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Two months ago the NII (National Insurance Institute) released its poverty report for 2002, revealing that one in five Israelis is poor - 1.32 million people. A month ago Latet humanitarian aid organization published its "Alternative Poverty" report which said 100 voluntary organizations across the country had increased food distribution programs by 46 percent since last year.

A Bank of Israel report published a month ago said the number of families in poverty had trebled from 1988 to today. The Council for Child Welfare released a report this week saying 30 percent of children live under the poverty line and 40 percent are in serious crisis. And yesterday the Adva Center issued a report on the growing gap between rich and poor.

In reaction to this deluge of bad social economic news, the government decided this week to set up a ministerial committee to try to reduce the number of children living in need, with Social Affairs Minister Zevulun Orlev as its head.

Not long ago Orlev said: "The Thatcherite policies of all recent governments that cut back spending on welfare and education have made things worse, not just for the poorer members of society, but for the middle classes too." Really? So the problem is cutbacks in budget allocations?

Israel's governments have turned it from a nation that lives off its own labor, with low unemployment and small gaps between rich and poor (up to 1973) into one where people live off state handouts, can't find jobs, and watch the yawning and increasing gaps that separate them from the rich.

In 1980, there were 10,000 families living on income support - that number has ballooned to 155,000. Up to the mid-1970s, you would have received tax credit according to the number of children, but the link between labor and child allowance has been severed. Until the 1990s there were practically no foreign workers here, but in the 1990s, the borders were opened and 300,000 foreign workers poured in to take jobs that would have gone to local manual laborers.

Before 1967, we invested in and developed the peripheral areas. Since then the money has been going to the territories, the settlements, the bypass roads, and the vast security apparatus that is an integral part of occupation. All this has been at the expense of infrastructure, education, professional training, and developing towns and neighborhoods.

Orlev's solution comes from a mistaken diagnosis. He said "we should immediately spend more on education and welfare" but, in the past 20 years except for the last two, spending on welfare and education has increased by enormous amounts.

Today we spend NIS 44 billion on NII allowances, but more handouts, discounts and benefits have not cured poverty nor filled income gaps. Government policies have made it not worth while to work and pushed the unemployed into a poverty trap.

In education, spending per pupil is among the highest in the world, but the system's achievements are among the lowest.

This proves the problem is not budgets - but mismanagement.