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9. Flows of Money out of Flanders

There have always been flows of money going from the North to the South in Belgium, but these last years there has been quite a fuss about it. Different studies have tried to find out how big these flows would be and the reasons for them. The following figures probably match the truth very close, but they remain estimates. The Ministery of Finance could of course provide the exact figures, but refuses to do so... which raises the suspicion of how big these flows might be. Claude Eerdekens (PS) keeps on denying these figures, and Bea Cantillon even said in spring 1996 that they should be kept from the public, because a Flemish reaction is to be feared...

In July 1996, Yvan Ylieff simply asked more money for Wallonia. This extra money would come on top of the current transfers, while the Walloon province of Hainaut already receices funding from the European Union. Of course, this extra money was denied unanymously, both in the federal government as in Flanders.

Figures

The Gross Geographical Product (GGP) of Flanders is relatively higher than that of Wallonia, as expected by the population figures. And the gap between Flanders and Wallonia is still increasing. In 1993, Flanders realizes a GGP of 107 billion euro, that is 60% of the Belgian Gross National Product (GNP), while Wallonia only realized a GGP of 44,6 billion euro, or 26% of the Belgian GNP. In 1980, the share of both regions was 57% and 27.5% respectively.

The VVA (Verbond van Vlaamse Academici, League of Flemish Academics) put forward the figures presented in Table 2 at their general assemblee on the 14th of March 1992 in Alden Biesen, as the volume of the annual flows of money out of Flanders in Belgium. These figures have been actualized using a specific study about the social security, like mentioned in [1].

Type Amount
Interests from the national debt [ABH90], [DEG91] 3 550 Meuro
Social Security [1] 3 020 Meuro
Dotations to communities and regions [ABH90] 223 Meuro
Remainder (Public sector [2], OKIs, Financement Law of 1989) [ABH90] 496 Meuro
Total 7 290 Meuro
Table 2 - Volume of the annual flows of money out of Flanders in Belgium

Flanders having 6 million inhabitants and Wallonia 4 million, this means that every Fleming (from new-borns to old men) every year pays 1220 euro, whereas every Walloon receives 1820 euro.

Figure 3 - Graphical representation of the figures from [3], presented by prof. Eric Ponette ; see also Table 3 and Table 4

Region Gross Income Real Available Income
Flanders 10 500 euro 8 920 euro
Wallonia 9 740 euro 9 250 euro
Table 3 - Gross and real available income per region in 1985, as given by prof. Eric Ponette in [3]

Region Gross Income Real Available Income
Flanders 14 000 euro 12 000 euro
Wallonia 12 300 euro 11 900 euro
Table 4 - Gross and real available income per region in 1990, as given by prof. Eric Ponette in [3]

Figure 3, Table 3 and Table 4 show a few figures of the gross and real available income in Flanders and Wallonia in 1985 and 1990. The situation of 1985 is very remarkable: although Flanders had a higher gross income, the real available income was lower than in Wallonia. This means that the giver was poorer after he gave than the receiver!

According to Paul van Rompaey of the KULeuven, 22,2 billion euro flowed from Flanders to Wallonia between 1980 and 1990, counting only in the Social Security. The estimate is a minimal one, since the burdon of interests, caused by the 74 billion euro the federal government had to borrow to keep the Social Security in balance, wasn't considered, nor was the positive the Flanders would have gotten from investing the 22,2 billion euro.

Flows Going the Other Direction?

Flows going the other direction, that is from Wallonia to Flanders, seem to be a myth. Professor dr. Juul Hannes , teaching at the universities of Brussel and Gent, did some research about possible such flows between 1832 and 1912. The study showed that th epopulation of the four Flemish provinces accounted for 44% of the total Belgian population during that period, paying also 44% of the taxes. The four Walloon provinces accounted for 38% of the population, but paid only 30% of the taxes. If any flow occured, it would have been one going from the province of Brabant to Wallonia. Furthermore, the industrial Wallonia paid less trade taxes than the agrarian Flanders, although Flanders received only 35 to 37% of the government's investments. The argument of earlier flows going the other direction to smooth over the current flow from Flanders to Wallonia seems to be unfounded. A reversal of the direction in the future seems to be very unlikely as well.

Cut-Backs or Taxes

Besides the fact that there are some ideological differences between Flanders and Wallonia as to whether there should be more taxes or cut-backs, there's also the effect that cut-backs hurt Wallonia more than Flanders, and extra taxes Flanders. The reason is that Flanders is doing better economically, while Wallonia has more people living on state support. Besides that, there are much more officials in Wallonia than in Flanders than could be expected from the population figures. This means that if more taxes are raised on the federal level, the flows of money going from the North to South actually further increase.

Federal Pensions

April 1996 showed another mechanism that moves Flemish money to Wallonia. The Walloon universities decided that professors should retire at the age of 60, but that they could be hired again as guest-lecturers. The pensions plus the extra compensations made up for their original salary, but the difference is that the pensions are paid by the federal government, while the salary of a professor is paid by the French Community. Or in other words, the French Community decided that Flanders should pay a part of the salaries of the Walloon professors too. The French Community tried this same mechanism again to save money in the secondary schools, and it was then that this mechanism came to light. By the way, this way of doing strictly forbidden in the Flemish Community.

[1] J. Van Overtveldt. Cijfers zonder Maskers (Figures without Masks). Study by P. Van Rompuy en V. Bilsen. Trends, 17th of June, 1993.

[2] G. Tegenbos. Openbare sektor is veel te groot in WalloniŽ zeggen werkgevers (Public Sector too Large in Wallonia according to Employers). Report from the Union Wallonne des Entreprises. De Standaard, 4th of February, 1992.

[3] J. Veestraete. Vlaanderen zet toekomst kinderen op het spel (Flanders puts its children future at risk). Prof. Eric Ponette about flows of money in the Social Security. Gazet van Antwerpen, 27th of July, 1993.


© Filip van Laenen ( f.a.vanlaenen@ieee.org )