Comptroller: Kandel Should Advise Cabinet, Not Just Premier

Shapira says Israel's National Economic Council should do better job of checking, balancing treasury’s dominant role in policy making.

Shiran Granot

The National Economic Council came in for harsh criticism in a report by State Comptroller Joseph Shapira released on Tuesday, as did some of the practices of the head of the council, Eugene Kandel.

Shapira found that the council, an entity that operates out of the Prime Minister’s Office and which has the task of coordinating policy-making for the prime minister on issues requiring a more comprehensive approach, was not fulfilling its role in the best manner. The result is that the council is only fulfilling a portion of its mandate, according to the comptroller. In the process, Shapira writes, it is failing to optimally serve the purpose for which it was set up – to provide a system of checks and balances in the face of the dominant role that the Finance Ministry enjoys in economic policy development. The council’s role, it was noted, includes providing independent policy analysis regarding the government budget, which in turn has such a major impact on the country’s economy and social fabric.

The comptroller’s report recommended that the prime minister reexamine the economic council’s status, its powers and its role. Shapira also recommended that further consideration be given to whether the council was achieving the task to which it was entrusted when it was established – by a 2006 cabinet decision – and that was to provide the economic data necessary for the government to make informed decisions.

The cabinet decision setting up the council provided that it be headed by the prime minister’s economic adviser. Initially the post was filled by Manuel Trajtenberg. Since 2009, Eugene Kandel, a close associate of Prime Minister Benjamin Netanyahu, has filled the position.

Shapira noted that the council was to serve as an economic policy address to help the prime minister formulate policy on economic and social welfare issues. As of last October, the council had a staff of 11, eight of whom are economists, including Kandel. At the same time, however, it was noted that the Prime Minister’s Office has another team that addresses socioeconomic policy. This body has a staff of 18, only six of whom are economists.

The National Economic Council is operating on the erroneous assumption that its role is to advise the prime minister alone, Shapira asserted in his report. This approach, the comptroller wrote, is in conflict with one of the central tenets of the functioning of the cabinet and of the civil service – that they be guided by mutual responsibility. That principle requires that the economic council’s professional judgment on policy be brought to all of the members of the cabinet. Such a practice on a systematic basis would lead to policy decision-making in the cabinet that is based on professional analysis and long-term thinking, Shapira added.

The council has not made it a practice of providing written professional policy analysis to the cabinet on matters that are the subject of cabinet decisions, Shapira noted, and that includes cabinet decisions on the government budget. Instead, it has been the practice of the head of the council to make oral presentations to the cabinet, and even when it comes to the budget, no written policy paper is submitted.

For his part, Kandel informed the comptroller that the data necessary to develop a formal professional opinion on the budget are not provided to the council early enough to issue an opinion in writing. The council is also hesitant to provide a written opinion on budget matters because such opinions then provide fodder for media leaks, Kandel added.