Prime Minister Benjamin Netanyahu presented on Thursday the government's strategy to reduce the rising prices of commodities during a special press conference. The outline includes the reduction of water costs, the reduction of public transportation prices and the cancellation of the latest tax increase on gas.
Moreover, Netanyahu announced that minimum monthly wages will be raised by NIS 450 ($122).
The PM said that following two financial crises that have plagued Israel over the past decade, it appears that 2011 might bring yet another fiscal meltdown.
"We are witnessing the characteristics of a third crisis which ties into the previous one," he said. "The recovering economies, the giant economies, demand a lot of energy. They drink a lot of oil, and when they do, the prices of oil rise."
Netanyahu explained that the rising prices of oil drag other commodity prices up with them, including the prices of gas and food. He listed the unrest in surrounding nations as another factor causing fiscal uncertainty, which contributes to the rising costs as well.
The prime minister said that the State has taken various measures to deal with past financial crises, including the creation of 100,000 jobs over the past year, increasing subsidies for kids and working mothers and supplementing the education budget.
Addressing the growing costs of raw materials, Netanyahu said that not only Israel but world powers like the US, China and Japan have no control over the fluctuating prices in this category.
"Since we cannot control them, it is possible that these prices, including those of oil, will continue to climb up," he said. "This is why our first step is to encourage the use of public transportation. This is the right thing."
He said that the government will therefore reduce the prices of bus and train rides by 10%.
The prime minister also said that certain alterations will be made to the prices of water used by citizens.
"We are setting a simple principle: Those who use more per person, for example those who use it wastefully to water their gardens and pools, they will pay significantly more, so that those who save can pay less," he said.
Netanyahu added that limits higher than normal will be set for people with disabilities, because they tend to use more water,
As for minimum wages, which will be raised by NIS 450, Netanyahu said that it will meet the immediate needs of families that struggle the most with the prices of basic products.
"We want to set a simple concept: To help those who don't have... We want to give the benefits to those who really make minimal wages," he said. "I hope and call on (Histadrut Labor Federation Chairman) Ofer Eini to talk and agree with us as soon as possible. We are ready to go immediately."
Lastly, Netanyahu said that the latest tax increase on gas, which amounted to 23 agorot per liter, will be cancelled.
"It doesn't solve the problem of the gas prices, but I think that we have here a serious and responsible package," he said.
"We must preserve the budget frame…To protect our economy and protect our security," he said. "We have found out that from Morocco to Pakistan Israel might be the most stable state. We must preserve the stability, help the citizens. We will do it, above all, responsibly."
Speaking after Netanyahu, Finance Minister Yuval Steinitz said that the first socio-economic priority is to reduce unemployment rates.
"This has been, and from my point of view still is, the holy goal of financial policy in a time of international crisis which has yet to end," he said.
Meretz chairman Chaim Oron told Ynet the measures presented by Netanyahu were "worthy, but too minor. The high cost of living and the disappearance of the middle class require a conceptual and systematic change, including a complete halt to indirect tax increases and the lowering of company taxes and direct taxes."
Knesset Member Shlomo Molla of Kadima, which heads the opposition, said Netanyahu "has once again been exposed as a spineless man and a tireless zigzagger. There is no trust in this plundering government.
"Today they are lowering (taxes); tomorrow they'll raise them. Netanyahu is entirely immersed in his political survival. This is why he must resign immediately," he said.
Fellow Kadima member MK Yoel Hasson said the prime minister makes decisions "only under pressure and in a state of panic, when he feels that his seat is wobbly."
Roni Sofer and Aviel Magnezi contributed to the report
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