What would you think about getting paid not to work? And what would you think about getting paid not to work your whole life, and having the right to bequeath that right to your children, or even selling it for a tidy sum? If this makes you laugh, maybe you should be crying, because if you’re an Israeli taxpayer, you’re on the other end — paying people not to work.
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So who are these people? They’re 600 farmers who had the good fortune to be raising chickens in certain communities in the north in 1996.
Well, they had to fulfill three conditions. The right only applied to farmers who raised chickens for slaughter, and again, it only applied to a few locations. And those two conditions had to be followed during one year — 1996. If you lived in an Arab community in the north, or if you got into the business after 1996, you wouldn’t qualify to be paid by the government for life.
There’s actually a fourth condition: the Agriculture Ministry’s eagerness to protect this privilege, which it plans to stick with at least for another three years — even though the Finance Ministry’s accountant general has found that there’s no written authorization for it.
But what did you really have to do to get paid by the government not to work? You had to have been tethered to the political system that in 1988 spawned the so-called Galilee Law. This was a great piece of legislation designed to help Galilee farmers by paying them a special government subsidy. The wonderful thing was that it only applied to egg and poultry farmers, and only in specific communities in the Galilee.
Only two villages inhabited by Circassians — Muslims with roots in the Caucasus — were included in the plan; no Arab locales were included. Only a handful of Jewish farmers have qualified for the subsidy since 1988. Together, they have been receiving a sum amounting to about 100 million shekels ($26.6 million) a year. Everyone else has been left out in the cold. And who says Israel isn’t committed to equality?
But since 1996, something major has happened in poultry farming. In 1996, central planning for the sector was scrapped; poultry farmers no longer face restrictions on the number of chickens they can raise (although the quota system still exists for egg farmers). Since there are no more quotas, there’s ostensibly no longer any basis for the Galilee Law subsidy plan, which is based on a few pennies per egg or shekels per ton of poultry.
No written documentation
But in Israel, the moment a subsidy is provided, it becomes an inherent right. So it would never have occurred to anyone at the Agriculture Ministry in 1996 to eliminate the subsidy to poultry farmers.
On the contrary, the subsidy stayed based on the quotas that existed in 1996. It was immaterial if a farmer raised more or fewer chickens, sold his quota to someone else or even left the business. His right to the subsidy, based on the quota he had in 1996, remained in place.
And that’s where the brilliant idea of the “poultry substitute” comes into play. This, for example, could be a farmer who in 1996 had a quota entitling him to raise a certain number of chickens. He received a subsidy on the quota and in the meantime stopped raising chickens. He would continue to receive a subsidy for his non-chickens, as it were.
Anyone who thinks this is a joke should read what a July audit by Finance Ministry Accountant General Michal Abadi-Boiangiu had to say about the Galilee Law subsidy. The sad fact is that of the 100 million shekels in subsidies paid out annually based on the law, about 40% is for people who are no longer poultry farmers. They get paid for the right not to raise poultry.
The government is shelling out 40 million shekels a year for the right not to work, a right that not only can be passed on to children, it can be sold, the accountant general found. She also discovered that there was no written record of the right to a subsidy for not raising chickens, and no written documentation for the joint decision by the finance and agriculture ministries to create the program.
“It was not possible to locate the minutes of the decision. It is not clear to the auditing team who approved it, on what authority and what the decision included,” the report states. “As a result, there are no clear criteria or procedures, and the execution of the program is subject to the judgment of the various relevant people at the Agriculture Ministry.”
The ministry, for its part, said it was addressing the report in full cooperation with the accountant general’s audit unit.
The ministry wasn't checking anything
Abadi-Boiangiu’s team also found that there was no relation between the sum the Agriculture Ministry transfers to the Egg and Poultry Board and the total subsidy that goes to farmers, because the board offsets various debts that the board is owed. In other words, the Galilee Law has created cash flow for the board through which it settles all its accounts with the farmers.
It was also found that the Agriculture Ministry didn’t have a clue that the poultry board was using the funds to offset other debts, because the ministry never checked. It conducted no oversight, didn’t make sure that the money that was transferred to the board got to the farmers, didn’t demand confirmation that bank transfers were received by the board and didn’t know if each farmer was getting what the law provided.
It became clear that the ministry wasn’t checking anything. It didn’t check how the subsidies were calculated, and for more than a decade, it didn’t revise the indexes for paying out the subsidies. Some indexes were calculated by the poultry farmers themselves.
In many case, the ministry has been using incorrect figures; the accountant general’s report said it’s not clear where the figures were from, but they were different from the figures provided by the Central Bureau of Statistics. And curiously enough, the ministry’s mistakes were entirely random, sometimes erring in favor of the farmers, sometimes not.
The report’s crowning finding is the way the payments have been made. The Agriculture Ministry pays the Egg and Poultry Board and the board in turn pays major marketing companies in the egg and poultry sector. These aren’t farms. The companies get millions of shekels a year.
In 2012, the board transferred 4.2 million shekels to the marketing firms, and that’s just for poultry subsidies. It doesn’t include egg subsidies. It’s these marketing firms that transfer funds to the farmers, but these companies offset the debts that they claim too, and do so without any Agriculture Ministry oversight or confirmation to the Egg and Poultry Board regarding the amounts paid.
So in the height of absurdities, Israel pays subsidies to its farmers via private companies that along the way use the funds to offset debts that they claim. And all this happens without even minimal oversight. And it’s happening with the consent of the Agriculture Ministry.
The Egg and Poultry Board issued its own statement.
“The board is the government’s executive arm for transferring subsidy funds. Eligibility and the subsidy’s amount are set by law, and adjustments to the amounts are carried out by the Agriculture Ministry. The board transfers the subsidy to every eligible farmer via the marketing firms with which they are associated,” the board said.
“The accountant general’s report has not been presented to us, but there is no basis for the contention that there is no oversight in the transfer of funds. The transfer of the subsidy funding does not create a concentration [of power] inasmuch as no marketer of eggs for consumption has a market share exceeding 20%.”