Sixth state reform: Flanders foots the bill

9 July 2013

With the sixth state reform, the Di Rupo federal government is transferring its cutbacks to Flanders. For the competences that the federal level is transferring to Flanders, it is only transferring 87% of the resources. This means that Flanders has to save 13% on child benefits, the woonbonus tax benefit on mortgages, care for the elderly, etc. Di Rupo slackened the reins but Flanders is being punished for having implemented a good policy. Vulnerable groups like children, young people and the elderly are the victims, and Flemish Competitiveness The extent to which companies in one country can compete with similar companies in another country. A law came into force in Belgium in 1996 to monitor competitiveness. This stipulates that Belgian salaries may not evolve faster than the average of those in the three neighbouring countries. The Central Economic Council (CEC) performs an annual measurement to see if the objectives have been obtained. competitiveness is coming under even more pressure. The new Financing Law The Belgian Financing Law - officially the Special Financing Law of 16 January 1989 - establishes how money is distributed between the Federal State and the Regions and Communities in Belgium. The Di Rupo Government, which included Groen and Ecolo (the Dutch- and French-speaking Green parties), adapted the law based on the political agreement in the summer of 2013. This was done without consulting the regions. The revision results in the cash flows, which are linked to the transfer of powers, being less inflation-proof. In addition to this, extremely heavy efforts were imposed on the regions in order to help close the gap in the federal budget. financing law will also cost Flanders a packet in the long term, and competences will be even more fragmented after this state reform than ever before. As a result, governing this country will become even more complex and less efficient.

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