Haredi coalition talks prove costly

Finance ministry sharply criticizes plans to raise government-sponsored child allowances; Cost estimated at NIS 1.5 billion (USD 320 million)

Gad Lior|Published: 04.21.06 , 12:06

The proposed cancellation of cutbacks in government-sponsored child allowances, as the United Torah Judaism party demanded during coalition negotiations, will cost the finance ministry NIS 1.5 billion (USD 320 million), sources at the finance ministry said on Friday.

Yedioth Ahronoth, Israel's leading newspaper revealed on Thursday that a deal is in the works between the Haredi party and Kadima in which the government will reduce about NIS 50 (about NIS 10) from child allowances for families of one or two children. Money saved by the move will be allocated to families with four or more children.

Senior finance ministry officias said on Thursday that if the cutbacks are withdrawn it is back to square one. The reform, meant to bring equality and fair allocation of child allowances in Israel, will be cancelled.

Some social organizations sharply criticized the proposed move saying it will not solve poverty but rather exacerbate it. "There is quite a bit of poverty in small families, and this money is very important to them", said Ran Melamed, Associate Director of Yedid, an association that promotes social justice and provides aid for the poor.

It seems that the single parents sector, about 130,000, has a lot to lose from such a move.

"Cutbacks of NIS 100 a month seem a little, but for those families it's food for a week", said Vicky Knafo, who three years ago led the battle of single mothers. "They can cut-back from the child allowances for the rich. That would be fair", she added.

Officials at the finance ministry also voiced their objection to the proposed raise in minimum wage, a move, they say could cost about NIS 2 billion (approximately USD 425 million) and cause lay-offs for tens of thousands of workers.

If child allowance reform is cancelled and minimum wage increased, there will be no choice but to ratify deep cutbacks throughout government ministries, they warned.