A Budget That Will Be Good for Israel

Haaretz.
Haaretz Editorial
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Finance Minister Avigdor Lieberman speaking at the Knesset podium, on Wednesday.
Haaretz.
Haaretz Editorial

The 2022 budget is an outstanding one. It is accompanied by an unprecedented “Arrangements Law,” which contains 27 reforms. If executed as proposed, these reforms will change the direction of the economy and drive it forward.

The numerous reforms are a response to the economic inaction of Benjamin Netanyahu and Yisrael Katz, who over the last two years did not pass a budget or carry out any reforms, due to the personal motives of Netanyahu, whose only guiding light was finding a way to escape his corruption indictments.

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The current Arrangements Law spans all walks of life: It raises the retirement age of women to 65, a move driven by necessity, which Netanyahu was afraid of making; a reform in the Standards Institute that will expose the economy to competing imports, driving prices down; the promotion of urban renewal to increase the supply of apartments, as part of a plan for tearing down older buildings and building new ones in which occupants get new apartments; the cancellation of pension-geared bonds, which will lead to large budgetary savings; imposing “congestion fees” on drivers entering Tel Aviv to alleviate traffic jams; starting the construction of a light rail system in the metropolitan Tel Aviv area; contending with bureaucratic excess; managerial flexibility in the school system, which will allow principals to run their schools; easy transition between banks, aimed at reducing interest rates and commissions; and privatization of kashrut regulation.

All these reforms will lead to growth, employment and a rise in living standards.

There have also been some missteps on this path, such as the exclusion of the reform in agriculture from this law. This is why the law does not include a drop in tariffs on importing eggs, vegetables and fruit, something that would have reduced food prices in Israel and benefited mainly those with lower incomes.

The reform in eggs, fruit and vegetables was excluded from the Arrangements Law due to vehement opposition by farmers’ groups and several coalition parties. Opponents want central planning and subsidies to egg farmers to continue. This is why a period of three months was designated for negotiations.

The question is whether Finance Minister Avigdor Lieberman will have the courage to stand by his word, issuing ordinances in December that would repeal central planning in the production of eggs. This will enable the importation of eggs without tariffs and lower the prices for consumers.

One can hope that Lieberman will also act unilaterally on fruit and vegetables, issuing an ordinance soon that would reduce tariffs and open the economy to unrestricted imports of produce from around the world. People close to Lieberman say he is waiting for the budget to pass before issuing the order. But there are some doubts as to whether this will actually happen.

Obviously, legislating reforms is not enough. Also needed is political stability that will buy time to allow the implementation of these reforms. The last thing the economy needs now is another election.

The above article is Haaretz's lead editorial, as published in the Hebrew and English newspapers in Israel.

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