Knesset Report: Israel's Treasury Makes Massive Budget Changes With Little Oversight

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In 2012, some 10,110 changes were made to the national budget totaling NIS 29.8 billion, or 10.5% of the original budget – 45% more than the number of changes made in 2005, according to a Knesset report to be presented Sunday.

On December 18 last year, when the Knesset members were in the middle of the election campaign and with less than two weeks left on the budgetary year, then Knesset Finance Committee Chairman Moshe Gafni quickly approved budgetary changes worth hundreds of millions of shekels that were detailed in a 201-page document.

He quickly read out the item number and asked, “Who’s in favor? Who’s against? Who’s abstaining?” and then stated out loud, “The changes have been approved.” In some cases he asked Finance Ministry budget department staff for clarifications. In some cases he asked but didn’t receive a response. A few weeks earlier, Gafni and some of his committee members approved changes totaling NIS 1 billion over the course of hours.

This Tuesday, the Knesset is expected to approve the budget bill. But that’s not the final word. Every year, the treasury asks the Knesset Finance Committee to approve thousands of changes. The committee members receive thick explanation pamphlets, but they can’t always review them. The treasury continues submitting changes even over the course of the committee session.

Some of the changes don’t even require the Knesset committee’s approval. They go through a treasury panel and take force after 21 days, so long as an MK doesn’t petition against them. The MKs are unable to track the volume of changes being made.

MK Zahava Gal-On (Meretz) commissioned a report by the Knesset Research and Information Center to analyze the nature of these budgetary changes. The findings, which are to be passed to the Knesset Finance Committee Sunday, are being published here for the first time.

“The tens of billions of shekels that pass through the Knesset Finance Committee every year, without proper oversight, turn the Knesset-approved budget into a laughingstock,” she said.

The figures show a steady increase in the number and value of budgetary changes. In 2012, the changes totaled NIS 29.8 billion - a 26.3% increase from the 2009 figure, which was NIS 23.6 billion. They accounted for 10.5% of the total budget in 2012, versus 9.6% in 2010, which was also the second year of a two-year budget.
The Knesset Finance Committee approved 95% more changes in 2012 than in 2005. It approved 184% more changes involving the general budgetary reserve than it did in 2004 (1,181 versus 416).

It also shows a sharp increase in the size of the budgetary reserve. The budgetary reserve includes funds allocated for various budgetary items that were not used, and is intended, in part, to cover unexpected expenses. In some cases, the funds have actually been committed for use for various items.

The report found that the reserve grew significantly over the past few years – in 2009 it was NIS 9.4 billion, while this year it is due to be NIS 16.7 billion.

The report also sought to ascertain where the money was going. A significant portion of the changes were for the sake of the defense establishment. The defense budget gained NIS 34 billion over the past four years thanks to budgetary changes, it found. Between 2009 and 2012, it grew by NIS 7.9 billion to NIS 9 billion a year.
In every case, MKs were being asked to approve changes without being told how much the defense budget had already increased beyond the approved budget.
As a point of comparison, the education budget increased by about NIS 1 billion in 2010 and 2011, and by NIS 2.7 billion in 2012.

The additions to the defense budget increased this sector’s portion of the total budget by more than 15% of the original budget allocation, the report found. For instance, in 2012 some 17.4% of the original state budget was defense, but after changes it grew to 20.3% of the total budget.

Gal-On asked the Knesset legal adviser to look into changing laws regarding what budgetary changes can be made via the Knesset Finance Committee.

Finance Minister Yair Lapid at meeting of Knesset's Finance Committee (archives). Credit: Michal Fattal

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