Cabinet approves NIS 1.2 billion budget cut PM calls ‘hard but necessary’

Netanyahu tells cabinet Finance Ministry’s plan to counter burgeoning deficit is a priority; ministers Erdan and Katz vote against measure

Prime Minister Benjamin Netanyahu (c), Government Secretary Tzahi Braverman (R) and Finance Minister Moshe Kahlon (L) attend a weekly cabinet meeting in Jerusalem on June 24, 2019. (MENAHEM KAHANA / POOL / AFP)
Prime Minister Benjamin Netanyahu (c), Government Secretary Tzahi Braverman (R) and Finance Minister Moshe Kahlon (L) attend a weekly cabinet meeting in Jerusalem on June 24, 2019. (MENAHEM KAHANA / POOL / AFP)

The cabinet on Monday approved an across-the-board NIS 1.2 billion ($333 million) cut to the national budget designed to reduce the soaring deficit, a move Prime Minister Benjamin Netanyahu  described as “hard but necessary.”

The cuts to public spending drew opposition from lawmakers and cabinet ministers whose ministries would be affected by the austerity measures. Public Security Minister Gilad Erdan and Welfare Minister Haim Katz voted against the cuts.

Netanyahu told ministers the Finance Ministry urgently needed to free up a quarter of a billion shekels to continue subsidizing after-school care programs and provide aid to the victims of recent forest fires.

The cuts, which will amount to 1.75 percent of the ministerial budgets, will also finance a Gaza border construction project.

“Budget cuts are hard, but they are necessary,” Netanyahu said at the start of the meeting. “Nobody wants to do this, I understand the ministers whose offices will be affected by the cuts, but this is what we have to do. We have to take care of our priorities.”

Minister of Public Security Gilad Erdan arrives for the weekly cabinet meeting, at the Prime Minister’s Office in Jerusalem, June 2, 2019. (Yonatan Sindel/Flash90)

Erdan said that “the cuts to internal security will ultimately harm Israeli citizens, and therefore I will vote against it.”

He said the NIS 66 million ($18 million) cut to his ministry’s budget would discontinue a project to equip all police officers with body cameras, and slow efforts to build up police forces in Arab cities.

According to the Ynet news site, Haim Katz, whose ministry is set to lose NIS 24 million ($6.5 million), said: “The government wants to cut back on the programs that we worked and labored on. We saved girls from prostitution; maybe we should send them back? I hope the government comes to its senses and reverses these cuts.”

Blue and White party leader Benny Gantz slammed the proposal, saying Netanyahu’s “irresponsible” insistence on holding another election this year was to blame for a large part of the deficit.

“This is economic lawlessness and misusing state fund for one reason: to save Netanyahu from legal proceedings,” he said. “In my opinion it’s irresponsible… [those funds] could have gone to funding schools, welfare projects or hospitals.”

A general view of the Finance Ministry in Jerusalem, November 26, 2006. (Flash90)

In January, the treasury warned of slower economic growth in 2019 that would result in lower tax revenue, resulting in a projected budget shortfall of around NIS 10 billion ($2.7 billion). The deficit increase was exacerbated by increased government expenditure as ministers acceded to demands for higher wages in the public sector, including the police, or spent money on projects to make housing cheaper for consumers.

In early 2019, Finance Minister Moshe Kahlon was reluctant to announce budget cuts or tax increases before the April 9 election. Economists had warned the new government would have to set out long-term policies to curb the shekel’s rise, boost education and infrastructure, and trim bureaucracy. But Kahlon’s hand appears to have been forced after no government was formed and with Israelis due back at the polls again in September.

At the start of Monday’s meeting, Kahlon said the austerity measures were necessary, and urged the ministers to vote in favor of the proposal.

“Israel’s economy is strong thanks to responsible management,” he said. “But there is a slowdown in global markets, which led to a decline in state revenues. The elections also cost us a fortune, but this is the situation that we’re in.

“We did everything we could to stabilize our economy, but now we’re in cut-back mode,” he said. “This is a cut of over a billion shekels, and it’s not pleasant.”

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