Army Loses Battle Over Budget as Gov't Moves to Make Defense Cuts

Public security minister receives NIS 400 million extra while Pensioner affairs also gets cash boost.

The cabinet Monday approved the budget proposal for 2009 by a narrow majority of one vote. Avi Dichter, minister of Public Security, was won over with NIS 400 million extra for his ministry but the ministers from the Labor and Shas parties, and Transport Minister Shaul Mofaz of the ruling Kadima party, remained in opposition. Haim Ramon, also of Kadima, abstained.

Getting the budget through was an important achievement and demonstration of responsibility on the part of the government, Finance Minister Roni Bar-On stated Monday, adding that it would reduce the uncertainty factor.

After a 15-hour debate, as dawn broke over Jerusalem Monday, thirteen ministers voted in favor of cutting into extra budgets for defense rather than slashing welfare stipends, and also voted in favor of the Economic Arrangements Law for 2009. After the dust settled it could be said: the army lost its battle over its budget. The winners are the Public Security and Pensioner Affairs ministries. Pensioners living on social security are spared deep cuts to their allowances, and the Educational Television channel survived the cuts (again) - though it has to streamline its act and reduce staffing.

There is a snag, though. The cuts passed Monday weren't extensive enough.

Throughout most of the protracted session, argument raged over where to cut about NIS 7 billion from the ministerial budgets. Usually the Finance Ministry simply hands down decrees, which are then negotiated. This time, Finance Minister Roni Bar-On took the original step of giving the cabinet two alternative scenarios: hacking deeply at welfare support systems, or reducing the extra budget allocated to defense.

The final outcome was a compromise - the extra money for defense in 2009 recommended by the Brodet Commission (set up to review the defense budget after the Second Lebanon War) will be reduced from NIS 3.4 billion to NIS 2.1 billion. There is a twist, however. Prime Minister Ehud Olmert has promised the Defense Ministry that it can enter into commitments covered by that missing NIS 1.3 billion, on the grounds that the ministry will get the money in the future.

This means that, based on the budget passed Monday, the defense budget for 2009 is NIS 55 billion.

The problem is that the government was supposed to cut NIS 7 billion, but the proposal that passed yesterday is only NIS 4.85 billion less. Not only that: The ministers voted on yet more spending yesterday - in the form of the promises to the pensioners and to the Public Security ministry.

Among the decisions the cabinet passed yesterday were an increase of NIS 350 million for people aged between 70 and 80 in 2009. (Stipends for people aged 80 and older had been increased in 2008.) The ministers also agreed to equate the rights of widowers to those of widows, which will cost the taxpayer NIS 40 million. Another accord was to give pensioners aged 67 and above a 10% discount on medications: until now that discount had only been available from age 75. Also, the Finance Ministry agreed to forgo its plan to reduce the discount given to pensioners on municipal tax (arnona).

Working mothers can also breathe a sigh of relief, though again, note that the budget cuts can't be final yet. But the cabinet Monday threw out the proposal, which had been incorporated in the Economic Arrangements bill, to shorten paid maternity leave from 14 to 12 weeks, to cut child allowances by 10%, and to reduce the maternity grant. Nor did the ministers accept the Finance Ministry's suggestion of reduced financial support for working women protecting a high-risk pregnancy through bed rest.

Students are spared the plan to double tuition fees for bachelor's degrees in business administration, accounting and law.

On the other hand, the cabinet also tossed out the proposal to strengthen the Water and Sewage Authority, and canceled added funding for the "absorption basket."

Another proposal that fell by the wayside was differential budgeting for schools, which would have beefed up spending on education in peripheral Israel.