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For some reason the government isn't willing to pay software developer salaries. It would rather pay a company to pay them instead.
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In some countries that is a dream job.

The public servant benefits in vacations, work hours, health support, plus an above average salary as highly educated technician.

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That's a logical thing for governments to do. Governments are under pressure on different axes than the companies they contract to do things. Governments switching contracts won't ever make the news, but it's much harder for them to fire people in order to take advantage of increasing efficiencies. Likewise, they cannot short-term employ people easily without this structure.
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In most cases its illegal to set up something inside the public org. It needs to be put out as a public offer. It's part of New public management pushed by neoliberal interests.
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Bullshit. Its not illegal.
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It often is. Above a certain value you need EU wide bidding.

Post and trains already had to be privatised since them being government owned was deemed anti competitive by EU standards

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Please do a minimum of research before you call some one out on bullshit.
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One important note: It's not the admin of the system that's in question here, that is government ran.

The company in question only provides cloud services, and has no access to any data.

> I just don't understand why the government won't consider funding it. It's a public infrastructure service at this point.

It has been 9 years since the last centrist ("purple") government in the Netherlands. 24 years since the last left-wing led government. Nothing more to it.

It's just decades of Neoliberal "outsource government tasks to the free market" policy. There really isn't any other reason; The Dutch government has multiple divisions which are quite good at IT. It could choose to do so at any moment, it just doesn't.

Voters just didn't care. The system worked fairly reliably. So they just kept voting for a very charismatic politician, regardless of the long term consequences.

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> What's wrong with the government taking over admin of DigiD?

Because they're a government and they are therefore going to fuck it up.

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the netherlands is far from perfect but unless you have a specific grievance with their government, you really have no idea how much better it can be. it's night and day when compared with places like the united states. things can be better even though it feels impossible sometimes.
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Unfortunately you will never realize how this ideology is fucking up every facet of society and which interests that are never your own put a momentous effort into drilling that propaganda into your head.
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> that propaganda

Not big on evidence-based thinking, are you?

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