Wednesday, June 26, 2013 - 05:31
Labour Says Money Must Roll
While negotiating the new cuts for 2014, the Labour Party would like to pump billions of euros of potted money into the economy. This is evident from an interview with Labour leader Diederik Samsom in the Volkskrant. Jeroen Dijsselbloem Minister of Finance joins the vision of his party leader. According Dijsselbloem it is now necessary to boost the economy and it is interesting to try to 'mobilize' the potted capital. He said Tuesday at RTL Z. According to the Labour politicians, pension funds, banks, large investors, housing corporations and individuals should let their money roll. "People need to be tempted to do so," says Samsom. The government should provide tax incentives, guarantees and other incentives to make it as attractive as possible for them to spend their capital. Dijsselbloem gives some examples. For example, he refers to people with a 'stuck' severance payments and to older people who have hoarded much capital but can not transfer it to their children. Dijsselbloem pointed out that he does not expect that people are going to spend their ordinary income. "We look at potted capital, which should come loose and become a part of the economy." The government talks already for a while with the pension funds to invest in the Netherlands, for example in Dutch mortgages. According Dijsselbloem the pension funds are reluctant to do so. They want both a high return and spreading their risks. By investing in the Dutch economy, according Dijsselbloem, it is certainly possible to get a reasonable return. According to Samson, the mobilizing of potted capital is not enough and therefore the coalition tries to make an austerity package of 6 billion euro. "The time of waiting for the better is really over. It's time to give the economy a substantial boost to create jobs and start construction projects again." To fill in the details of the austerity package of 6 billion in a wise way, Dijsselbloem says, that he is "very open" to suggestions from opposition parties. Dijsselbloem talks on Thursday with D66 and GroenLinks about including education and child arrangements. As far as he is concerned, everything can be put on the table, like D66 leader Alexander Pechtold advocated. However, Dijsselbloem has not heard yet many sensible suggestions for cuttings of the opposition, but ‘quite a number of wishes’. "We talk any way about education and child arrangements, but if they want more, then they can talk with me about the whole budget." Opposition VVD leader Halbe Zijlstra has responded rather cool, on Tuesday, to the statements made by his Labour colleague Diederik Samsom. Zijlstra pointed out that the coalition negotiates an austerity package of 6 billion euros in 2014. "It is the right of Mr. Samsom to indicate what his commitment is." According Zijlstra, the main task of the government is to bring the public finances in order. This requires an austerity package of 6 billion euro. Zijlstra also pointed out that he addressed earlier, that the government should invest in policies that boosts the economy. However, spending extra money to boost up consumer spending he rejects. "Samson totally lost the track", says Geert Wilders of the PVV. "He is responsible for billions of tax increases and spending cuts, so his words are now totally unbelievable." SP leader Emile Roemer speaks of an obvious panic reaction, which is full of contradictions. “Cutting an extra 6 billion euro, sharply rising unemployment and more and more taxes and then beg people to spend more? Then you are not of this world," said Roemer. CDA leader Sybrand Buma says that Samsom again spends money to solve the crisis, which according to him can only lead to increase in costs. D66 leader Alexander Pechtold is also critical about the statements of Samsom. "Everyone wonders what decisions the government will make and what will be the implications for the personal finances of people. Unfortunately, the government delays decisions time after time. Why don’t I hear Samsom talking against the delaying of reforms and delaying the cuts in education? Has he accepted those things already? Education and reforms increase the strength of our economy. PvdA and VVD can not continue to deny that." GroenLinks leader Bram van Ojik says, “it is good that we now know that the Labour Party also wants to invest, but disappointing that he holds on to cut 6 billion euro. That still means a negative boost to the economy” " Reaction financial experts Financial experts say in response to the vision of the Labour politicians that the release of severance payments, which is now parked in special accounts - the so-called annuity BVs - will not lead to additional consumption. It will rather be parked on another savings account. Marius Winter, director of consulting bureau ‘Golden Handshake Specialist’, doesn’t think that it will happen that the government can tempt people in this way to spend more money. "These are people who have lost their jobs, this group is uncertain and very careful. I do not think they are going to spend the released money on new cars, refrigerators and holidays,” says the financial advisor. Marcel van der Schaaf of Harmony Asset Management agrees. "It is a pocket-pocket story, this does not lead to additional consumption. People will only consume when they feel secure," says the investment expert. "We have also seen, when the so-called spaarloon was released, that it has not led to additional consumption."