Netanyahu Postpones Cabinet Session on Budget for Fourth Time

Move indicates discord between Likud and its ultra-Orthodox coalition partners over proposed spending cuts.

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Weekly cabinet meeting in June, 2015.Credit: Alex Kolomoiski

Prime Minister Benjamin Netanyahu has delayed the cabinet debate on the state budget for a fourth time. The session on the 2015-2016 budget that was scheduled for Thursday has now been moved to next Monday. However, even that August 3 date is not considered firm, an indication that the premier hasn’t managed to reach agreement with the other parties in the coalition.

Netanyahu (Likud) and Finance Minister Moshe Kahlon (Kulanu) have faced opposition from the ultra-Orthodox coalition factions, United Torah Judaism and Shas, over proposed cuts to annual spending commitments of 8 to 9 billion shekels ($2.1 to $2.4 billion) that were made to the parties as part of their agreement to join the government. The defense budget is also a source of disagreement.

The government is currently operating based on the 2014 budget, as a 2015 budget wasn’t passed last year. Instead, the March Knesset election resulted in the formation of the current government, which took office in May. The Locker committee, the official panel that looked at defense spending and submitted its report last week, recommended a basic defense budget of 59 billion shekels for next year, not including outlays that are conditioned on income-generating activity. The Finance Ministry, however, is proposing 54 billion shekels. Netanyahu and Kahlon have been unable to resolve the issue.

Finance Ministry officials also warned over the weekend that unless the cabinet approves the budget by August 3, there won’t be enough time to submit it for Knesset approval by August 31, as recently passed legislation requires. Although missing the deadline won’t result in the government falling, it would be a violation of the law. The budget is scheduled for the first of three Knesset votes on September 2; it must pass its final two subsequent votes by November 19.

Ultra-Orthodox opposition

The Council of Torah Sages of Agudath Israel, one of the constituent factions of United Torah Judaism, passed a resolution last week rejecting proposed cuts to spending commitments that appear in the coalition agreement. Deputy Health Minister Yaakov Litzman (UTJ) conveyed the stance in two meetings with Netanyahu, in which the prime minister asked that the ultra-Orthodox parties reduce their demands. Litzman also met with Kahlon, but that meeting dealt primarily with Health Ministry issues. Finance Ministry budget director Amir Levy held similar meetings but failed to resolve the matter.

Litzman has been the major target of the three men’s lobbying efforts. Levy, for example, proposed spreading the spending over a longer period, but the UTJ chairman was insistent on fulfillment of the coalition commitments as originally agreed. The cajoling is expected to continue this week, but the prospects for any movement are considered slim.

“First, people at the top political level irresponsibly threw around billions in promises, as if there was no tomorrow. And now they are asking the parties to forgo the promises they gave to their voters,” one political source noted.

Coalition sources claim the ultra-Orthodox factions have sharpened their tone after parliamentary opposition leader Isaac Herzog (Zionist Union) dismissed speculation a week ago that his party would be joining the coalition. Prior to that, two ultra-Orthodox leaders – Economy Minister Arye Dery (Shas) and Knesset Finance Committee chairman Moshe Gafni (UTJ) – had agreed that increases in child-allowance payments, a major issue for large ultra-Orthodox families, would not be paid retroactively.

The coalition agreement spoke of increases going into effect in May, and Litzman is insisting that increases be retroactive. If he had relented, it would have saved the treasury considerable sums.

The differences of opinion between Netanyahu’s Likud and the ultra-Orthodox parties are not limited to the budget. Likud officials are suspicious that three ultra-Orthodox MKs last week failed to vote for MK Nava Boker (Likud) as a member of the selection committee for rabbinical court judges. Boker received 58 votes in the secret ballot, losing to MK Revital Swid (Zionist Union) by four votes.

Opposition from Yisrael Beiteinu

Over the weekend, Yisrael Beiteinu chairman Avigdor Lieberman said his party would oppose the budget. There had been talks recently between Finance Ministry officials and representatives of the party – now in the opposition – but nothing came of them. Much of the party’s core support comes from immigrants from the Former Soviet Union, and Yisrael Beiteinu was pushing for a budget provision that would provide pensions to immigrants from the FSU who came to Israel in the 1990s at a relatively advanced age and were forced to forgo the pension rights they had accumulated in the U.S.S.R. Lieberman said over the weekend that nothing came of the talks and his party would be voting against the budget.

The governing coalition has the slimmest of possible majorities – 61-59 in the 120-seat Knesset – and Lieberman has expressed the view that new elections will be called early next year. However, Public Security Minister Gilad Erdan (Likud) predicted last Friday that after the budget is passed, Zionist Union will join the government when it realizes it cannot bring down Netanyahu’s current coalition.

‘No’ to the Histadrut

Finance Ministry officials don’t intend to accept demands by the Histadrut labor federation for a salary increase for public sector workers, beginning in January 2016. Talks on the matter are slated to begin soon, with the labor federation expected to demand a 5% to 7% wage hike – which would cost the treasury 5 to 7 billion shekels a year. Finance Ministry sources claim that public sector employees haven’t been badly treated in recent years. In addition, they say, the government doesn’t have the money for such a raise, meaning the demand is out of the question.

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