With lightning speed (as far as coalition-building goes in the Netherlands), the two top finishers in the Sept. 12 Dutch election have formed a government that will seek €16 billion in budget cuts to bring the Dutch budget further into balance. 

Standing in front of a futuristic poster of a bridge, prime minister Mark Rutte (pictured above, right), the leader of the center-right Volkspartij voor Vrijheid en Democratie (VVD, the People’s Party for Freedom and Democracy) and Diederik Samsom (pictured above, left), leader of the social democratic Partij van de Arbeid (PvdA, Labour Party) announced that they will form the next governing coalition together.

The two parties finished first and second, respectively, in September’s election, far outpacing the other Dutch parties.

Throughout much of the campaign, the more leftist Socialistische Partij (SP, the Socialist Party) led polls, only for Labour to emerge in the last two weeks of the campaign, as Socialist leader Emile Roemer seemed to stumble in various television debates and Samsom emerged as a credible alternative — more pro-Europe and less stridently leftist yet still more skeptical of budget cuts.

Ultimately, the VVD won 41 seats and Labour won 38 seats — an increase for both parties.  The Socialists won just 15 seats, a far cry from polls just two weeks prior to the election that showed them winning upwards of 3o or 35 seats.  In switching from the Socialists to Labour, a huge chunk of Dutch voters have essentially moved the country from an outright anti-austerity coalition to a more stable, more centrist coalition — in fact, a return to the tradition of ‘purple cabinets’ of the past that included the VVD and Labour, most recently from 1994 to 2002 under various governments led by Labour prime minister Wim Kok.

The reported terms of the coalition agreement make clear that, essentially, the Rutte II government will continue to pursue vigorous austerity measures designed to bring the Dutch budget within 3% of GDP, despite Samsom’s opposition to budget cuts earlier in the spring and his vigorous opposition to Rutte throughout the campaign.  So in joining a government with Rutte, Samsom and Labour will leave the Socialists as the major anti-austerity opposition on the Dutch left.

So how exactly will the Rutte II government differ from its predecessor? And what did Labour win in exchange for its support for a fairly pro-austerity agenda?

First and foremost, the new Rutte-led government will be more stable.

After the 2010 elections, Rutte and his coalition partners, the Christen-Democratisch Appèl (CDA, Christian Democratic Appeal) formed a minority government, propped up with the outside support of the populist, far-right party led by Geert Wilders, the Partij voor de Vrijheid (PVV, the Party for Freedom).  Wilders’s refusal to support further budget cuts in April led to the early elections.  But both of those parties lost seats in September (the CDA lost eight and the PVV nine), and Rutte will likely be relieved that his government will not depend upon the mercurial, anti-Europe, anti-Muslim Wilders.

In contrast to the previous Rutte-led government, the new VVD-Labour ‘purple’ coalition will command a solid majority in the 150-seat Tweede Kamer, the lower house of the Dutch parliament, though the two parties command just 30 seats in the 75-member upper house, the Eerste Kamer, although Rutte will try to pick up the handful of additional votes from any of the CDA, the socially-liberal Democraten 66 or even the PVV.

Policy-wise, the VVD will have won tax cuts to the highest brackets (the 52% rate will be cut to 49%, and the 42% rate cut to 38%), but Labour will have won an important concession from the VVD in the form of cuts to mortgage tax relief starting in 2014, which will disproportionately fall on wealthier homeowners.

Otherwise, the budget cuts are wide-ranging: €3 billion in cuts to healthcare (health insurance premiums will become income-dependent), €1 billion in cuts from development aid, a cut in unemployment benefits from 38 months to 24 months, and other cuts to housing (social housing rents will rise by 1.5% or more) and education (students grants will be replaced with loans).  Immigrants to the Netherlands will be prohibited from receiving welfare for the first seven years of residency.

Samsom himself is not expected to take a ministerial role in the new cabinet, which will be named later this week, but it is expected that Labour MP Jeroen Dijsselbloem will replace the VVD’s Jan Kees de Jager as finance minister, which will certainly mark a shift in tone from De Jager’s sometimes confrontational zeal in balancing the Dutch budget.

On foreign affairs, the Rutte II government is likely to be much more pro-Europe, and it’s expected that Labour MP Frans Timmermans, a former state secretary for European affairs, will become foreign minister, and the new government will likely take a more accommodating approach on aid for Greece and other troubled economies in the eurozone’s periphery.

Labour will be happy to boast that civil servants will no longer be permitted to refuse to marry gay couples, a key issue in their campaign platform.  Although the coalition will still support restricting access to the Netherlands’s famous cannabis coffeeshops to local residents, the coalition will drop plans of compulsory membership / registration.

The cabinet formation process will have been the speediest in the entire postwar period, underlining the need for stable government with the eurozone near (or in) recession and with the single currency still looking shaky.  It typically takes an average of three months to finalize a post-election coalition, and it took four months for a government to emerge after the 2010 elections.  This year’s formation process was the first not to be directed by the monarch, but rather through the Dutch parliament, following 2010 legislation that sought to limit the role of the largely ceremonial head of state.

Photo credit to ANP.