BIBI'S BUDGET

Long before the social media were in vogue, TV channel archivists were busy documenting speeches, statements and off-the-cuff remarks made by Benjamin Netanyahu. Now they are causing him no little embarrassment by airing them again.

As Israel was suffering from its worst economic recession twenty-one years ago, then-finance minister Benjamin Netanyahu blamed the crisis on the public sector for exploiting the private sector.

In an interview last December, just before forming a government with ultra-Orthodox and nationalist parties as his partners, Prime Minister Netanyahu recalled that the Haredi community’s high birth-rate, low employment rate and reliance on state welfare had created a burden that contributed to that 2002 economic crisis.

Netanyahu explained that Israel’s economy then was in trouble for various reasons, including its “lavish welfare system, which encouraged people to live on the dole and not to go out and work.”

Netanyahu’s remedy, he remembered, was to reduce government expenditure. A measure that included cutting the child allowances that grew incrementally with each successive child and implementing wide-ranging structural and regulatory reforms to encourage economic growth and prosperity.

Now it seems the opposite is happening. As part of its expenditure programme for the next two years, the government has okayed the allocation of billions of shekels in funds to causes which the Finance Ministry and leading economists have warned will lower incentives to join the workforce. Furthermore, Haredi men will be ill-qualified to earn a living.  The approved expenditure programme will stifle growth, causing some economists to term it an existential threat!

After slogging through a seemingly unending filibustering by the opposition parties in hopes of delaying proceedings, Knesset members finally voted to approve the final parts of the two-year budget just after 6 a.m. Wednesday, capping a boisterous all-nighter in the plenum.

The final vote approving the budget buys Netanyahu and his government another 18 months until the Knesset must approve another budget, clearing the coalition’s largest internal point of contention.

   "Happy days are here again."

“This is a good budget, it will serve the citizens of Israel,” Finance Minister Bezalel Smotrich said from the Knesset podium after the vote, to cheers and applause from the coalition lawmakers who stood together in a show of unity to celebrate the milestone event.

As the Knesset began voting on the budget, thousands of protesters gathered in Jerusalem, waving Israeli flags and chanting against the government’s “looting” of state funds.

“The budget does not serve and does not provide a response to the needs of Israeli citizens such as investment in reforms for tackling the high cost of living in the country, which is not adequately addressed,” Daphna Aviram Nitzan, Director of the Centre for Governance and Economy at the Israel Democracy Institute said “Instead, it allocates funds that are not growth drivers for the economy at the expense of a diminishing working population which will have to carry the high tax burden to finance this budget.”

The Israeli public is mostly concerned about the high cost of living, according to a survey released by the Israel Democracy Institute (IDI) on Tuesday. It showed that two-thirds of respondents think that food prices are the most significant factor, and around half blame housing costs, and 29% indirect taxation.

The majority of the public believes that the high cost of living is the fault of the government’s lack of action and only 27% blame the large monopolies, and 3-4% attribute responsibility to local manufacturers, importers, or supermarket chains, the survey found.

“The changing priorities of the government are very much reflected in the allocation of the coalition funds,” Itai Ater, an economics professor at Tel Aviv University told The Times of Israel. “Previously, funds for Haredi institutions were made available on certain conditions of teaching core subjects and an understanding that the ultra-Orthodox community needs to be incentivised to join the labour force.”….

“Two things have changed in that regard, we give them more money, and we don’t give them the necessary core education,” said Ater.  “The economy cannot survive without more Haredi men joining the labour force.”

“Many Haredi women are already joining the workforce, but with regard to Haredi men, we are very far from being in a good place,” he added.

Today, almost 25% of children under school age are born to ultra-Orthodox families, and this proportion is expected to double by 2050. Overall, the ultra-Orthodox community makes up 13% of Israel’s population, it will constitute 16% of its population by the end of the decade, and will account for about a third of it by 2065.

The average monthly salaries of Haredi households - $ 3,786, are far lower than their non-Haredi counterparts, who earn $ 5,857.

The Finance Ministry has already warned that the allocation of funds to ultra-Orthodox institutions and initiatives creates negative incentives for Haredi men to seek employment and will harm the labour market and the economy as a whole.

I want to conclude on a festive note, namely, the celebration of Shavuot.

Ostensibly Shavuot, the Feast of Weeks, the Feast of the First Fruits is ideally suited to the saga of the Jewish agrarian renaissance, the return to our ancestral land.  Shavuot is not explicitly named in the Bible as the day on which the Torah was revealed by God to the Israelite nation at Mount Sinai, although this is commonly considered by Orthodox Jews to be its main significance.

 

Chag Shavuot Sameach

 

Beni,

               26th of May, 2023