Cabinet Okays More Economic Reforms

But avoids much of the tough stuff.

Several measures to increase market competition, including in the dairy industry, were approved by the cabinet yesterday - but many of the most important, and contentious, recommendations meant to reduce the cost of living in Israel were left out.

Recommendations by the Trajtenberg Committee on Socioeconomic Change that were approved yesterday include subjecting the diesel fuel and cooking gas markets to supervision, increasing competition in the cement industry, and opening Israeli ports up to competition, with private terminals opening in Haifa and Ashdod. The proposals will now go to the Knesset for approval.

Cabinet session on Trajtenberg committee, Netanyahu
Alex Kolomisky

The cabinet also approved opening 40 new gas stations, improving public transportation, reinforcing the mandate of the anti-trust commissioner, and boosting competition in the egg, cheese and milk market.

The latter is particularly resonant because it was protests against cottage cheese that began this summer's protests against housing prices and the cost of living in Israel, which led to the formation of the Trajtenberg Committee.

But the ministers held off on several key proposals, such as reducing the defense budget, implementing free compulsory education for children aged 3 and 4 and providing more affordable housing. The cabinet said these issues, as well as suggestions related to raising the employment rates of Arabs and ultra-Orthodox Jews, will be discussed later, but no date was set.

Former Antitrust Commissioner Dror Strum, who served on the Trajtenberg Committee, said manufacturers had managed to block many of the recommendations that would have increased competition and lowered the cost of living.

Earlier this month, the Knesset approved some of the tax portion of the Trajtenberg Committee report. Among the amendments to Israel's tax law was a monthly addition of NIS 418 for fathers of children under 3.

The tax changes will take effect in January 2012.

Ignoring what's really important

The Trajtenberg panel's recommendations that were approved yesterday are an important step forward, even historic. But as usual, what is more important is what is missing from the sections the cabinet passed. First and foremost, an entire section on competition was buried in advance: the part about opening up parallel imports - the key to lowering the cost of living in Israel.

Prime Minister Benjamin Netanyahu has given in not just as part of a necessary compromise, but has also backed down on the most sensitive of the recommendations. Indeed, it does not seem as if he intends to raise the issues of changing the status quo vis-a-vis the Haredim, or of cutting the defense budget. He has also made sure to keep regulators under control and deny them the necessary freedom to act.