Later this morning, the government will present the ‘National Growth Fund’, for which a total of 20 billion euros can be borrowed over the next five years. That money should be used for long-term investments, such as projects in knowledge development, infrastructure, research and innovation.
Initially, the idea was that the government would release a much larger amount of money for the so-called Wopke-Wiebes fund, named after the two initiators: ministers (Wopke) Hoekstra and Wiebes. There was talk of 50 to 100 billion euros. As far as Minister of Finance Hoekstra was concerned, the government would borrow that money all at once and put it into a state investment fund. Because the interest rate is now so low, that would be beneficial.
But that’s where his civil servants came up against it. They warned him that “taking on debt in order to invest is risky”, according to internal documents last summer (.pdf). “The scenario of negative return is realistic and creates political risk.” If such a high amount had been borrowed, not everything could have been invested immediately, but most would have had to be invested first, and so the officials warned against such an investment fund.
That is why the government does not choose to borrow an enormous amount of money at once, but wants to increase the national debt by an additional EUR 4 billion a year to fill the fund.
Wishes are very different
The idea behind the fund is to invest outside the political agenda in developments that contribute to economic growth and the achievement of the Paris climate targets. That is why an independent committee will assess who gets the money.
Projects will receive a one-off amount, not a structural one. However, in the end that committee will only give an advice, which the Cabinet can adopt. The Lower House of Parliament can still block investments. Completely unrelated to politics, therefore, this fund is not.
Already now the wishes are very different. For example, there is a call in the Lower House to use the money to extend the North-South line in Amsterdam, to widen the railway in South Holland and to build a fast train connection to Groningen. But there are also calls to invest in pre-school education, hydrogen infrastructure or biotech companies.
No concrete projects yet
According to Prime Minister Rutte, such a fund is a good idea right now. “Because if people, companies and the government, are resilient and agile, we can absorb unexpected blows better in the future.”
Concrete projects will not be announced by the government today. In the coming period, people and organizations can apply if they think that the money should go to their plan.
Whether the fund will actually reach EUR 20 billion will also depend on subsequent cabinets and whether they see the need for it. On 1 January, the first EUR 4 billion must be in the fund.