Labor, Finance C'tee Chair Oppose Two-year Budget Plan

The cabinet may have approved the concept of a biennial state budget late last week, for 2011 and 2012, but the fight in the Knesset is just beginning.

Despite fierce disagreement along the way, the parliamentarians are expected to pass both the budget as well as the Economic Arrangements Bill, and with only minimal changes, by the end of 2010.

The heads of the coalition parties - Ehud Barak of Labor, Eli Yishai of Shas, Avigdor Lieberman of Israel Beiteinu, Moshe Gafni of United Torah Judaism and Daniel Hershkowitz of Habayit Hayehudi - know that failure to pass the budget would translate into early elections, and none of them is eager to jump back onto the campaign trail.

The first trial facing the budget is the passing of the Economic Arrangements Bill, the supplementary legislation that accompanies the budget itself. Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz intend to introduce a variety of reforms in this bill, known as Hok Hahesderim, some of which are not directly connected to the budget.

Sources in the Knesset describe this as a tactic by the Finance Ministry to push through reforms quickly, without thorough discussions.

Knesset Speaker Reuven Rivlin (Likud) last week vowed to block the treasury from putting forward too broad an Economic Arrangements Bill, with items that are unrelated to the actual budget at hand.

Rivlin is negotiating the matter with treasury budget director Udi Nissan.

Rivlin has to the idea of a two-year budget, on condition that in the course of the year, when the cabinet is not putting the budget together, it discuss structural reforms unrelated to the Economics Arrangements Bill.

"In light of its success, the biennial budget deserves further consideration. We should insist, however, that the cabinet take advantage of 2011 to submit to the Knesset economic reforms that are not related to the budget and not try to have them passed this year under the Economic Arrangements Bill," Rivlin said.

Coalition parties Labor and United Torah Judaism oppose the concept of a two-year budget. Labor ministers abstained from the cabinet vote while Gafni, who chairs the Knesset Finance Committee, voiced his opposition to Netanyahu.

If the cabinet does approve a two-year budget, in theory, this would have far-reaching political implications. In particular, it would limit the political power of parties and MKs by preventing them from making additional budgetary demands from the cabinet through 2012, when the period covered by the next budget ends.

In addition, they will not be able to threaten to bring down Netanyahu's government until the end of that year.

In response to the cabinet's approval in principle of the biennial budget, MK Meir Sheetrit (Kadima) demanded that party chairwoman Tzipi Livni call for a discussion over giving Kadima control of the Knesset Economic Finance Committee.

Now that the cabinet has approved the principle of the two-year budget, Sheetrit argued, Kadima as leading opposition party cannot give up the chairmanship of this important committee, especially in light of the major economic reforms written into the Economic Arrangements Bill.

These include issues involving infrastructure and communications, planning and zoning and the national railroad system.

The committee chairmanship generally goes to the main opposition party. But during the coalition negotiations last year, Kadima agreed to give that position to Likud MK Ofir Akunis in exchange for Kadima getting control of the Knesset Foreign Affairs and Defense Committee.