Israel’s new budget is as solid as a shekel

They did it. Five months since he took power, the strangest coalition in Israel’s history passed a budget, an unlikely feat that adds to an impressive act of political humility and economic momentum.

The political act began with a successful assault on the Delta variant of the pandemic. Now, having shown that they can fight a fire together, the coalition’s multiple opposites produced an ambitious budget, overcoming their deep differences not only on foreign policy, but also on domestic affairs.

The 40 budget reforms include raising the retirement age for women from 62 to 65 for the next 11 years. Its rationale is core funding, which reflects increased life expectancy, eases long-term pressure on the pension industry, and completes raising the retirement age of then-Finance Minister Benjamin Netanyahu’s men. 65 to 67 in 2003.

Previous attempts to pass this reform met with resistance from women’s organizations. This government surpassed them.

The pressure was even stronger regarding the reform of kosher supervision, which allows competition in an industry that was until now an ultra-Orthodox cartel. Therefore, the resistance was fierce (thousands of jobs that ultra-Orthodox politicians have been distributing for years are at stake), but it was overcome.

The KNESSET building in Jerusalem houses one of the smallest legislatures in the world. (credit: MARC ISRAEL SELLEM / THE JERUSALEM POST)

Industrialists also lobbied. The budget import reform removed protectionist regulation that required local standard tests for imported products that had already undergone such tests in their home countries. That resistance has also been overcome and the result will be lower import costs and lower consumer prices.

Transport Minister Merav Michaeli opposed the new toll that will make non-local drivers entering Tel Aviv during rush hours pay NIS 5-10 for that pleasure. Michaeli called the toll “a regressive tax” but it was repealed.

Most importantly, investment in public transport nearly doubled, to NIS 35 billion. This includes a new Metro Law, which will establish a framework for expanding Tel Aviv’s fledgling light rail network into a metro system.

In the social sphere, the monthly fees for the elderly and disabled were increased. In the medical field, the budget of hospitals will be remodeled to make it larger and more transparent. These are just a sample of 40 tax clauses that add up to the largest set of budget reforms Israel has seen since 2003.

While it was at it, the government also reached a so-called “deal package” whereby the unions agreed to a public sector wage freeze for one year, while the Treasury agreed to raise the monthly minimum wage from NIS 5,300 to NIS 6,000 during the next three years. years, and employers’ organizations agreed to add an annual vacation day and also allow a weekly workday from home.

In addition to all this, the budget deficit will be reduced next year to 3.9% of gross domestic product, after having skyrocketed in the wake of the pandemic lockdowns and special spending to more than 12%. This means the economy is well on its way to pre-pandemic standards of budget discipline.

This display of economic acumen and political delivery received its most impartial compliment from the financial markets, where the shekel emerged as the world’s strongest currency, appreciating against the euro, yen and even the Swiss franc, not to mention the dollar, which is it has plummeted from NIS 3.33 on the eve of Prime Minister Naftali Bennett to NIS 3.1 this week. The idiom “sounds like a dollar” could also change to “so sounds like a shekel”.

Yes, there are deeper reasons for the strength of the shekel and it also poses problems, most notably declining profits for exporters. However, in terms of the judgment of this budget, it is an emphatic vote of confidence, one that may well be followed by a further improvement in Israel’s credit ratings.

This, in short, is what happened politically and economically. So what does it mean personally?

The BUDGET saga has shed new light on three people. The first is Finance Minister Avigdor Liberman.

This column has criticized Liberman in the past for many reasons (see, for example, “Poorman’s Churchill,” November 15, 2018), most notably for his imposition in 2019 of an early election five months after a general election (“Person of the Year ”, September 27, 2019).

Now, however, the man whose 28 years in politics were often about demagogy, intimidation and manipulation has emerged as a skilled negotiator and flexible pragmatist. Perhaps at age 63, Liberman matured, and perhaps this is just part of a calculated plan to storm the post of prime minister from the political center. Either way, he has now led a great political movement, and while he did so, he served the national interest.

The second budget hero is Prime Minister Bennett, who has demonstrated his ability to reconcile opposites and deliver lemonade from the bowl of lemons he came out of the last election with.

The latest budget hero is opposition leader Benjamin Netanyahu, whose personal barrage against Bennett in the Knesset budget debate was meant to change the subject, from what Bennett just did to what Netanyahu didn’t.

Overall, during the 12-year term that ended in the summer, Netanyahu displayed none of the reformist zeal that fueled his 2003-2005 term as finance minister. Therefore, it is frustrating for him to see so much delivered by a coalition that is much weaker than the ones he led until 2019.

Even more frustrating for him is the collapse of his prediction that Bennett’s first budget will never pass. Yes, the most frustrating thing for Netanyahu must be the way he passed this budget, a show of collectivity that was the antithesis of his own Bonapartist arrogance; a team effort joined by people who over the years abused, stripped and also fired, from Bennett, Shaked and Liberman to Gideon Sa’ar and Yair Lapid, people who now, by working together, have activated the power of the helpless; the power of humility; a power Netanyahu never wielded, and dubiously ever heard of.

The writer’s best-seller, Mitzad Ha’ivelet Ha’yehudi (The Jewish March of Madness, Yediot Sefarim, 2019), is a revisionist story of the leadership of the Jewish people from ancient times to modernity.

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