In 2005, government spending amounted to 132.9 billion euro, an increase by 2.2 percent on 2004, whereas one year previously government spending dropped by 0.5 percent. In the period 2001–2003, government spending annually increased by an average 7 percent.
Higher government contribution to old age pension fund
With 26.6 billion euro, social provisions were the largest spending category in 2005, followed by education (24.8 billion). Social provisions also increased by the largest amount in 2005 (2 billion euro), mainly due to a substantial lump-sum payment of 1.4 billion euro by the government into the old age pension (AOW) fund. Thus, the compulsory contribution to the AOW fund did not have to be increased.
The government took steps to safeguard the purchasing power of AOW recipients (0.3 billion euro) and also made a financial contribution to facilitate child care (another 0.3 billion euro).
Government spending by policy area, 2005*
Higher EU contribution
Spending on general administration, foreign relations and development cooperation increased by 1 billion euro in 2005.
Half of this amount concerned the higher financial contribution of the Gross National Income to the European Union (EU) and 0.3 billion euro was added to the budget of the national tax authorities to finance new tasks. An extra 0.2 billion euro was put aside for assistance to countries struck by the tsunami and debt relief for poor countries.
Increase government spending by policy area, 2005*
Costs of education continue to rise
The Dutch government spent 0.7 billion more on education in 2005 than in 2004. In 2004 and 2003, government spending on education grew by 0.9 and 1.0 billion euro respectively. In 2005, the primary education budget was increased by 0.3 billion euro to finance expansion of teaching staff, ICT equipment and special education for physically handicapped pupils and pupils with severe behavioural problems. In secondary education, the growing number of pupils led to an extra government contribution of 0.3 billion euro.
Smaller amount earmarked for export credits and urban renewal projects
In 2005, budget cuts were implemented in general economic affairs and public housing, environmental planning and conservation (0.3 billion euro each). In general economic affairs, the budget cut was caused by lower damage compensation payments for export credit insurance. In public housing, environmental planning and conservation, less money was spent on urban renewal projects and energy-saving measures in houses. There were also incidental costs in 2004 to the amount of 0.1 billion euro for the closing of rotating drum furnaces and the discontinuation of chlorine transports.