Finance

Warning CPB director to politicians: don’t react too panting

The Central Planning Bureau (CPB) is the government’s most important adviser in the economic field. “Don’t focus on a monthly or quarterly figure,” the director of the company responds to the current high inflation figures.

The high inflation, which means that you get less value for money, is a reaction to the special situation of a while ago, explains Hasekamp. “When we got out of that lockdown and had very low inflation for a while.”

Hasekamp sees no indications yet that inflation will still be at such an abnormally high level at the end of next year, despite the fact that the high inflation will last longer than initially assumed.

“The expectation is still: the capacity bottlenecks are temporary, the increase in energy and commodity prices is temporary, so at some point that inflation will start to fall again,” he sums up.

Central banks on the move

If this does not happen, it will be up to central banks to step in and tighten their monetary policy in the first place, Hasekamp says. Not to the politicians, even if high inflation erodes purchasing power.

“Don’t react too much to each figure now, because we have agreed rules with each other to do it in a structured way,” says Hasekamp.

For example, he questions the first compensation scheme because of the high energy prices of the outgoing cabinet. “I fully understand that for political reasons, of course, and it is important to do something for poorer families, but I think the government should be careful with this way of compensating,” said Hasekamp. “It ends up with everyone and then the question is, is it useful to do it that way?”

So really awkward?
Laughing: “Yeah. Anyway.”

The government must be careful not to make the situation worse with good intentions, Hasekamp warns. “Of course there are all kinds of plans to incur additional expenditure. And that can be justified from a long-term perspective, but I would be careful about doing it in the very short term because at that moment you increase the current bottlenecks.”

He points to the lagging investments in construction and industry, due to shortages of chips, for example. “And if the government also invests extra, you will increase the shortage of materials and people in the short term. And that naturally leads to extra price increases,” he sums up.

Hasekamp had started as director at the CPB less than two weeks when the Netherlands went into lockdown. “That was bizarre, that time when you look back. No one had ever experienced anything like this before.”

Starting in an organization where he didn’t know the people yet, in such an uncertain situation, was a bit of a stretch. “Fortunately, we were able to quickly switch to remote working, which actually went surprisingly well.”

At that time, Hasekamp worked in the office for about one or two days, just like at the time of this interview, in mid-December. The current working from home came as a surprise again, compared to the summer when much more was possible. “And it was expected that we were already going to the final phase of the crisis”, Hasekamp remembers.

Expectations that do not materialize, didn’t that also apply to the estimates of the CPB, which were regularly wrong in the past period? Explainable, Hasekamp thinks. “The special thing about this crisis is that it comes from outside the economy,” he explains. “That means, in a way, that your economic forecasts are more unpredictable. That’s also why we’ve been working with scenarios: if this and this happens with the pandemic, we ultimately expect this and this as consequences for the economy.”

And are they listening well enough?
“I think so. The difficult thing is, such a pandemic is an exponential development. You see that we are not used to acting in policy on something that can be tenfold in three weeks. That means it is also too simple to say keep it open or close it.”

What is missing is a long-term perspective. It is obvious that the economy and business must adapt, but not yet in which direction. “People and companies need a certain degree of certainty,” says Hasekamp.

This also includes the option of canceling debts for companies that are healthy in principle but are heavily indebted to the tax authorities due to the lockdowns. “You shouldn’t do that generically, because then you punish those who have paid tax properly and may have been quite crooked for it.”

Surely this is a repetition of what you advised earlier this year. Aren’t you getting a little impatient by now?
“I think the whole society is getting a bit impatient. The term Groundhog Day has of course also been used. We have been in this situation before, you can no longer call it an acute crisis,” says Hasekamp.

The CPB director does not want to say whether the plans of the Rutte IV cabinet offer a solution during the interview that took place before the presentation of the coalition agreement. Formateur Mark Rutte has now asked the planning office to calculate the coalition agreement now, something the coalition did not intend to do in the first place. According to Hasekamp, ​​there is in any case agreement about ‘where the challenges lie’.

“Labour market, housing, climate. And the earning capacity of the Dutch economy.” Employment is fine, but productivity development is relatively low, explains Hasekamp. Time to invest in knowledge and innovation, he advises. “And I think you will get a lot of hands on each other in The Hague.”

But there are also still attempts to keep some ‘old economy’ businesses here?
“I think you should think carefully about what kind of activities you want to have in the Netherlands in the future.” He sees a change in how people think about the business climate. “From the idea that all activity is good to that you need to look more closely at earning capacity in the long term, sustainability and all that sort of thing.”

So it’s not such a bad thing that Shell is leaving?
Laughing: “I won’t comment on that.”

Hasekamp is cautious in any case, he does not want to be pushed into the corner of a political commentator, he says. “If the government has made a decision, then it’s not up to me to constantly try to reverse that decision.”

He likes the fact that he has a little more distance from politics, compared to his previous job as a top official at the Ministry of Finance. “The distance from politics and with it the control over one’s own agenda”, he mentions as the biggest difference between the two jobs.

“As a director-general at a ministry, or whatever senior official position, you are simply in the service of politics, of the minister, of the House of Representatives. And that means that you literally almost run after politics,” he explains. .

“The moment there is something going on in current affairs, you can’t say ‘let it pass for a while’, you have to respond to it. At the CPB we don’t have to go along with that right away.”

As a civil servant you can also say to your minister: better find out before you make a decision?
“Yes, that happens all the time. I also had that role when it came to fiscal measures. And at the same time: the moment you said twice ‘I would take more time or I would do it differently or I would ‘ and the politicians say ‘yes, but we still want this’, then you are obliged to work that out.”

This gives you less freedom as a civil servant, in terms of content and especially in terms of timing. “It is also more difficult from the ministries to ignore current affairs for a while.” Hasekamp is happy where he is now. “This is a very nice role.”

And that not all advice is followed?
“No, I have never experienced that otherwise. That would not be good either. We advise from a certain angle and ultimately politics has a broader perspective and I always hope that they take our advice into account, but that does not mean that they which have to follow one on one,” he concludes.

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