It’s Friday and our study trip is coming to an end. To wrap up the past days, we offer you an overview of our last engagement here in Amsterdam.

With the visit to Amsterdam University on our agenda for the day, we prepare our class for the upcoming presentation. Arriving at The Student Hotel Amsterdam after a good nights sleep and a fresh cup of coffee we started off our introduction with facts about our host.

The University of Amsterdam, as one of the largest Universities of the Netherlands, started off 1632 solely offering education in medicine. Nowadays they supply students with knowledge in seven different faculties. One of them being the faculty of Economics and Business. Where Prof. Dr F.D.J. Frans van Schaik welcomes us as Professor of Management Accounting. Waking us up with his critical point of view towards the prevailing accounting system in the Netherlands. Pointing out, that the National Court of Audit and the Tax Administration both are content with following the law without going beyond to globalize themselves. Exemplary for the Netherlands rather outdated accounting system, Prof. van Schaik stated the fact, that they still use cash accounting on the governmental level even though many municipalities already made the switch to the more modern and standardized accrual accounting system.

Following this introduction, our host compared the Swiss and Dutch financial and socio-economic indicators. Concluding that, besides the use of accrual accounting systems, there are not many differences between the countries in terms of size, government bond ratings, GDP, the government’s expenditures and many other factors.

Edging towards the end of his presentation he introduced a topic that stimulated a lively discussion: The Dutch Disease. If one economic sector grows rapidly, like the natural gas concession once did in the Netherlands, and therefore increases the economic wealth, other sectors suffer under the loss of competition.

Does Switzerland suffer from the Dutch Disease?

During the discussion, arguments were made for and against the Dutch Disease being recognized in the Swiss Financial Sector. While some sectors might suffer under the strong Swiss Frank, one should keep in mind that external factors, such as the value of surrounding currencies or political stability, could influence the value of the Swiss Frank. Because of this, the group did not come to a final conclusion – unlike our study trip, which came to an end.

On that note, we thank Prof. van Schaik for his dedicated time, our instructors for the organization of a great study trip and our class for a fun time and vivid discussions. Have a safe trip home and see you soon in Winterthur.

Den Haag is a city near the Western Sea Side, the seat of Netherlandish Government, Binnenhof (the Parliament) and the International Court of Justice, home to half a million citizens and the King himself.

This morning we had to get up quite early. Nevertheless our group was looking forward to today’s program: Den Haag is calling! As there have been some spontaneous changes in the agenda, we had to improvise a little during the briefing. Before getting into the train everyone had time to catch a hot awakening coffee. While traveling to Den Haag we could enjoy the beautiful landscape.

Welcome to the Netherlandish Court of Audit (Welkom bij de Algemene Rekenkamer)! We were instructed about the autonomous government organ (Hoog College van Staat), whose task is to audit how the Netherland’s ministries spend the revenues. These are provided by the Netherlandish tax payers. Our hosts,  Maaike Damen, Jost van Hofwegen (Research and Audit Director), Martin Dees, Gijs Koop (Senior Researcher), Rudi Turksema, Maarten de Jong started with a couple of key facts about the Court of Audit. They underlined that it is important that public spending is more than just finances, it also impacts the environment. The Netherlands recognized that impact very early and implemented the Court of Audits in their constitution in 1814 as a counterweight to the government. The Netherlandish law secures that; Cooperation is mandatory for all governmental bodies as the likes of ministries. They have to provide the Court of Audits with all the financial information they ask for. Other bodies are audited as well, Quasi Non-Governmental Organisations (QUANGOS) for example. Digitalization, which were also discussed on Monday and Tuesday (of our Study Trip), also takes place in the Algemene Rekenkamer. Accounting and audit are more and more shifted into a digital form. However, there’s a lack of qualified personnel in the field of IT and programming such systems in the Netherlands. Therefore the few people available in this branch were invited to an accountability-hack (a kind of competition who can program the best accounting-system). The Court of Audit’s internal personnel was trained in IT as well. Structuration and automation were the goals of these actions. On the other hand, the more data is collected, the more difficult it is, to handle. Therefore, complexity, data ethics and security are the downside/challanges of this digitalization-trend. Untypical for an innovative country like the Netherlands is, that on central government level, still the simplified version of cash accounting is in use (in which expenses and revenues are taken into account when they are paid, not when they occur). While the OECD encourages accrual accounting, the European Union (EU) makes no progresses in invoking the much rumored EPSAS (European Public Sector Accounting Standards), which would have that and other detailed accounting regulations in write. The EU was a target of justified critics this morning, as its suboptimal revenue-collection and redistribution was addressed as well. Finally, the New Public Management approach of output-oriented budgeting was discussed in a critical manner as well.

