Knesset Approves Austerity Budget for 2013 and 2014 in First Reading

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Israel's parliament on Monday night approved the first reading of the austerity budget bill proposed by Finance Minister Yair Lapid for the years 2013 and 2014.

The budget bill was accompanied by a bill "Changing National Priorities." And as always, the budget bill was also accompanied by the Economic Arrangements Bill, a hodgepodge of completely unrelated legislative proposals with some economic bent or other that often amend the budget law of preceding years (or budget decrees due to take effect).

The bills passed their first reading into law as well, with 58 Knesset members voting yea to 44 voting nay.

The Finance Ministry stated that the budget it proposed will narrow gaps, boost participation in the workforce and "ensure that financial responsibility is shared equally."

At the heart of the budget lies the decision that all state-funded schools be required to teach the core curriculum, the ministry stated. It also budgets for job training and the establishment of placement centers, in order to increase participation in the workforce, which is relatively low in Israel – mainly thanks to high levels of joblessness among two key population groups, Israeli Arabs and the ultra-Orthodox.

“The budget contains measures intended to lower the cost of living, such as reforms in the costs of food and vehicles and standards reform. In addition, the leading criterion for receiving benefits from the state, such as discounts on municipal property tax and day-care subsidies, will be utilization of earning potential," the ministry statement said.

The budget also contains measures making the flab-bound Civil Service more efficient, not to mention decentralization of the economy.

“The budget will resolve the profound structural deficit in Israel’s economy, which is NIS 35 billion. Allowing the situation to remain unchanged could lead to a structural deficit of NIS 55.6 billion in 2013 and of NIS 62.2 billion in 2014," the ministry stated. “An additional goal of the budget is to lay the groundwork for growth- and confidence-building measures to continue creating an economy based on innovation and creativity.

While the budget includes stringent austerity measures and is based in part on increases in tax – VAT for one rose to 18% from 17% at the start of June – some areas get more money. Principally, the Finance Ministry begged to point out the following:

- NIS 9.1 billion extra for the Education Ministry budget

- NIS 3 billion for the Health Ministry.

- NIS 1 billion for the Welfare Ministry, of which NIS 200 million is for a food-security fund for children.

- NIS 500 million for a multi-year program to provide nursing care and medications to Holocaust survivors

- NIS 500 million for a 5-year plan for the integration of Haredim into the work force.

Knesset speaker Yuli Edelstein (left) accepts the budget bill from Finance Miniser Yair Lapid.Credit: Emil Salman

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