577 million euros for health-care personnel, but where will this money come from?

Radio 1

After the Dutch government implemented a plan to support health-care workers, the government of Flanders will now also implement a pay increase for personnel in the health-care sector. The Flemish government is making 577 million euros a year available for this. The Prime Minister even mentioned an investment of 1.1 billion euros for the health-care sector. But one important thing is not yet clear: where will all this money come from?

Uncertainty

This uncertainty raises many questions among the Flemish population. According to Kevin Spiritus, Assistant Professor at Erasmus School of Economics, it is actually quite understandable that the government has not yet drawn up a budget, he explains in an interview with Radio 1. ‘In the current circumstances, it is very difficult to draw up a budget because it is difficult to predict how the economy will develop during the coming months. It is therefore understandable that they do not have a solution for the time being. But in the long run, of course, a solution will have to be found, either by finding new income or by cutting some expenditures.’

One-off vs recurrent expenditures

Lately you hear a lot of economists saying that we now have to make one-off expenditures, Spiritus says. ‘These economists make a distinction between one-off and recurrent expenditures. With a one-off expenditure you could actually hand out ‘presents’ every year. The goal is that, in the long run, this expenditure will yield more than it cost,' Spiritus explains. ‘In normal times you can indeed invest, but during the corona crisis you have to try to keep the economy stable, because if you don't then it will only cost you more later on. What the government wants to do now is not a one-off investment but a recurring expense, and in this case, you really have to make sure that there are financial resources available.’

Too little investments

The Flemish Government has a reputation for being very thrifty. ‘I think they have invested a bit too little in recent years,' Spiritus says. ‘The investments are also at a very low level compared to other countries. You also saw that during the corona crisis, when the Flemish health-care institutions got into trouble because they had insufficient resources. I think that now the government gets the opportunity to make up for that.’

Good news

The government's new plan will certainly increase the government’s debt, but Spiritus does not find the situation worrying. ‘The debt will certainly rise but that debt is still bearable in the long term. We also don’t have to pay off the debt immediately after the crisis. We have to remember that we are spending a lot of money now, but the fact that we can spend that much money at all during a pandemic is actually very good news. This means that we are rich and can overcome this period.’

More information

The full item from Radio 1, 26 November 2020, can be found here (in Dutch).