New Government Economic Policy to Fight Cost of Living, Economic Concentration

Fighting poverty and ‘sharing the burden’ were prominent in the policy of the previous government but they’re now gone.

Finance Minister Moshe Kahlon, left, and Prime Minister Benjamin Netanyahu.
Reuters

The policy guidelines of Prime Minister Benjamin Netanyahu’s new government, which is due to be sworn in on Thursday evening, reflect some notable differences in emphasis from the guidelines of the outgoing government.

The new policy outline has less prominent language about fighting poverty and economic disparities, for example, although the issue is noted. On the other hand, the new guidelines give prominence to bringing down the cost of living and reducing the concentration of economic power.

Although the guidelines are not binding on the government, they do give an indication as to where the new government is headed and what its economic policy priorities might be.

The outgoing government was pledged to seeking “social justice by reducing social disparities and an uncompromising fight against poverty, in part through education, employment and housing solutions.” By contrast, the policy outline of the new government emphasizes lowering the cost of living in every sector, including housing, food and energy, according to a document submitted to the Knesset yesterday.

The new government, in which Kulanu party leader and former Likud cabinet minister Moshe Kahlon is to be finance minister, will not be presenting a policy blueprint for its first 100 days. Likud sources say that the government will instead act in accordance with the new policy guidelines, as well as the coalition agreements signed by Likud with its four coalition partners: Kulanu, Habayit Hayehudi, Shas and United Torah Judaism.

The outgoing government didn’t present a 100-day plan when it took office either, Likud sources said, explaining that this is generally done when a party that has been in opposition takes over. Since Netanyahu and his Likud party have been at the helm of the government since 2009, such an initial policy blueprint is regarded as being unnecessary.

The emphasis in the 18 sections of the new government’s guidelines is on socio-economic clauses providing for increased competition and provisions relating to to the banking and housing sectors. They also appear in the coalition agreement, at the request of Kahlon.

“The government will act with determination to reduce concentration [of economic power] and increase competition in the Israeli economy, including the banking industry, insurance companies and investment firms, with the goal of lowering the cost of services that Israelis receive and permitting less expensive and more accessible credit to small and medium-sized businesses,” the guidelines state.

Another clause commits the new government to technology education “to appropriately address the current needs of industry in Israel as a main growth engine of the economy.”

When it comes to non-economic policy differences between the incoming government and the outgoing one, the outgoing government guidelines made reference to strengthening the courts, whereas the new one makes no such reference. Instead, it refers to strengthening “the rule of law.” It is anticipated that incoming justice minister Ayelet Shaked of the Habayit Hayehudi party will attempt to push through legislative changes to curb the Supreme Court’s powers and to change the composition of the Judicial Appointments Committee.

The outgoing government’s policy blueprint also made reference to “equal sharing of the burden,” a term that was commonly used in the last government in connection with efforts to require ultra-Orthodox yeshiva students to serve in the army. The outgoing government had no representation of ultra-Orthodox parties, while the new governing coalition includes both Shas and United Torah Judaism.

“The government will work to narrow disparities in Israeli society,” the new guidelines state, “providing equal opportunities in education, strengthening the health system, advancing [opportunities for] women and minorities [which is generally a reference to Israeli Arabs], addressing the needs of the elderly, the war against poverty and increasing assistance to weaker segments of the population. “

The government will also give priority, according to the new government’s blueprint, to what it calls “developing Israel’s geographic and social peripheries,” by giving them preference in the provision of various services, in an effort to provide equality of opportunities.

“The government will place education at the center of the national priorities and will work to promote reform in the education system; give priority to the advancement of university students, soldiers and youth and, to every extent possible, assist young people at risk.”