Bar-On Pledges Vote on Pension Savings Rescue in Three Weeks

The Knesset Finance Committee yesterday approved the Finance Ministry's economic stimulus plan and will vote on a rescue scheme for pension funds within three weeks, Finance Minister Roni Bar-On vowed. The discussion was lively, not to say rancorous. "People are bleeding and every month will bleed more, and you're talking crap about a net," Knesset member Haim Katz rebuked Bar-On.

The stimulus plan includes investment in infrastructure and research and development, and increasing resources for lending to cash-starved businesses through funds (in which the state will place NIS 5 billion) to be set up in cooperation with institutional investors. Also, the government will guarantee up to NIS 6 billion worth of bank loans to businesses.

The panel also liked the treasury's proposal to have small businesses with turnover under NIS 15 million a year pay income tax every two months rather than every month.

MK Shlomo Molla of Kadima, who voted against the plan, said it ignored rising unemployment and damage to pension savings.

During the meeting, Bar-On vowed to submit the plan to secure pension and provident-fund savings to the committee within three weeks.

The minister also called on business tycoons who issued corporate bonds to take steps to ensure that investors are repaid.

While Bar-On said he understood that the companies, like the entire economy, face forces beyond their control, "it is their moral duty to do everything possible to ensure that the loans they took from the public are repaid on time."

Bar-On also called on the banks to provide as much credit to businesses and companies as they can.

"State guarantees will be available, with the understanding that the sole purpose of these guarantees is to supply credit to the economy to deal with a clear market failure in the area of credit, and with the real distress in the face of a shrinking global credit market. The credit challenge is common to us all," Bar-On said.

Don't hug me

The meeting yesterday morning was fraught with emotion. "Don't hug me!" Bar-On pushed away Finance Committee chairman Avishay Braverman of Labor, when the latter sought to place his hand on Bar-On's shoulder at the beginning of the meeting.

"We scheduled the meeting for 8:30," Bar-On complained. "Let's get started. Your bosses haven't arrived."

A Knesset source suggested that by that, Bar-On was actually sarcastically referring to Histadrut labor federation chief Ofer Eini, and to Shraga Brosh, chairman of the Manufacturers Association.

"I don't have bosses," Braverman shot back.

But Bar-On was impatient. "Just get started," he replied.

Indeed, Eini was half an hour late, but a seat was saved for him next to Braverman, prompting Reuven Rivlin to comment that Knesset members had nowhere to sit, while Eini had reserved seating.

The meeting that followed was tense, punctuated with criticism from Knesset members. MK Katz assailed Bar-On repeatedly: "You talk and talk, but there is no safety net. People are bleeding, and will bleed more every month, and yet talk crap about nets," he railed at one point. Committee chairman Braverman finally reminded Katz that his style was inappropriate.

Early this week a confrontation also erupted between Bar-On and Ehud Olmert, when Bar-On told the prime minister: "You don't manage the treasury", to which Olmert responded: "I'm the one who decides."

Back to yesterday: Bar-On announced that the plan had been based on the assumption that economic growth will be substantially below pre-crisis forecasts. The budget deficit for 2009 is expected to be a lot higher than initially expected, too.

At this stage there is no plan to reduce government spending or raise taxes, he added.

Ram Belinkov, the treasury's budget director, agreed that the deficit will increase. "I won't be surprised at a deficit of more than 3%. "The steps that the government has already implemented are likely to increase the deficit," he said. "There is a limit to the deficit that we can live with."

Call to freeze executive wages

Bar-On called on Knesset members to freeze wages of top people in government. In response to a query from Rivlin, Bar-On told the Finance Committee that his position - as finance minister - is that there is no reason whatsoever to raise wages.

"The Knesset would do well to freeze all wages at this time," he said.

Fourteen out of 19 finance committee members support a wage freeze for the president, prime minister, ministers, their deputies and judges.

Wages are set to increase by 3% to 4% next month.

House Committee chairman David Tal (Kadima) announced his support for a freeze on Knesset members' wages.

Braverman asked committee members to support the wage freeze.

"The economic situation is worsening. There has been a wave of layoffs, and people are losing their livelihoods," he said, and asked the committee to freeze top executive wages that are under its authority. Braverman announced that the committee would convene again shortly to block the planned wage increase.