Saturday, April 21, 2012

Elections Due as Dutch cabinets breaks over austerity measures



Major austerity talks between the three political parties VVD, CDA and PVV broke down this afternoon, with the PVV stepping out of the negotiations. Effectively this means the Dutch government will fall and new elections will be called. In the course of Saturday afternoon, details emerged of exactly how the Dutch government was planning to save a further 14.2 billion off the annual budget. If it collapses, the non controversial plans will probably go through as planned. I'm guessing that means overseas development aid and further cuts to public service broadcasting will now go ahead. 


Overseas Development Aid - Further Cuts
Dutch Ministry of Foreign Affairs
The VVD and PVV parties both believe that The Netherlands should reduce the money they set aside they current give in overseas development aid. In September 2010, the Dutch government announced its intention to reduce the budget for overseas development aid from 0.8 to 0.7% of the GNP. Effectively, this meant going from an annual budget 4.78 billion down to 4.6 billion, a saving of some 1.9 billion.  


Today, the documents from the failed austerity measures indicate that the other party in the minority cabinet, the CDA, had apparently agreed to a further reduction of 0.5 billion in 2013, rising to 0.75 billion in 2014 and 2015. CDA has been the lone voice defending Overseas Development Aid. 


It is unclear what this would mean to the proposed budget of 14 million for Radio Netherlands Worldwide, which is to be taken away from the Ministry of Culture and put under the Ministry of Foreign Affairs. If the budgets are simply adjusted downwards proportionally, then the best case would mean a further budget reduction to something like 11.8 million a year. 


But the surprise resignation of the Radio Netherlands Worldwide Editor-in-Chief Rik Rensen and his deputy on Friday, as well as news that the departing Director General could receive a golden handshake of up to 1 million have made the future of Radio Nederland Wereldomroep in any form a lot more uncertain. If the top management are bailing it, then it quickly starts looking like a Titanic scenario. "Abandon ship, everyone for themselves". If you want to disappear without a murmur of interest from the public, then resign on a Friday.




Domestic Public Broadcasting Hit again


Headlines last year said that Public broadcasting would have to save "200 million Euro". In fact, 73 million of that came by drastic reductions to Radio Netherlands, the orchestras, special funds and some overheads in the Media Authority. The other 127 million was shaved off the annual budget of domestic radio and TV channels (national and regional).




Under today's plans, domestic public broadcasting would get a further hit.  This year's budget was 792.5 million Euro. This would have gone down to 665 million for 2013. Today's documents reveal a further reduction of 25 million was proposed for 2013, and 50 million off the budget in 2014/2015. I believe that means domestic public broadcasting is heading towards an annual budget of 615 million. These cuts, together with expected reduced income from advertising which runs on public channels, means almost certainly the closure of a national public TV network, leaving two national TV channels and a national network with regionalised opt-outs. 


I'd expect severe cuts in radio too. What was merely a suggestion last year as a way of saving money now becomes a necessity. 


Netherlands Public Broadcasting HQ in Hilversum
What else?


VAT rises from 6 to 7 percent (low tariff) and 21% instead of the present 19%. And student grants disappear - everything becomes student loans. I'm rather sure that The Netherlands will lose it's triple AAA status as result of a collapse in consumer confidence.
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