The Bottom Line / Acceptance Test

What reforms should be in the government's priority list, and what is their current status?

Acting Finance Minister Ehud Olmert's test won't be passing the budget in Knesset. That's a political matter. If Vice Premier Shimon Peres wins Labor primaries in another two weeks, the budget will pass because Peres will stick by Sharon until November 2006 (and November 2010, if he can ...)

Olmert's test, rather, will be in the field of reforms. Finance Ministry Budgets Director Kobi Haber was overly interested in taking politicos into consideration. He introduced very few reforms into the arrangements bill due to the election year. It's a shame, because reforms are what bring economic growth, strengthen competition, eliminate monopolies, improve the situation of citizens and modernize our economy. What reforms should be in the government's priority list, and what is their current status?

1. Water

Water treatment is currently performed most inefficiently by 10 different authorities handling different aspects of the matter, which is subject to complex regulation. The result is high costs, low quality and water shortages.

The solution is establishing an independent water commission that would centralize all authority and make decisions only on a professional basis, free of political interference. A ministerial committee decided as much recently, but Agriculture and Rural Development Minister Yisrael Katz opposes. He wants to defer the ghastly decree. Katz knows that the moment water prices are set professionally, the price to farmers will rise, which is precisely what he and the farmers want to prevent.

Olmert's problem is not just Katz. The honorable prime minister himself is a champion of the agriculture lobby. Don't forget the amount of water the Sharon family utilizes on Sycamore Ranch.

2. Oil Refineries

The Oil Refineries saga has dogged us for two years. After a protracted struggle, the sides involved agreed that the Ofer family would receive $120 million for its stake in the company. However, the state dragged its feet and did not implement the agreement. The price of oil spiked recently, and the Ofers had second thoughts. Now, the family wants to honor the first agreement it had agreed to with Nir Gilad.

The bad results: no agreement, no dismantling, no privatization and no competition - and the country suffers from exceedingly high fuel prices.

3. Open skies

People among us have been talking about expensive air travel prices for years, but nothing was done about it as long as El Al was state-owned.

The transportation minister still determines who gets a license to fly in Israel and who doesn't, according to El Al's interests. The reform rules that the minister would be forced to change his approach. He would have to fulfill the goal of increasing competition for the good of the economy and the consumer. Will the reform pass the Knesset? It depends upon the pressure Olmert applies.

4. Digital broadcasts

The cable and satellite companies don't love the idea that the government has decided upon television broadcast reform. A governmental committee needs to publish tenders soon for a national digital infrastructure for all the public stations - channels 1, 2, 10 and 33.

If the reform passes the Knesset, it will be possible to view all the public channels through a special converter without having to pay an agora to either the cable or satellite companies. So, it's no wonder they oppose the idea. Will Olmert stand up to Peretz?

5. Electricity

No one is talking about electricity reform. Israel Electric Corporation management is not handling the matter. It hasn't even chosen a new CEO. Olmert doesn't speak on the subject, nor does the prime minister. No one wants to upset the IEC workers' union.

However, the breaking up of IEC needs to come into effect by March 2006. Will Olmert have the political heart to battle the IEC union like his predecessor Benjamin Netanyahu did against the port unions?

6. Airports Authority

This reform still doesn't appear in any document of the budgets division, because the authority is the most desired work place among Likud activists and their families. The time has arrived to shake up this fossilized institution as well, to break it up, privatize it and introduce competition - for the good of Israel - and at the expense of the Likud Central Committee.