8. Limitations on Government Debt and Deficits: The Netherlands

The usage and meaning of the word ‘control’ is ambiguous. In the English language the meaning of the term control, and in particular parliamentary control, lies in the field of exercising influence. In this chapter we will use the word control as it is used in the Dutch language. In Dutch, parliamentary control (controle), especially when used in the field of the budget, refers to repressive control. Controle means inspection, verification, checking against fixed standards and it refers to the process of auditing the expenditure. Coombes 1976, p. 15–16.

The State budget covers one calendar year: article 2 (1) GAA.

Article 1 (2)(3) GAA.

These commitments stem from, among others, Acts of Parliament, previous resolutions, contracts and international obligations.

Article 2 (3) GAA.

Molinier (1976), p. 166.

Article 81 Dutch Constitution: ‘Acts of Parliament shall be enacted jointly by the Government and the States General.’ (translation from <http://​www.​denederlandsegro​ndwet.​nl/​9353000/​1/​j9vvihlf299q0sr/​vgrnd1vh80xv> – accessed on 2 September 2015). For the sake of clarity we also use the term Acts of Parliament, although, in the Dutch context, this is not completely correct.

The State budget for 2014.

The budget for General Affairs, the budget for Defence, the budget for Economic Affairs, the budget for Finance and national debt, the budget for Foreign Affairs, the budget for Health, Welfare and Sport, the budget for Infrastructure and the Environment, the budget for Security and Justice, the budget for Social Affairs and Employment, the budget for the Interior and Kingdom Relation, the budget for Education, Culture and Science, the budget for Foreign Trade and Development Cooperation and the budget for Central Housing and the Government Sector. Ministers without portfolio administer the last two budgets. These ministers fall under the department of Foreign Affairs and Interior and Kingdom Affairs respectively, but do have an individual budget.

These are: the budget for the King, the budget for the High Councils and the Cabinet of the Governors, the budget for the States-General, the budget for Kingdom Relations.

These are: the Infrastructure Fund, the Municipality Fund, the Province Fund, the Animal Health Care Fund, the Delta Fund and the BES islands Fund. These BES islands are Bonaire, St. Eustatius and Saba. Since 2010 these islands are part of the Netherlands and receive the status of ‘special municipalities’. The Netherlands form, together with Curacao, Sint Maarten (Saint-Martin) and Aruba, the Kingdom of the Netherlands. Each of the countries is autonomous within the Kingdom.

Budget funds are established by Act of Parliament in order to separately manage the expenditures and revenues of the government in a particular area (article 9 GAA).

Article 19 GAA. The budget for the States General e.g. falls under the responsibility of the Minister of Interior and Kingdom relations and the Infrastructural Fund falls under the responsibility of the Minister of Infrastructure and the Environment. In the Act that establishes a budget fund it is mentioned which minister is responsible for the budget fund.

In exception to the rule that each budget is adopted by Act of Parliament, the departmental minister who is also responsible for a particular budget fund can decide that the budget fund and the departmental budget are adopted together in an Act of Parliament. See article 1(5) GAA.

Article 19 (1) GAA.

Article 20 (1) GAA.

Article 21 (1) GAA.

Article 24 GAA.

Article 19 (2) GAA.

Articles 20 and further GAA.

In Sect. 8.9 the relation between the central government and the local authorities will be amplified in more detail.

Next to these autonomous public entities, the Government Accounts Act establishes ‘legal persons with a legal task’ (Rechtspersonen met een wettelijke taak) (article 43). The two categories, autonomous public entities and legal persons with a legal task, largely correspond, but there are also important differences. The legal person with a legal task has to perform a public task that is explicitly stated in a statute which task is in whole or in part financed by statutory levies. Article 43 GAA establishes that the responsible minister can supervise the budget and the accounts of this legal person. Article 91 GAA established that the Court of Audit can, among other things, review the annual account. For more information, see Hofman (2007), p. 85–86.

Article 1, under a, Framework Act on autonomous public entities.

It is therefore very difficult to give a general picture of all the ins and outs in this field.

See Chap. 4 of the Framework Act on autonomous public entities.

