"The billions we invested in security saved the State of Israel financially. We need a significant raise of the defense budget, by many billions," said Netanyahu at a Tel Aviv University's International Cyber-security Conference.
The prime minister stressed that the country faced many security threats over the years, saying "the State of Israel needs a responsible budget which will provide a response to its security needs and will not lead us astray."
"We need money for Iron Domes and to deal with ISIS in the east, Hezbollah and al-Qaeda in the north, and Hamas in the south. Billions were invested in a fence (on border with Egypt) which blocked both infiltrators and jihadis. I prefer not to consider what would have happened had we not made that investment then," he told the audience of officials and experts.
Netanyahu claimed the responsible conduct of the government was the reason Israel did not deteriorate like other Western economies. "The billions invested in thousands of interceptor missiles for Iron Dome saved the Israeli economy during the last campaign and prevented the outflow of foreign investments from Israel."
In a direct refutation of Lapid's proposed policy, Netanyahu said, "We have the ability to withstand these challenges as long as we do so responsibly and not spiral Israel into an uncontrollable deficit."
Netanyahu also discussed Israel's war in cyberspace. "We have identified and stopped cyber attacks. There is activity on this front from Iran – even attempts by Hamas. But Iran is both the support and the point of origin for many cyber attacks. We are committed to maintaining Israel's position as a global cyber power."
Earlier on Sunday, Lapid told Ynet that an agreement was possible regarding the budget dispute. "We can provide an injection to the military's preparation for future challenges, and on the other hand to consider and to strengthen the civilians by adding to social funding."
Lapid, however, warned against any increase in tax rates. "We must absolutely not raise taxes which would burden the people. Not raising taxes will help the people and allow for growth in the economy and in industry."