With campaign season underway, the leaders of Habayit Hayehudi and Yesh Atid are both laying claim to economic policies without divulging the true extent of their involvement or the goals they didn’t manage to reach.
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Yesh Atid chairman Yair Lapid served as finance minister for the better part of 20 months, until he was dismissed from the cabinet as Prime Minister Benjamin Netanyahu called new elections, and Habayit Hayehudi leader Naftali Bennett is the country’s economy minister. It’s no surprise that they have been recounting the government’s economic achievements during their relatively brief tenures, but do their statements accurately reflect the record of their involvement? In most cases, the answer is no.
A peek at a paper Lapid prepared ahead of a speech at a recent Ramat Gan election rally contains a long list of achievements, but a critical examination shows that he can fairly take credit for only a small number.
Lapid doesn’t mention economic growth in his notes, which shouldn’t be surprising. During his tenure, which began in March 2013, economic growth steadily slowed. Gross domestic product expanded 3.2% in 2013 and just 2.6% in 2014, according to the Central Bureau of Statistics.
Per capita growth, which reflects how much individual Israelis are benefitting from an expanding economy, edged up just 0.7%, less than half the rate for other countries belonging to the Organization for Economic Cooperation and Development. In the years before Lapid was in office, Israel’s per capita growth was higher than the OECD average.
What does Lapid have in his background paper then? Biased data relating to housing, an unjustified pat on the back regarding ending daylight savings time for the year, an increase in the ultra-Orthodox men and Arab women in the workforce, and references to espresso, David Ben-Gurion, Benjamin Netanyahu and Lapid’s notorious Zero-VAT plan.
Meanwhile, data from the Bank of Israel presented two weeks ago show that Israel’s GINI ratio — the measure of economic inequality — is still among the highest of OECD countries. But those figures haven’t stopped Lapid from describing himself as a finance minister invested in the social welfare of Israelis, determined to reduce income gaps and poverty rates, and the author of a 2015 state budget that was friendly to such “social” issues.
Lapid is right to say spending on Holocaust survivors increased, but doesn’t talk about reducing the number of students in classrooms, adding more hospital beds or increasing National Insurance Institute allowances, because nothing like that happened in his tenure.
On the housing issue, Lapid maintains that prices fell (slightly) during his tenure. But Lapid’s flagship initiative to bring down prices — the Zero-VAT plan to exempt many buyers of new homes from the value-added tax — never won Knesset approval. Instead, it caused the housing market to seize up while builders and buyers waited for the legislation to pass.
According to the Central Bureau of Statistics, investment in construction, which grew between 8.6% and 13% in the three years before he took over, increased just 1.2% in 2013 and declined 1.2% in 2014. As a result, the stock of housing failed to grow, which promises to lead to even higher prices in the future.
Meanwhile, a video put out by the Bennett campaign has been advertising a long list of achievements as economy minister, including raising the minimum wage for cleaners and security guards, building kindergartens and devising an aid package that convinced the semi-conductor company Intel to remain in Israel and expand manufacturing. He also takes credit for solving the challenges faced by people with disabilities seeking to work.
To his credit, Bennet did take some initiative in office, notably by establishing employment centers to help Israeli Arabs and ultra-Orthodox Jews them find their way into the labor force. He also backed a plan to make the Economy Ministry’s Office of the Chief Scientist, the government’s main arm for helping the high-tech industry, an independent agency and gave a lift to technology education by increasing aid to engineering colleges.
But the minimum-wage agreement for cleaners and security guards was reached by the Histadrut labor federation and the cleaning companies association in July 2013, shortly after Bennett took office. Bennett had no part in the talks. He did play a role in expanding the agreement a year later, but that is not the same as originating it.
The law mandating that at least 3% of a given work force should be people with disabilities, if the employers have at least 100 staff members, had already been devised and agreed on by the Histadrut and employers. Bennett attached his name to it and signed off on the agreement.
In August, the finance and economy ministries launched a joint initiative to build 400 more kindergartens within two years. The problem, however, isn’t finding the budget for such a program, but overcoming the bureaucratic obstacles erected by local authorities. That was one reason organizations like WIZO and Na’amat, which run large netowrks of kindergartens, objected to the plan; it wasn’t realistic. Bennett is taking credit for a project that has barely gotten off the ground and whose results no one will be able to measure until the August 2016 deadline set for it.
Regarding Intel, the chip giant has received billions of shekels in grants over the past 20 years for new and expanded plants, in a ritual that starts with the application for aid, reservations expressed by government officials, threats by Intel to abandon Israel and the grant eventually made. Bennett had the good fortune to be in office when the last round of this ritual took place.