Cabinet to Vote Sunday on NIS 5.4b in Budget Transfers

Money to go for free preschool education for ages 3-4 and defense.

Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz want to move NIS 5.4 billion from this year's budget, including NIS 1.5 billion more for the defense budget, NIS 2.5 billion for free preschool for children age 3-4, and NIS 700 million for various other commitments, such as previously agreed raises for teachers and doctors. The money will come from a 4% across-the-board cut in the budgets of all government ministries and NIS 1.5 billion in budgetary reserves. Netanyahu and Steinitz will present the proposal to the cabinet on Sunday.

In response, three parties in the coalition have already said they will vote against the changes: Atzmaut, Yisrael Beiteinu and Shas. In addition, Vice Prime Minister Silvan Shalom (Likud) said he will also vote against. This leaves 13 ministers against out of 28 in the cabinet, with a number of others wavering.

Ehud Barak, left, and Benjamin Netanyahu on a visit to an IDF base during Hanukkah - Nir Kafri
Nir Kafri

Netanyahu's staff, headed by the new director general of the Prime Minister's Office, Harel Locker, is expected to apply heavy pressure on Atzmaut and Yisrael Beiteinu before Sunday morning's meeting.

The main dispute with Yisrael Beiteinu is over the housing section of the Trajtenberg committee's recommendations on socioeconomic reform. The real fight on the issue is between Avigdor Lieberman's party and Shas, both of whom are interested in very different criteria for determining who receives the 4,000 housing units to be built under the new housing program.

Netanyahu has signed two contradictory documents on the matter: One based on the number of family members, the other based on family income - supported respectively by Shas and Yisrael Beiteinu.

Yisrael Beiteinu also complained they were given too little time, four days including Saturday, to study the proposals.

Shas also objects to the idea of the across-the-board cut.

Atzmaut, headed by Defense Minister Ehud Barak, is fighting to increase the defense budget. Barak is not satisfied with the proposed increase and demands more - another NIS 2 billion. Atzmaut also says it objects to the across-the-board cuts to pay for the educational initiatives, and also wants the defense budget exempted from these cuts.

Just a month ago, the cabinet approved another blanket cut to pay for the new fence along the Egyptian border, and Barak objected to this too as it also affected the defense budget. "The treasury's proposal harms the security of the State of Israel," the Defense Ministry said yesterday.

In fact, the defense budget will grow by an additional NIS 3 billion this year, based on the proposal to be voted on this Sunday. Netanyahu approved transfering various budgetary surpluses from 2011 to the Defense Ministry, but said this was a one-time act and that there would be no further additional funds in 2012.

A number of recommendations of the Trajtenberg committee will still be excluded as the money will not cover them: Affordable housing, aid in finding employment for Haredim, and programs for the Arab community.

The NIS 5.4 billion will be coming from NIS 1.5 billion in budgetary reserves and the rest from the across-the-board cuts, including child allowances, which were supposed to rise by NIS 7 per child for the second, third and fourth child on April 1, will be postponed for one year. This will save the government NIS 100 million.

The proposal will cut NIS 150 million from the Transportation Ministry's development budget, and NIS 30 million from the budget of Silvan Shalom's Regional Development Ministry. The Agriculture Ministry will lose some NIS 100 million in subsidies for Galilee poultry farmers, and the Interior Ministry will have to cut NIS 40 million from grants to local authorities. The program to cut greenhouse gas emissions will lose NIS 30 million.