Kahlon Sees Competition as Key to Lowering Israel's Cost of Living

In interview with TheMarker TV, Kulanu leader attacks Lapid, price controls.

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Moshe Kahlon at Tel Aviv's Shuk Hacarmel, February 4, 2015.Credit: Tomer Appelbaum

Moshe Kahlon, who is leading the Kulanu party with an economics-oriented platform, said in an interview with TheMarker TV on Sunday that competition, not price controls, is the key to bringing down the cost of living.

“I’m against price supervision because with controls, prices are always going higher,” he said referring to ways of ensuring low prices for natural gas, although he supported price supervision for banking and other industries.

“There has to be competition in gas, real competition, along the lines proposed by Antitrust Commissioner David Gilo. Once there’s competition and infrastructure is really deployed properly, the market will take its course. To fix prices is an error.”

Kahlon, whose party, according to polls, stands to win seven or eight Knesset seats in the March 17 election, rose to political prominence as communications minister in the 2009-2013 Netanyahu government, where he led a breakup of the cellphone cartel, bringing a plunge in prices. He quit the cabinet in 2013 and left the Likud to form Kulanu ahead of the upcoming elections.

In banking, where Israel’s two biggest lenders control about 70% of the market, Kahlon told TheMarker that competition would solve the problem. He proposed doing that by divesting the bank of their credit card operations and easing the way for new banks to enter the market.

“The Bank of Israel is the [banking industry’s] biggest shield, its Iron Dome,” he said. “Our plan, which is detailed, talks about banking supervision being subordinate to a supervisor of competition, and additional regulators.”

Kahlon had harsh words for Yair Lapid, finance minister in the last government whose Yesh Atid Party is competing for many of the same voters as Kulanu.

Asked about the difference between him and Lapid, Kahlon said, “One difference. Yair Lapid sat for two years in the government as a powerful finance minister and not a single monopoly was disbanded, no bank faced more competition and no insurance company or food maker.

This means he sat there for two years and did nothing. The one important thing he did was to fight. Lapid and Bibi fought constantly and we saw the result after a year and a half.”

Kahlon expressed optimism that the economy could handle a sharp drop in home price, even as much as 20%, saying that mortgage banks had sufficient financial cushions.

He said he was unconcerned about opposition from powerful unions to introducing competition or making other reforms in the public sector, such as state-owned Israel Electric Corporation.

“The workers’ committees are reasonable people who also want to ensure they have a place to work,” he said. “I believe, and I’m not nave, that you can improve the public sector by understandings and agreements.”

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