Tensions between Prime Minister Benjamin Netanyahu and Yesh Atid chairman, Finance Minister Yair Lapid, are once again on the rise after Lapid threatened Saturday night to quit the coalition if the 2015 state budget is not approved without changes.
"Finance Minister Lapid is determined to pass a social budget for the benefit of the middle class and weaker sectors, alongside a broad housing plan. If anyone harms these core issues, he will quit the government," Lapid's office said Saturday.
Sources close to Lapid said the prime minister and coalition chairman MK Ze'ev Elkin have lost control of Likud members.
The members of Likud, the sources say, are influencing Netanyahu and Elkin "and making them try to thwart the German health system reform."
And if that was not enough, there's now a threat of a general strike, including education institutions.
On Tuesday, Histadrut (General Federation of Labor in Israel) chairman Avi Nissenkorn is expected to declare a general labor dispute. The grounds for the dispute, according to the Histadrut, are "the embarrassing minimum wage in the State of Israel, the worrying increase in the use of contractor employees and the state's disregard of the extension order regarding the employment of people with disabilities in the civil service."
Likud, Yisrael Beiteinu oppose KKL reform
The state budget was passed on first reading at the Knesset last week, but three main disagreements between Likud and Yesh Atid are delaying discussions on the state budget and The Arrangements Law, and preventing the passing of the 0% VAT bill on second and third readings.
Rather than having opposition MKs making passionate speeches on how the budget offers no new help to the lower and middle classes, the battles are waged in the coalition instead, where threats from all sides are constantly made, which also leads to a halt in discussions. At present, each side is sticking to its guns.
Votes on reforms included in the Arrangements Law have been frozen due to a dispute between Lapid and the heads of Likud and Yisrael Beiteinu, who want to break off some bill proposals from the Arrangements Law and put them on a regular legislative track, with that essentially burying the proposals.
At the top of the reforms Likud and Yisrael Beiteinu are trying to foil is the decision to transfer 65 percent of the JNF-KKL's yearly revenue from marketing of state lands to the state budge. Representatives from Likud and Yisrael Beiteniu have suggested that the JNF-KKL will instead transfer some NIS 1 billion to the state budget in 2015, but the bill - that proposes to transfer a similar sum that the Treasury will determine how to divide among the different ministries - will be taken out of the Arrangements Law and essentially buried.
Objections to German's health reform
Likud and Yisrael Beiteinu also want to remove the chapter dealing with the German committee's recommendations on private healthcare in Israel from the Arrangements Law and raise it in a separate discussion in the Health Committee.
This chapter includes several decisions meant to limit the expansion of private healthcare and bolster public healthcare, cancel the VAT exemption on medical tourism, impose a 15 percent tax on revenue from medical tourism, and set an upper limit for private hospitals' revenues beyond which the state will collect 10 percent worth of royalties. Health Minister Yael German insists this reform is approved.
Another proposal Likud and Yisrael Beiteinu representatives are trying to remove from the Arrangements Law is to issue government companies' stocks at the stock market. This proposal includes the privatization of the Israel Military Industries (IMI) and the Ashdod port, issuing 49 percent of the company's stocks for environmental protection services, and moving Tel Aviv's municipal companies to the full ownership of the municipality. In addition, the proposal offers to issue 7.5 percent of the Israel Electric Corporation's (IEC) stocks and allocate minority interest in the Israel Natural Gas Lines.
The three bill proposals Likud and Yisrael Beiteinu seek to remove from the Arrangements Law have raised objections from those who stand to lose from such a move: JNF-KKL objects to transferring a part of its revenue to the state, private hospitals (and particularly Assuta) object to the German Committee's recommendations, government companies' labor unions worry of the supervision and transparency that will occur after some of the control of these companies is transferred to private hands.
Sources within the Knesset have reported intense lobbying last week on behalf of these elements to convince MKs to work to thwarting these proposals.
0% VAT still awaiting approval
The dispute between the finance minister and the Likud and Yisrael Beiteinu parties currently delays the approval of the government's two main plans to lowering housing prices: 0% VAT and target costing.
The 0% VAT plan, which has already been approved by the Finance Committee, is being delayed by Knesset Chairman Yuli Edelstein who is refusing to put it up to a vote on second and third readings in the Knesset as long as Lapid refuses to compromise on the JNF-KKL bill and the German Committee recommendations.
The target costing plan is also delayed because it was decided the plan would come into effect only after the 0% VAT plan is approved and comes into effect.
"The finance minister and all of the Yesh Atid MKs fully support the Knesset's right to hold a discussion on all chapters of the budget," Lapid's office said. "But unfortunately the reality is reversed. Interested parties, led by the Likud center members, are putting intense pressure on MKs in an attempt to harm social budgets and reforms that would benefit the public, the lower and middle classes."
Yesh Atid also demanded to pass a legislation freezing appointments in government offices, which also raises objections from the Likud.
Source in Yesh Atid said the party prefers "to go to elections rather than harm the weaker sectors and the Israeli middle class."
On the opposing side, senior coalition officials accused Lapid of foot-dragging and blowing up discussions.
"As long as Lapid insists not to discuss the Arrangements Law's chapters in Knesset committees - a position in contradiction to that of the Attorney General - he will bring about costly and redundant elections in Israel," they said.
Officials from Knesset Chairman's office added that Edelstein does not intend to raise the 0% VAT plan - Yesh Atid's flagship legislation - to a vote until all disputes over the budget are resolved.
"It's hard for us to believe that the Knesset Chairman is hurting the Knesset's status and that of his role by serving as a tool for political interests seeking to cancel reforms vital for growth and to lowering the cost of living in Israel," Yesh Atid officials said. "With his decision, the Knesset Chairman is putting out the spark of hope young couples had when the discussions on the 0% VAT bill ended in the Finance Committee. Yesh Atid will continue its struggle to solve the housing crisis on the one hand, and to pass a social and responsible budget on the other hand."