Van Putten (2001), p. 75.

Warmelink (1993), p. 5. See also Bonhof and Hogendoorn (2001), p. 26.

Article 12 and 18 GAA.

Article 14 GAA.

Articles 39–42 GAA.

Article 2 (1) GAA.

Article 66 and 67 GAA. Recently a Bill has been tabled to the House in which the departmental accountants offices are all accommodated under one centralised audit office: the audit office of the State.

Article 82 and 83 GAA.

Article 64 GAA.

Article 82 (1) Constitution.

Article 18 (1) (a) GAA. The State Budget Regulations can be found on: http://​www.​rbv.​minfin.​nl/​ (accessed on 2 September 2015).

The State Budget Regulations also entail rules with regard to the accountability of the budget over the previous year and the execution of the budget of the current year.

Article 12 (1) GAA.

Which is itself part of the Ministry of Finance.

The Minister of Finance can make an objection if he considers that the draft budget runs against the overall financial policy or the efficient management of the State and if the stated amount is disproportionate to the objectives of the policy that underlies the budget. Article 12 (2) GAA.

Article 4 GAA.

Article 5 GAA.

This memorandum was submitted for the first time to Parliament in 1906. The name of the memorandum therefore owes its name to that period. If taken literally the term Millions is no longer applicable in this age, and should be replaced by Billions.

Article 13 GAA.

Article 73 (1) Constitution and article 17 (1) Council of State Act.

Article 3 (2) Fiscal Compact. In its communication ‘Common principles on national fiscal correction mechanisms’, the European Commission elaborates on the role and independence of these national monitoring institutions. COM (2012) 342 final.

Article 5 Regulation (EU) No 473/2013 of the European Parliament and the Council on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro zone [2013] OJ L140/11.

Dutch Parliamentary Papers II (Kamerstukken II) 2014/15, 34 000, no. 3. See in particular section III: Assessment of the budget. In this advice the Council still refers to itself as ‘independent budgetary authority’ (Onafhankelijke Begrotingsautoriteit). The name of the authority later changed to ‘independent supervisory body’.

Article 12 (3) and (4) GAA.

Article 13 GAA.

Article 65 Constitution. Prinsjesdag is for the most part a ceremonial day. On this day the King pronounces, on behalf of the government, the Troonrede (King’s speech or speech from the throne) in the presence of both the House and the Senate. The Troonrede is an explanation of the general policy for the coming year of the government. After the Troonrede the Minister of Finance will officially submit the State budget and the Miljoenennota to the House of Representatives, in which the costs of the plans that are pronounced in the Troonrede are amplified.

Article 84 Constitution.

Daalder and Hubée-Boonzaaijer (1976), p. 280.

Article 84 Constitution and Article 96 Rules of Procedure of the House of Representatives.

Article 67(2) Constitution.

The total amount of revenues, after all, can only be established at the end of the (coming) budget year, with the establishment of the account. Above all, the amount of revenue that will be collected is based on underlying Tax Acts. Thus in order to influence the amount of revenues that are collected the Tax Acts have to be amended.

The Instruction for the State budget also mentions this custom.

Warmelink (1993), p. 77.

Bovend’Eert and Kummeling (2010), p. 336.

Daalder and Hubée-Boonzaaijer (1976), p. 294–295.

Minderman (2000), p. 133.

Though only during oral debates.

Article 66 Rules of Procedure of the House of Representatives.

Minderman (2000), p. 150–155.

Daalder and Hubeé-Boonzaaijer (1976), p. 280.

Dutch Parliamentary debates II (Handelingen II) 1965/66, p. 242.

But are of course also ‘used’ by the opposition parties to create more visibility.

Article 93 Rules of Procedure of the Senate.

Although the total number of introduced and approved motions has increased in the parliamentary year 2013–2014 (30 of the 67 introduced motions were approved) in comparison to 2012–2013 (20 of the 63 introduced motion were approved) according to the annual report of the Senate on 2013–2014. The report can be found on <http://​www.​eerstekamer.​nl/​id/​vjfmfz5gwxs7/​document_​extern/​jaarbericht_​2012_​2013/​f=​/​vjfmfzr4r1c6.​pdf> (accessed on 2 September 2015).

