to be reaching their limits. Unorthodox policies must be considered. The basic needs of housing, energy and food are at stake and then the government may, no should, intervene firmly. Regulating prices and offering help in kind should not be a taboo. On a temporary basis, of course."

An urgent task

When it comes to the energy crisis, again, countering waste is an important issue. "Special circumstances call for special measures. The Dutch government must start banning some forms of energy waste by households and companies" believes Professor of Environmental Economics Reyer Gerlagh.

"Gas and electricity prices are now so high that some companies have to close their doors. Households with lower incomes and poorly insulated houses are not making ends meet. And then winter is yet to come. Germany bans heating halls and corridors in public areas and heating private swimming pools. Spain bans heating offices above 19 degrees and cooling below 27."

Europe is taking all kinds of measures to reduce energy demand, but the Netherlands is lagging behind

Reyer Gerlagh

"Our government must act now," Gerlagh believes. "First, because companies and households themselves are having a hard time figuring out how to save energy. Second, because wasting energy by one gives extra costs to the other in the short term. Especially next winter, with an acute shortage of gas. A small drop in demand has a big effect on the price. Third, we are dealing with an energy transition and climate change. The Netherlands has long lagged behind the EU. It is now time for a vision for the long term. Activate energy conservation and encourage the development of non-fossil energy storage."

Achilles' heel

"All the major challenges we face in the Netherlands will not get off the ground without a well-functioning, inclusive labor market", finds Professor of HRM and Social Security Irmgard Borghouts. "The labor market is intertwined with all kinds of social challenges we face in the Netherlands. Think of the climate transition, the housing shortage, energy poverty."

Irmgard Borghouts

The major challenges facing the Netherlands will not get off the ground without a well-functioning, inclusive labor market

"There are major personnel shortages now and they will remain for some time. On the other hand, people are also still losing their jobs. In the Netherlands, we mainly react after the fact when the risk has already materialized. You can send out relief troops in the event of a major 'storm,' but we now have to build something that will stand up in all weathers. That requires good interplay between government and employers and the courage to make choices."

"Government and employers must focus on the people who are on the sidelines and would like to work (more). That includes access to decent work and smooth transitions if needed or desired. As far as I am concerned, the government should also look more at the long term. We know there is an aging population in the coming years. This means, for example, that more people are leaving care, but also that the demand for care is increasing. At the same time, the inflow lags behind and starters in care leave the sector too quickly. We must anticipate this now by encouraging, recognizing and rewarding both the influx and retention of people in these vital professions."

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