Israel Plans to Reboot Efforts to Slash Red Tape, Reform Regulatory System

The original five-year plan required all government ministries to reduce their bureaucratic burden by 25 percent, estimating it would save the public 5 billion shekels

Meirav Arlosoroff
Meirav Arlosoroff
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People wait to be served at Israel's employment service
People wait to be served at Israel's employment service Credit: Tomer Appelbaum
Meirav Arlosoroff
Meirav Arlosoroff

Five years after the launch of an abortive program to slash government red tape, a trio of officials in the Prime Minister’s Office, the treasury and the Justice Ministry is determined to get it back on track over the next few months.

Ministry directors general last week got the first word on plans to fast-track the undertaking, which had originally been launched in 2016, only to fall victim to the absence of a functioning Knesset and government over the last two years of elections. In addition, sources said ministries weren’t highly motivated to act.

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The original five-year plan required all government ministries to reduce their bureaucratic burden by 25 percent, estimating it would save the public 5 billion shekels ($1.5 billion) and a combined 50 million days of time spent waiting for government services every year. In practice, only about half the targets were met.

No one disputes the need for regulatory reform. Since 2007, the PMO has been seeking to improve Israel’s regulatory regime and over the last decade a fair number of laws to ease the regulatory burden have been approved. Among the most prominent were an overhaul of business licensing, the requirement to conduct a regulatory impact analysis of the cost of each new regulation, and the 2016 decision to reduce red tape by 25 percent.

In practice, all the initiatives were only partially successful. In 2016, the Organization for Economic Cooperation and Development said Israel suffered from excessive regulation. If it were to succeed in reducing the burden to the average among developed countries, per capita gross domestic product would increase by 3.75 percent within five years and 5.75 percent over a decade.

The cost of heavy regulation was felt more keenly than usual during the coronavirus crisis, when the government reacted slowly to the challenge and failed in basic functions such as identifying who was eligible for aid and ensuring businesses that needed it got it.

The trio, which includes PMO acting director general Tzahi Braverman, Deputy Attorney General Meir Levin and acting treasury budget chief Yogev Gardos, will be ordering each ministry director general to meet with them personally to report on what they have achieved to date and explain what is blocking further progress. The intention is eventually to submit the Regulation Reduction Arrangements Law, a single bill that will include hundreds of steps to repeal and reduce regulations that the Knesset will be asked to approve in a single vote.

Informing directors general of their plans is the first step. The next occurs on Thursday when the public will be asked for comments on the central piece of the reform drive – an overhaul of the state’s regulatory structure.

The public part of the drive comes just two days after elections and is aimed at spurring discussion among officials and politicians even before coalition talks get underway. It will also be the first reform undertaken in the wake of Israel’s coronavirus pandemic.

The reform drive will come in two parts. The first, described in the letter to directors general as a three-pronged “spring cleaning,” calls for immediate changes based on completing the 2016 program to help the economy’s post-COVID recovery over the next two to three years. It also includes the business-licensing reform and a temporary freeze on new regulations. The second is a wide-ranging structural reform to be contained in the planned arrangements law.

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