In 2013, only four budget Bills were discussed in plenary debate all in one session. And only one budget Bill was prepared in writing by a specialised committee. The rest of the Bills were voted on (and approved) in one session.

This revisionary budget procedure ensures that the minister who is responsible for a certain budget is provided with an advance which, in case of entering into commitments, amounts to a certain percentage of the amount as was provided for in the budget for the previous year, and, in case of the expenditures, amounts to the total percentage that is provided for in the draft budget.

Article 4, Regulation (EU) No 473/2013. It remains quite ambiguous what ‘objective reasons beyond the control of the government’ means. Does it for example also include the fact that Parliament has not been able to approve the budget Bills in time?

See among others the written correspondence (as a result of an informal correspondence between the House, the Senate, the Prime Minister and the Minister of Finance) between the Senate and the Prime Minister: Dutch Parliamentary Papers I (Kamerstukken I) 2012/13, 33 181, no C.

The budget Bill for Security and Justice was voted upon and approved on the 20th of January 2015, following a plenary debate on the Bill in December 2014.

Overall policy debates will not be held more than three of four times during a parliamentary year of the Senate.

Article 87 Constitution.

Article 88 Constitution.

The rules on budgetary discipline were actually introduced in 1987, but were comprehensively reviewed in 1994. These reviewed rules are still valid today.

See Sect. 8.8.2.

Dutch Parliamentary Papers II (Kamerstukken II) 2010/11, 32 565, no. 4.

Regulation (EU) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies and Regulation (EU) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure.

Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area [2011] OJ L306/1; Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies [2011] OJ L306/12; Council Regulation (EU) No 1177/2011 of 8 November 2011 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure [2011] OJ L306/33; Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances [2011] OJ L306/25; Regulation (EU) No 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct macroeconomic imbalances in the euro area [2011] OJ L306/8; Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States [2011] OJ L306/41, which were enacted pursuant to Articles 121, 126 and 136 TFEU.

Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability [2013] OJ L140/1; Regulation (EU) No 473/2013 of the European Parliament and the Council on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area [2013] OJ L140/11, which were enacted pursuant to Articles 121 and 136 TFEU.

European Council, Conclusions 20 April 2011, Annex I <http://​www.​consilium.​europa.​eu/​uedocs/​cms_​data/​docs/​pressdata/​en/​ec/​120296.​pdf> (accessed on 2 September 2015).

Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (the text of the Treaty is available via <http://​www.​eurozone.​europa.​eu/​media/​304649/​st00tscg26_​en12.​pdf> (accessed on 2 September 2015).

The United Kingdom and the Czech Republic did not sign the treaty.

This formal commitment was preceded by a political commitment, agreed between the heads of state in the Euro Plus Pact (supra note 85). The commitment to having numerical budgetary rules is also laid down in article 5 of Council Directive 2011/85/EU (supra note 83).

Further principles of the trend-based budget policy are elaborated upon in the memorandum of understanding. Dutch Parliamentary Papers (Kamerstukken II) 2012/13, 33 416, no 3, p. 4.

Minderman (2000), p. 137.

Dutch Parliamentary Papers (Kamerstukken II) 2012/13, 33 416, no 3, p. 4.

Korte (2001), p. 11.

Dutch Parliamentary Papers (Kamerstukken II) 2012/13, 33 416, no 3, p. 4.

Dutch Parliamentary Papers (Kamerstukken II) 2012/13, 33 416, no 3, p. 4–5.

Korte (2001), p. 11.

Korte (2001), p. 17.

Minderman (2000), p. 122–123.

Minderman (2000), p. 124.

Korte (2001), p. 18. See also Minderman (2000), p. 124.

<http://​www.​rijksoverheid.​nl/​documenten-en-publicaties/​richtlijnen/​2013/​01/​14/​nederlandse-begrotingsregels​-2013-2017.​html> (accessed on 2 September 2015). Dutch Parliamentary Papers II (Kamerstukken II) 2012/13, 30 400, no 18, annex 1.