We enjoyed having our delicious lunch in the historical center of Den Haag.

Welkom bij het ministerie van Financiën (Welcome to the Ministry of Finance)!

First we got background information from Bart about the tax and customs administrations and the organization of the tax collection. He pointed out also several deficiencies. The most important ones were legacy, management-information and strategic personal planning. He then presented Moore’s strategic triangle and encouraged the students to map the challenges of the Tax and Customs Administration by refering to that framework to cut through the complexity of the organization.

Bert Kloster, International Affairs, talked to us about the international strategy and cooperation against tax avoidance. He pointed out that internationalization and globalization cleared the path for multinational companies to avoid taxes.

In the meantime new sources of information like social media and Internet in general changed the people’s expectations about the government’s institutions. More precisely, transparency has become more and more important to ensure the high compliance of civil taxpayers in the Netherlands and the G20 countries. The OECD BEPS (Base Erosion and Profit Shifting) replaced the system of earlier, mostly bilateral, tax treaties. These bilateral treaties had been used as a playground. Some multinational companies even shaped their business structures in a way that no or very little tax had to be paid. According to Bert, not only the developed countries suffered from tax avoidance. Also, developing countries like Ghana and Malawi did not receive the amount of taxes they should have. These countries did not have the resources (HR or financial) to deal with the taxing duties of multinational companies. BEPS made it possible not only for the G20 to take in the guidance of OECD into their national legislation, it also provided practical help and technical assistance for developing countries, which originally felt the negative consequences of BEPS.

The 08:16 intercity train from Amsterdam Centraal took us almost straight to the door of the Utrecht municipality building where an interesting half day with the CFO of Utrecht was awaiting us. The municipality decided to move to this very central location to be more prominent and accessible for the public. The building from 2014 is light and open – even though it is constructed from more steel than the Eiffel tower as we would learn later during our tour.

Frank Halsema, CFO of Utrecht, welcomed us with coffee, cake and an introductory presentation on the city of Utrecht. Utrecht is the 4th largest city in the Netherlands with approximately 350’000 inhabitants and an expected growth of 20% in the next 15 years. “The city of growth”, “the city of work” and “the city of bicycles” has a long history starting 50 years a.c. and is proud of its heritage with the tallest dome tower in the Netherlands (112m) but also its modern status with the biggest bike parking in Europe (12’500 bikes) and its healthy urban living vision (video on youtube).

Frank Halsema, CFO of Utrecht, giving his introductory presentation

The morning continued with Jasper Woelfjes, tax expert for the municipality who gave us some insight into the specialities of their system compared with the Swiss system. Only 3.5% of taxation is done on municipality level whereas 95% is taxed by the national government. This and the system of the municipality fund with 60 criteria defining who receives how much budget gives the municipalities much less autonomy than Swiss municipalities. If the national government does not spend enough money, then the municipalities also receive less spending money – the frustration on this point was noticeable and the Swiss system preferable in the eyes of the Utrecht financial experts. Furthermore, municipalities cannot define new taxation methods for their citizens, these are also defined on national level. However, in the municipality of Utrecht a group of businesses approached the taxation office and requested an increase in taxes of 11.1% to create a business fund which is then reinvested in community projects in the regions the businesses are active in. And the bottom line of the budget: always 0. Revenue has to equal expenses.

