Analysis

Thanks to the Coalition Crisis, Israel's 2019 Budget Will Pass Without Much Debate

But early elections are still on the horizon and the politicians may yet tear it up before it goes in effect

Prime Minister Benjamin Netanyahu and Education Minister Naftali Bennett in the Knesset on March 12, 2018.
Emil salman

Throughout the long months they were preparing the 2019 budget, treasury officials were convinced it would never win approval by the Knesset. Between the ambitious timetable set by Finance Minister Moshe Kahlon to pass the budget, months before it is due to go into effect, and coalition squabbles, the odds just didn’t look good.

But as the time for the vote grew closer, it looked increasingly like Kahlon would achieve his goal. Even the last-minute crisis over the ultra-Orthodox conscription law that erupted last week and ensnared the budget-making process turned out to be nothing more than a hiccup.

Indeed, the crisis might have made passage of the budget easier by distracting lawmakers at a critical moment, coming between the point at which the Knesset Finance Committee approved the budget and the second and third votes by the full Knesset that will make it law. With the coalition crisis resolved Tuesday, the votes are now slated for this week and they are not expected to include many demands for changes in the spending package or much debate,

What happens next is another story. There is a long gap of nearly 10 months between the final budget vote this week and the start of 2019, and the prospects of early elections remain. The odds are that the 2019 budget that MKs are due to debate this week will not be the one that goes into effect next January 1.

If a snap election is called later this year, the new government won’t have time to prepare a proper 2019 budget of its own – certainly not a spending package that’s better than the one now – but that won’t necessarily stop it from trying.

A new government means a new coalition and a new coalition means coalition negotiations and a give-and-take that will almost certainly involve government spending. That rule applies even if the talks are among the same leaders as in the current government and involve the same political calculations and the same players, including Prime Minister Benjamin Netanyahu, Defense Minister Avigdor Lieberman and the ultra-Orthodox parties.

Israeli voters will pay a price in their pocketbooks for early elections. However, if the budget does pass, it will lock in some urgently needed reforms this week that come within the framework of the budget – reforms that the current government has been dealing with for two years and that previous governments had failed to implement. If the Knesset had been dissolved for elections, the reforms would have been put off yet again, with another year or more wasted.

Among them is the protracted war over the coal tax, which still has been settled. After a tax on coke – a particularly polluting fuel that’s used mainly to make cement – was cancelled, the coal tax was supposed to replace the 500 million shekels ($145.7 million) in lost revenues. If the tax on coal isn’t raised, the money will have to come from across-the-board spending cuts. Another reform that could become endangered is the Banking Services law, which among other things would enable account holders to move quickly and easily from bank to bank. Then there is workers’ compensation legislation, mainly for construction workers, and the reforms easing personal imports. Others include subsidies for after-school programs under Kahlon’s “Family Net” initiative and an expansion of the negative income tax, a program for the poorest wage-earners.