Reuters AlertNet Lite - New Dutch government waters down economic reforms

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New Dutch government waters down economic reforms

04 Feb 2007 11:56:25 GMT
Source: Reuters

AMSTERDAM, Feb 4 (Reuters) - Dutch Prime Minister Jan Peter Balkenende's new centre-left coalition government will not introduce major economic reforms, but will shift to a softer stance on immigration, leaked documents indicate.

The draft agreement to form a coalition government, thrashed out over weeks of secretive negotiations between the three potential political partners, will be submitted on Monday to the different parliamentary factions for final approval.

Balkenende's Christian Democrats were forced to enter talks with the opposition Labour party and a small religious party, the Christian Union, after November's inconclusive election.

Weekend media reports said the parties have agreed not to touch tax breaks for mortgages, which Labour had wanted to limit, and will also not ease rent controls, which Balkenende's previous centre-right government had planned.

Balkenende is not expected to unveil a full cabinet on Monday but some key posts may be announced.

Labour party leader Wouter Bos appears set to become deputy prime minister and finance minister, although it is unclear whether Christian Union leader Andre Rouvoet will take a ministerial post.

The NRC Handelsblad newspaper said the agreement assumed average economic growth of 2 percent over the four-year government term, and that the parties were seeking a budget surplus of 1 percent of gross domestic product by 2011.

The coalition also plans to grant amnesty to unsuccessful asylum seekers who entered the country before 2001, when new tougher rules took effect, the newspaper said.

The financing of state pensions will be tweaked to encourage people to work longer to forestall any strain of the health care and pension systems which could occur as the baby boomer generation start retiring.

From 2011, better off pensioners will have to pay additional taxes to help finance pensions if they stop working before the age of 65. People who work beyond 65 will receive a tax break.

The agreement also calls for extra spending of 800 million euros ($1 billion) for the environment and clean energy, the NRC said, adding the government planned higher taxes on pollution, including a tax on flying.

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Last updated:Sun Feb 4 11:56:56 2007