This section is based on Diamant and Van Emmerik (2014).

In the Fiscal Compact it is added that the Treaty calls into existence ‘the obligation for those Contracting Parties whose general government debt exceeds the 60 % reference value to reduce it at an average rate of one twentieth per year as a benchmark’.

Council Recommendation to the Netherlands with a view to bringing an end to the situation of an excessive government deficit, Brussels 30 November 2009, no. 15758/09, which can be consulted at: <http://​ec.​europa.​eu/​economy_​finance/​economic_​governance/​sgp/​pdf/​30_​edps/​104-07_​council/​2009-12-02_​nl_​126-7_​council_​en.​pdf> (accessed on 2 September 2015) and Council Recommendation with a view to bringing an end to the situation of an excessive government deficit in the Netherlands, Brussels 18 June 2013, no. 10571/13, which can be consulted at: <http://​ec.​europa.​eu/​economy_​finance/​economic_​governance/​sgp/​pdf/​30_​edps/​126-07_​council/​2013-06-21_​nl_​126-7_​council_​en.​pdf> (accessed on 2 September 2015).

E.g. in 2013 when a final decision by the cabinet was made with regard to the budget in October, only three months before the beginning of the budgetary year. One of the reasons why a decision was made only in October was because the European Commission advised in July that in order to comply with the rules of the SGP – the Netherlands was at that point subjected to the EDP – cutbacks worth 6 billion euros had to be incorporated in the current budget plans.

Dutch Parliamentary debates II (Handelingen II) 2013/14, session number 39, item 5, p. 9. See also the fourteenth report of the study group Fiscal Space (studiegroep Begrotingsruimte) ‘Stability and Trust’. It can be consulted at: <http://​www.​rijksbegroting.​nl/​system/​files/​9/​14e-rapport-studiegroep-begrotingsruimte​-stabiliteit-en-vertrouwen.​pdf> (accessed on 2 September 2015).

This section is largely based on Diamant and Van Emmerik (2014).

See Article 120 of the Dutch Constitution: ‘The constitutionality of Acts of Parliament and treaties shall not be reviewed by the courts.’ (translation from http://​www.​denederlandsegro​ndwet.​nl/​9353000/​1/​j9vvihlf299q0sr/​vgrnfcwz08zv l – accessed 2 September 2015).

See Article 137 of the Dutch Constitution: two readings, dissolution of the Lower House and new elections, two thirds majority in second reading.

See also the plea made by Geerten Boogaard to quickly incorporate the golden rule in the Constitution, <www.​publiekrechtenpo​litiek.​nl/​begrotingsregels​-in-de-grondwet> – accessed on 2 September 2015 and ‘Europe speaking German’ (n 19).

Duplicated from Diamant and Van Emmerik (2014).

ECJ judgment of 5 February 1963, Case 26/62 (Van Gend and Loos) and ECJ judgment of 15 June 1964, Case 6/64 (Costa/ENEL).

The Fiscal Compact has been ratified in October 2013.

Hoge Raad (Supreme Court of the Netherlands) 30 May 1986, NJ 1986, 688 (Spoorwegstaking).

Cf. Uzman et al. (2010), p. 423–462.

Lienert and Jung (2004), p. 45: ‘By voluntarily adhering to the rules [of budgetary discipline], the general government deficit was turned to a surplus in the 1990s.’ The case of the Netherlands also supports the claim of Wehner. He argues, on the basis of case studies in Sweden and South Africa, that, what he calls, top-down budgeting (‘a binding political decision about the total level of expenditures at the beginning of the budget process’), can be a possible way to strengthen fiscal discipline. He claims that although many are ‘skeptical about the ability of politicians to impose effective fiscal constraints upon themselves’, the case studies performed by him ‘suggests that this possibility is not entirely utopian’, although, he adds, it may be rare Wehner (2010), p. 103 and 127–128.

Dutch Parliamentary Papers (Kamerstukken II) 2012/13, 33 416, no 3, p. 5.

See Sect. 8.5.2.

See Sect. 8.3.

See Sect. 8.6.2.

