Rivlin Speaks Out in Favor of ‘Bold’ Economic Reform

Israeli president says legislation already enacted has not gone far enough.

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Israeli President Reuven Rivlin, November 3, 2014.
Israeli President Reuven Rivlin, November 3, 2014.Credit: AP

President Reuven Rivlin weighed in strongly on Monday in favor of cracking down on cartels and monopolies, saying the legislation that has been enacted does not go far enough.

“It’s clear that the financial services, energy, food and housing sectors, among others, are in need of bold but responsible reform,” Rivlin told the annual Eli Hurvitz Conference on Economy and Society in Haifa.

“When I say bold reform, I don’t mean the reforms approved by the Knesset like the Business Concentration Law or the Food Law. I’m not only concerned that these reforms were not sufficiently bold or that they don’t solve the problem, but I’m worried they will entrench the existing situation more than they will correct it,” he said.

Bank of Israel Governor Karnit Flug told the conference that fundamental change in the economy was critical to ensure Israel’s future growth in an era of slower world economic growth, and in view of Israel’s changing demographics that will bring an increase in the ultra-Orthodox and Arab populations, which have lower levels of education and lower productivity.

Reforms must focus on Israel’s retaining its high level of innovation and creating a supportive business environment, she said. That means overhauling the electric power sector and ports and making the civil service more efficient.

“They [reforms] are likely to encounter opposition from the groups most directly threatened by them in the short term, but [reforms] are the key to increasing productivity and efficiency and will contribute to the economy’s ability to develop and withstand shocks,” Flug said.

However, she told the conference that she opposes an Education Ministry plan to expand technical education in the high schools.

“There’s room for expanding technical education, but we need to take into account the danger of tracking – putting young people into a technological track at school age, based on their socioeconomic class and not on their abilities, which can develop at a later age,” she said.

Prime Minister Benjamin Netanyahu also urged a broad-based assault on monopolies and cartels but said the ports should be addressed first. Inefficiency at the ports, said Netanyahu, reverberated throughout the economy by raising prices and creating uncertainty.

Another big target of reform is the public sector and regulation, Netanyahu said. “Reform needs to include getting rid of inefficient workers who don’t serve the public,” he said.

“We have too many regulations in some areas and too few in others,” the prime minister said, warning that officials are often too quick to impose rules. “It’s hard to operate with so many regulators who don’t necessarily see the financial cost of the reforms they want to advance.”

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