Committee Urges Israel to Spend $1.8b More Annually to Cut Poverty Rate by Half

Treasury slams panel’s recommendations as being divorced from fiscal reality.

Olivier Fitoussi

The War on Poverty Committee is recommending the government increase spending on welfare services and allowances by as much as 6.3 billion shekels ($1.8 billion) a year starting in 2015, TheMarker has learned.

The panel, whose conclusions were given to Social Affairs Minister Meir Cohen on Sunday before they are formally released, said the negative income tax program should be expanded at a cost of 2.3 billion shekels annually and income-support measures by 1.2 billion shekels.

In addition, the report – a copy of which was obtained by TheMarker — called for old-age allowances to be increased by 600 million shekels and spending on social workers to go up by up to 500 million shekels. It also proposed that spending on public housing be increased by 1.6 billion shekels annually and that dental costs for those under age 14 and over 75 be subsidized to the tune of 560 million shekels a year.

The panel, which had been working on its proposals for the past half year, said the extra spending should be rolled into the budget over the next three years with the aim of reducing the poverty rate in Israel by half over the next decade.

Israel has the second-highest poverty rate among countries belonging to the Organization for Economic Cooperation and Development. Last week the organization, which groups most of the world’s wealthiest economies, estimated that 18.8% of Israelis were under the poverty line in 2012, compared with an OECD average of 11.5%.

“Israeli society and its institutions have treated the people living in poverty with indifference and disclaim concern and responsibility for the situation,” the report said. “People find themselves caught in the margins of life that were largely beyond their circumstances “

But even some members of the committee, which is chaired by Eli Alalouf, a former director of the Rashi Foundation and a winner of the Israel Prize, said before the official release of the report that they doubted its recommendations would be implemented in full, meaning its ambitious targets would not be met.

Treasury officials, in fact, were quick to dismiss the proposals as unrealistic. “The treasury doesn’t have the resources to implement the poverty committee’s recommendations,” said one official. “A government committee needs to take into account the feasibility of its proposals.”

The report contains major reservations expressed by the treasury as well as the Bank of Israel, the Prime Minster’s Office and Alalouf himself concerning the proposal to expand income supports. Alalouf and the government believe no more money could be allocated without creating effective tests for ensuring that people who are capable of working are doing so.

Indeed, the criticism of the panel’s report was so severe that it felt compelled to add note saying that “it was made clear by government representatives that their participation shouldn’t be seen as government approval of its positions.”

The panel called for all government ministries to make the issue of combatting poverty a core activity and to establish a bureaucratic framework to implement programs.

The PMO “must organize this endeavor together with the relevant ministries and with the assistance of the Finance Ministry, to formulate a working program that reflects the spirit of the committee and provides detailed follow-up and controls,” the report said.

The committee said the treasury must create a fiscal framework that would ensure that the necessary spending would be in place for the next five years. Without it, it would be impossible to move ahead with the program.

“Everyone understand that the continued development of the State of Israel and improving the standard of living of all its citizens requires that it successfully contend with the targets contained in this report,” the committee said. “Poverty weakens Israeli society economically, socially and militarily.”

Alalouf accused the government and society of ignoring the problem of poverty. “I believe we can do more. Solidarity, mutual support and love of one’s fellow man — basic values on which the country was built – have gradually lost their centrality,” he wrote in the report.

“Poverty is not written in stone in a way that cannot be reversed,” he said. “While there are those who sink into poverty because of life choices they have made, most are born into this reality without any real chance of changing things on their own. We as a society are supposed to extend a secure safety net.”

The report paid special attention to the role of social workers. It said as much as 400 million shekels should be spent to ensure that each one has no more than 50-60 cases at any given time and that they should be given the role of helping families escape poverty at a cost of 200 million shekels a year.

Another 200 million to 500 million shekels should go to a discretionary fund that would allow social workers to make specific grants to impoverished families.