The first two authors however made the suggestion that if a budget Act violates the golden rule as it is enshrined in the Fiscal Compact, an increased majority should approve this budget Act. If this is a bridge too far – in the Dutch case the Constitution will have to be amended which is not likely to happen – the budget legislator should at least face an extra strict obligation to motivate the deviation. See Diamant and Van Emmerik (2014).

Wehner (2010), p. 128.

Because the Senate is likely to vote with the (parties in the) House and because the Senate used to have the same majority as the House this resulted in practice the Senate voted according to the coalition agreement. Currently though, as a consequence of the new cabinet formation in December 2012, the cabinet does not have a majority in the Senate. On several occasions in 2013 this has caused fierce political debate between the cabinet and the Senate. Especially because the Dutch government was deemed to make severe budgetary cuts that could obviously count on resistance from the opposition. This while the support of (part of) the opposition was necessary to adopt the necessary budgetary cuts. This has caused the cabinet to make, besides the coalition agreement, several different (budget) agreements with opposition parties in order to ensure a necessary majority in Parliament.

The cabinet consists of the ministers and their state secretaries.

Minderman (2000), p. 133. See Sect. 8.5.2.

See Sect. 8.6.1.

Article 21a Act on the Council of State. For example, the Senate asked the Council’s advice on the matter of national parliamentary and democratic control with regard to the economic governance in the EMU. Dutch Parliamentary Papers I (Kamerstukken I), 2012/13, 33 454, no AB.

These independent monitoring institutions are also referred to as Fiscal Councils. On the website of the European Commission Fiscal Councils are defined as: ‘nonpartisan public bodies, other than the central bank, government or parliament that prepare macroeconomic forecasts for the budget, monitor fiscal performance and/or advise the government on fiscal policy matters.’ See: <http://​ec.​europa.​eu/​economy_​finance/​db_​indicators/​fiscal_​governance/​independent_​institutions/​index_​en.​htm> (accessed on 2 September 2015).

For more information about the Central Planning Bureau see: <http://​www.​cpb.​nl/​en/​> (accessed on 2 September 2015).

Dutch Parliamentary Papers II (Kamerstukken II), 2014/15, no 3, p. 13.

Dutch Parliamentary Papers II (Kamerstukken II), 2014/15, no 3, p. 12 and 13.

Article 76 Constitution and chapter VII of the Government Accounts Act.

Article 82 and 83 GAA.

Article 83 (2) GAA and article 84 GAA.

Article 88 and 89 and articles 64 and 83 GAA.

Article 85 GAA.

The departments are also responsible for periodic inquiries into the efficiency and effectiveness of the policy underlying the budget and the efficiency of the management of the departments. Article 21 (1) GAA.

Article 87 (5) GAA.

Article 90 GAA.

Information about the inquiries performed by the Court of Audit can be found on <www.​rekenkamer.​nl> (also available in English) (accessed on 2 September 2015).

Bovend’Eert and Kortmann (2007), p. 42.

See e.g. Zijlstra (2009), p. 64.

See e.g. Van der Woude (2013), p. 919.

See more extensively on the differences between these two types of local authorities, Bovend’Eert and Kortmann (2007), p. 42–56.

See Dölle and Elzinga (2004), p. 532.

As to the position of the water boards in relation to the national government, see e.g., Hoeben (2012), p. 58–65.

In 2008, for instance, the national government funded 72 % of the budget of the provinces and 79 % of the budget of the municipalities, see Dutch Parliamentary Papers II (Kamerstukken II) 2009/10, 32 249, no 2, p. 7–8.

This provision does not apply to the provinces.

Dölle and Elzinga (2004), p. 535.

Ibid., p. 536.

Van der Woude (2011), p. 258.

Ibid., p. 247.

See more extensively ibid., p. 253–258.

See Sect. 8.3.1.

Van der Woude (2013), p. 919.

Van der Woude (2011), p. 261.

Dutch Ministry of the Interior and Kingdom Relations (2013), p. 15.

See, e.g., Van der Woude (2011), p. 260.

Feld and Baskaran (2010), p. 387. See also Diamant and Van Emmerik (2014).