A second Frank then gave us a tour of the building. The building is situated on the “other” side of the railway station – previously no-mans-land, now becoming the new city centre. The first six floors of the building are open plan and can by used by the public for studying, working and marrying. The other 15 floors are occupied by the municipality. The views across Utrecht from the 21st floor, where we spent most of our time, were spectacular – even in the rain.

City model of Utrecht being explained by the second Frank

Auke Timmerman, business controller for the work & income unit, took us on a simulated retreat of the council of the mayor and aldermen of Utrecht. Part of their yearly planning cycle is the spring note where they discuss and negotiate the use of the yearly allocated revenue for the next year. In five groups representing the mayor and four aldermen we made proposals to adapt the budget to meet the final goal of having zero difference between revenue and expenses. The aim: “everybody has to leave the building as a winner”. The reduction of the budget for sports fields expansions and the Vuelta which passes Utrecht in 2020 were measures to achieve this aim.

The council of mayor and aldermen trying to solve the budget challenges

Last but not least the CFO gave us an insight into their digitalisation journey. After nearly killing the internet for the entire city of Utrecht with their blockchain project in 2017 the aim this year is to fully digitally check the flow of the 1.49 billion Euro municipality budget by the end of this year “met een druk op de knop”.

After saying goodbye to our great hosts most of us took a walk through the old city of Utrecht, which is beautiful even in the rain. This evening our group will meet at Cafe de Kroon in Amsterdam for an informal get-together.

Beautiful old city of Utrecht in the rain

38% of children worldwide do not complete basic education. Today, Wendy, Livia and Shirin from the NGO Aflatoun gave us an introduction into how their organization fights against that fact and helps children and young adults all over the globe to improve their livelihoods. Aflatoun’s methodology follows the «train the trainer» approach: By providing local partner organizations and government institutions with their curricula and services, the NGO aims at giving the beneficiaries a better self-image, promoting their critical thinking, raising awareness about their rights, and fosters their entrepreneurial attitude. In collaboration with partners and stakeholders, Aflatoun adapts their curricula according to local contexts, which allows them to be active in more than 100 countries. Depending on their financial capacity, the organization started to charge their partners for these services and thus considers itself nowadays a social enterprise rather than an NGO. Surprisingly, the great majority of partners did not seem to mind the change of business model and are willing to pay a licence fee for accessing the Aflatoun curricula. The organization acts as a hybrid of an NGO and a private business, which is exemplary for the transformation the world of international development is going through. The traditional way of raising funds solely through donations becomes harder to walk with a rising number of competing organizations entering a stagnant donor market. Modern organization need to find alternative ways to fund their projects if they want to keep up the quality of their work. In the case of Aflatoun, their transformation to a social enterprise comes with high ambitions: In 2020 the organization aims at delivering their programs to 20 million children.

For our second visit of the day, we were welcomed by Marije Poel at the Smart City Academy of the Hogeschool van Amsterdam. The afternoon was insightful: we learnt that our colleague Bettina sneezes every morning after waking up and that the city of Amsterdam is turning its roofs blue-green. Relying on a bottom-up approach, Smart City Amsterdam stimulates small businesses to make the metropolitan area economically, ecologically, and socially future-proof. The Smart City Academy supports these developments in several ways: it develops expertise, connects stakeholders to exchange their knowledge, acts as a portal to other Smart Cities worldwide, and implements education programs in the fields of Smart City. Marije presented three specific Smart City projects, for us to better understand how this buzzword translates to the real Amsterdam. Through the project Resilio, the city wants to encourage citizens and investors to turn their roofs into urban gardens and water storages. In terms of environmental protection and economical use of resources such as energy and water, a lot can be gained. Green-blue roofs save energy by insulating houses and add to the quality of life in the city. In a group exercise, we had the chance to brainstorm about ways to involve citizens in the implementation of this project and business models that can make this approach economically feasible.

Day 2 marked the end of the Smart City-focus of our study trip. For the remaining 3 days, we are excited to learn about Public Financial Management in the Netherlands and to excursions to Utrecht and Den Haag. Stay tuned!

As representation for the expedition team, Alissa Brenn, Svenja Hofmann and Chantal Menzi