Text size

Immediately after Finance Minister Benjamin Netanyahu presented his 2005 budget, the attack started. It is natural for the opposition to attack the budget, for example when former Labor finance minister Avraham Shochat says that Netanyahu does not care about the social welfare situation, or Histadrut labor federation chairman Amir Peretz promises a full-scale war against the economic decrees.

More worrying are the attacks from various Likud ministers who have discovered a new invention: increasing the budget framework. Why argue about cutbacks if you can raise the budgetary framework by 1 percent - and thereby solve all the problems?

Industry and Trade Minister Ehud Olmert has set the tone. At first, he said it was necessary to increase the budget by 1.7 percent; but later he improved his proposal, and said it was necessary to increase the budget by 2 percent. This would mean another NIS 2 billion in expenses, of which NIS 1.5 billion would be dedicated to encouraging investment, research and development, and wage subsidies - all, of course, Olmert's responsibility.

Defense Minister Shaul Mofaz kept up with Olmert. He proposed raising the budget by 1.8 percent, and using the money to solve the problems of cutbacks in the defense budget. The treasury wants to cut the defense budget by NIS 1.5 billion, while the Israel Defense Forces is demanding an additional NIS 1.5 billion at the same time. But the real gap is NIS 4 billion, since they cannot even agree on the baseline for the defense budget.

Education Minister Limor Livnat is not willing to settle for the half a billion shekels that Netanyahu has promised to devote to implementing the Dovrat Commission report on reforming the education system. She is demanding much more.

Health Minister Danny Naveh demands another NIS 700 million. Altogether, the ministers have demanded NIS 10 billion - a sum that will increase the budget deficit to 5 percent of GDP. All this means a larger government, a smaller private sector, higher interest rates, lower economic growth and higher unemployment: but all that is Netanyahu's problem - not that of Olmert, Mofaz, Livnat or Naveh.

l Wages: The largest cuts are planned in public sector wages. This is the result of the major mistake made by the treasury during negotiations over earlier budget cuts in 2003. In light of the serious economic crisis at the time, the treasury reached a historic agreement with the Histadrut to cut public sector wages by 6 percent for two years. But at the time of the agreement, nothing was said about what would happen at the end of the two years. Therefore, in July 2005 it will be necessary to reinstate NIS 4 billion in wages all at once. Now the treasury is trying to delay payment of NIS 2 billion of this amount. Of course, the Histadrut cannot agree to this, and the next general strike is inevitable.

l Water: Every year the treasury proposes to raise water prices. This year, as well. Economics and justice both require raising the price of water to agriculture only, because the price for farmers is only 1 shekel per cubic meter, while household consumers spend NIS 2 per cubic meter - and this price for consumers is the price charged by Mekorot before the local authorities add their expensive additional charges.

The budget division has sinned professionally by proposing to raise the water price to all consumers by the same amount, 20 agorot per cubic meter. In the treasury they know there is no chance of raising the price only for farmers because of the opposition of Prime Minister Ariel Sharon, who also does not like too large a water bill at his own ranch.