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Budget session disgrace

Ministers approve 2007 budget without knowing what they're voting on

Published: 09.13.06, 13:22 / Israel Opinion

The cabinet approved the 2007 state budget late Tuesday by an expected majority, following deliberations that lasted 10 hours. As anticipated, the majority of the Labor Party ministers supported the budget.

 

But my heart goes out to the ministers; it wasn't easy to digest, comprehend, to consolidate an opinion and to decide on a NIS 300 billion budget and dozens of important constitutional changes in such a short timeframe.

 

But why was it necessary to convene on the 2007 budget at this highly volatile time? What's the urgency? Israel is approaching the holiday period anyway, and nothing will be done with the budget until after Sukkot.

 

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Here's the answer: This week a large delegation comprising senior members of the Treasury will be leaving for an annual conference held by the International Monetary Fund (IMF) and the World Bank in Singapore.

 

Budget decisions under a ticking clock

I am not envious of the participants – the travels of the minister, the director general, the governor of the Bank of Israel and his deputy are financed by the monetary fund itself.

 

I just can't help wondering whether such a marginal event, by an organization that has been 'searching for its identity' for over a decade, warrants forcing cabinet ministers to make crucial decisions pertaining to the Israeli economy under the pressure of a ticking clock.

 

In a normal country (and we are not) the prime minister would have distributed the initial drafts of the Sate Budget and Economic Arrangements Law to his ministers for their perusal at least a month prior to the initial budget session, thus enabling them to study its content in depth, and to prepare learned counter proposals. The economic and social future of the State following the last war is at stake here after all.

 

In this respect I am greatly disappointed in the prime minister of all people. Ehud Olmert in his position as the minister of industry, trade, and labor, held several meetings with me, in which he complained about the arrogant behavior of the Treasury.

 

He mentioned artificial haste in convening budget sessions, presenting politicians with fait accompli, spreading of half truths, use of vague figures, insertion and extraction of "budgetary needs," and verbal laundering of decrees, among other things.

 

When I become prime minister or finance minister, said Olmert, I will change the very foundations of this unacceptable conduct.

 

Today Mr. Olmert is prime minister, and has anything changed for the better? Nothing. The change is all for the worse. The budget over which the cabinet convened Tuesday is the least transparent and the most confused in the last five years. Next to it, Benjamin Netanyahu's budget can serve as a prime example of transparency, clarity, openness and representation of the truth to the public.

 

Three examples of disrespect for coalition partners

Following are three prime examples of the disrespect with which the prime minister and the defense minister are treating their coalition partners.

 

First example: The prime minister was presented with a budget that does not comprise an established and reasoned forecast for collecting taxes. It is not quite clear what is expected to enter the State coffers next year and it not quite clear who will benefit from which reform. The entire section of the budget's income is mentioned in a document presented to the cabinet just incidentally, in a footnote.

 

Cabinet ministers, therefore, do not have a factual platform on which to deliberate the issue of whether it is feasible to raise the VAT back again, or to postpone the decrease in income tax planned for 2007, or to impose a special tax on the high income earners. They don't have any figures, just a whistle of contempt in the darkness.

 

Second example: A lot has been written about the fact that a critical discussion on the State Budget must be accompanied by an analysis of the budget's implications on poverty, the number of persons below the poverty line and their numbers among the various population sectors.

 

The cabinet's economists at the National Insurance Institute, Treasury and Bank of Israel could have prepared the forecast in advance and brought it to the discussion table. They were not asked to do so. The reason for this is clear: The less the ministers know, the better.

 

The third example: Cabinet ministers were informed in a threatening tone that they must adhere to the budget framework for 2007 and add an additional NIS 1 billion (half a percent of the budget, roughly USD 225 million) in order to prevent the anti-social freeze of allowances.

 

However, the framework for which the ministers are being called to vote on deviates by more than 100 percent from the original plan! Budgetary expenses are projected to increase by 1.7 percent next year according to coalition agreements, and by a further 1.6. percent for covering the costs of the war, and by another 0.5 percent for financing what remains of the disengagement from Gaza.

 

In total the budget will increase by 3.9 percent, namely more than double the "framework."

 

The "framework" is apparently very flexible when it's convenient and important for the prime minister and finance minister, and it is as hard as steel when it is inconvenient.

 

The Labor Party's vote in favor of the budget (except for Peretz who abstained), after being thrown a few crumbs from the table – NIS 50 million here, NIS 100 million there, and an NIS 15 "down payment" for the minimum wage – is not surprising: It just reiterates two things.

 

Firstly, that this party can be bought very cheaply at a bargain price of O.3 percent of the state budget. Secondly, the Labor Party is no longer viable after voting in favor of a budget that does not impose a single cent for covering the costs of the war on the high income brackets.

 

The Labor Party would do well to join forces with Kadima, because now it is evident to all that it is an integral part of it. And the sooner the better.

 

Chairman of the Labor Party and Defense Minister Amir Peretz chose an original way to demonstrate his view on the budget: He abstained. This is absurd and cowardly behavior that does not do justice to a junior minister let alone one who heads a large party and who is at the helm of the Defense Ministry. Perhaps he isn't at the helm - abstention indicates removal from the helm.

 

Finally, the outcome of the budget session is humiliation to its participants. What? How much? No one knows. None of the ministers I spoke with could explain or quote the size of their office's budget. They didn't know whether there would be cutbacks and responded abashedly when asked simple informative questions.

 

There is something childish in Olmert's and Hirchson's approach of viewing their cabinet colleagues as enemies who should be surprised and pushed into a corner, with their backs to the wall.

 

This is not the way to conduct serious budgetary discussions; this is the way a political circus is run with clowns and magicians in one of the last performances before the curtain closes.

 

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