State Comptroller Joseph Shapira on Monday formally launched an investigation into last year’s enormous budget deficit, which at NIS 39 billion was far larger than anticipated.
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The announcement came just hours before the cabinet was expected to approve the 2013-14 budget on Monday night, which includes a slew of spending cuts and tax increases aimed at closing the hole created in 2012. A vote was expected to take place sometime after midnight last night.
“As we announced in a press statement on February 17, 2013, the State Comptroller’s Office is indeed conducting a probe,” a spokesman for the office said, referring to the statement that first announced Shapira’s plans to launch the investigation. “The economic division of the State Comptroller’s Office is preparing for a probe into the matter in light of the comptroller’s decision in discussions of the annual work plan.”
Earlier Monday, Knesset State Control Committee chairman Amnon Cohen (Shas) had said he would convene his committee within two weeks to ask Shapira to prepare an opinion on who is responsible for the deficit.
He added that he would personally ask the comptroller to look into the issue even if he failed to obtain a majority for the motion in the committee.
“We felt that during the last term we didn’t receive real data from the Finance Ministry,” Cohen said. “Even when there were debates in the Knesset plenum about the budget, they told us that Israel’s situation is good relative to the rest of the world, that unemployment is low, that we are among the leading OECD countries ... I’m concerned not about [last year’s] deficit, but how to prevent it next time, so we won’t face a similar deficit.”
MK Miki Rosenthal (Labor), who had sent his own request for an investigation into the deficit to the comptroller a few days ago and had also requested a meeting of the State Control Committee on the issue, termed Shapira’s announcement an “important achievement,” though he said the guilty parties were already known: Netanyahu and former Finance Minister Yuval Steinitz.
“Now, [Finance Minister Yair] Lapid is putting his hand in our pockets to cover this deficit, responsibility for which rests with those same people who frightened us that we were en route to being Greece or Spain but in fact brought the country to the brink of an economic abyss,” Rosenthal added.
In a cabinet meeting that dealt with the state budget on Monday, Prime Minister Benjamin Netanyahu announced that he had decided to cut the defense budget by NIS 3 billion, rather than the NIS 4 billion the treasury had wanted. But he insisted that the reduced cut “won’t come at the public’s expense” in the form of bigger cuts or tax hikes elsewhere.
The prime minister did not mention that in exchange for agreeing to the NIS 3 billion cut, the defense establishment was promised significant budgetary increases in 2015-18. The increases are included in the army’s five-year plan for 2014-18, which the diplomatic-security cabinet approved on Monday.
While the official cabinet meeting was taking place, several ministers were busy on the side trying to persuade senior treasury officials to reduce the cuts slated for their ministries. One who succeeded was Industry, Trade and Labor Minister Naftali Bennett, who got the funding cut for the Chief Scientist’s Office reduced by NIS 500 million. As a result, the office’s budget will now be NIS 1.3 billion per year.
Justice Minister Tzipi Livni also garnered a victory by persuading the treasury to freeze plans to close three magistrate’s courts in northern towns: Beit She’an, Nahariya and Afula. The freeze will remain in place until the legal, economic and social implications of the planned closures have been studied.
The meeting took place without the man who by law is the government’s economic advisor, Bank of Israel Governor Stanley Fischer, since he is on vacation in France. He was replaced by his deputy, Karnit Flug, whom Fischer has been pushing to succeed him when he retires in about six weeks.
Altogether, the budget will total NIS 388.3 billion in 2013 and NIS 408.1 billion in 2014 − the first time it has passed the NIS 400 billion mark. It is slated to be approved by the Knesset no later than July 30 and to take effect on August 1.