GroenLinks-PvdA plans will halve poverty; VVD scores badly in reducing unemployment

The plans of GroenLinks-PvdA will halve poverty in the Netherlands, according to the Central Planning Office’s (CPB) calculation of the parties’ election manifesto. The VVD’s election program will lead to a smaller decrease in unemployment than the plans of the other seven parties that had their programs calculated. NSC - the third large party in the polls - did not have its election program calculated by the CPB.

GroenLinks-PvdA

GroenLinks-PvdA will push more money into healthcare, education, public transport, and regional facilities, but also into defense and development cooperation. Despite these billions in additional expenditure, the left-wing party’s plans will improve the government finances, partly thanks to a new millionaires’ tax that yields over 9 billion euros.

The CPB calculation also shows that the GroenLinks-PvdA plans score relatively well on economic growth and employment. Jobs will be created, especially in government and healthcare. There is a risk of a decline in the market sector in the longer term, the CPB noted.

In the Netherlands, an estimated 800,000 people live in poverty, over 6 percent of the population. That share will drop to 3 percent if the parties implement their plans. That is mainly due to a significant increase in the minimum wage to 16 euros per hour in 2025, and then gradually to 18 euros per hour in 2028. Benefits like state pension and social assistance will also increase.

Government expenditure will increase by almost 20 billion euros in the left-wing party’s plans. That is offset by a net increase in tax burdens of over 11 billion euros. That mainly affects high earners, the wealthy, and the most profitable companies, while taxes will actually decrease for most workers. Purchasing power will increase by an average of 2.4 percent. Low-income earners will benefit even more.

Although expenditure increases faster than taxes, the GroenLinks-PvdA plans still improve public finances. The budget deficit will fall to 3 percent. That is because rising government expenditure and purchasing power have a positive effect on economic growth. That effect is temporary, said the CPB. In the longer term, the budget deficit will increase again.

VVD

The CPB calculations of the VVD’s proposals show that unemployment will decrease by 0.2 percent. The program also amounts to almost 10 billion euros in budget cuts. The Liberals are making the biggest impact by stripping investments in international cooperation.

The VVD’s plans ensure slightly more economic growth: 0.2 percent. That means the party scores relatively well compared to the other parties, although its left-wing rival GroenLinks-PvdA provides 0.4 percent extra economic growth. It is remarkable that the VVD, which often emphasizes the importance of employment in its campaign, scores worse on jobs than other parties, according to the CPB models. Regarding improving purchasing power and reducing the number of people in poverty, the VVD is also among the laggards.

Strikingly, the VVD’s plans for growing purchasing power mainly affect the lowest incomes and benefit recipients. In recent months, the party has consistently stressed the importance of purchasing power measures for the middle class.

As promised in the VVD election program, the party opts for budget cuts over increasing tax burdens. The party’s plans include 3.3 billion euros in lower taxes and premiums for families. But for companies, that the VVD says it wants to spare, the costs will increase by 1.7 billion euros.

Over half of the 9.7 billion euros in cuts (5.5 billion euros) are cuts to international cooperation. The CPB calculations show that the VVD wants to “limit development cooperation (...) to the provision of emergency aid, mandatory international contributions, and reception in the region.” The Ministry of Education will lose 1.3 billion euros of its budget, and another 1.3 billion euros will be cut from public administration. Some cuts will affect companies - 800 million euros will be cut from subsidies, and 1.7 billion will be saved by scrapping the remaining budget of the National Growth Fund.

The cuts are offset by the more than 2 billion euros the VVD wants to invest in defense. Extra money will also go to safety, climate and environmental measures, and accessibility.

Only right-wing parties increasing government debt

Most parties that had their election programs calculated don’t want the government finances to deteriorate further, the CPB reported. Only the right-wing parties SGP and JA21 allow the national budget deficit to increase compared to the trend until 2028. The VVD’s score on this front is comparable to the other parties.

The fact that the parties pay close attention to the government’s budget is in stark contrast to the plans presented in recent years, the CPB noted. In the time of record low and even negative interest rates, many parties were eager to spend a lot, and budget cuts hardly featured.

If the policy is not adjusted, the government deficit will climb to 3.6 percent in 2028, exceeding the European limit of 3 percent. Most parties want to limit the deficit to around 3 percent.

The progressive EU party Volt achieves the lowest deficit at 2.2 percent of the gross domestic product. The party wants to abolish a whole series of tax regulations, placing tens of billions in additional burdens on families.

Party plans won’t achieve climate neutrality by 2040

It is unlikely that the parties' plans will be sufficient for a climate-neutral Netherlands in 2040, said the Netherlands Environmental Assessment Agency (PBL) in an analysis of the election manifestos. D66, Volt, and GroenLinks-PvdA have this goal in their programs, but not enough measures to achieve it.

The biggest challenge is in transport, agriculture, and the built environment. Neutrality in 2040 is possible, provided measures are taken to store CO2, for example. “But all parties lack concrete measures to make this possible,” the PBL said. Moreover, GroenLinks-PvdA would rather not focus on CO2 storage. The party only wants to compensate for emissions that cannot be avoided.

EU member states, including the Netherlands, have agreed to be climate-neutral by 2050. The PBL cannot judge whether this will be successful based on the programs currently in place. There is still too much uncertainty about policy after 2040 and unforeseen developments in the meantime.