Cabinet unanimously okays two-year budget after marathon talks

Health minister, education minister announce bumps in their office budgets after close to 24 hours of negotiations

Prime Minister Benjamin Netanyahu (right) seen with Finance Minister Moshe Kahlon at the weekly cabinet meeting in Jerusalem on August 11, 2016. (Emil Salman/Pool)
Prime Minister Benjamin Netanyahu (right) seen with Finance Minister Moshe Kahlon at the weekly cabinet meeting in Jerusalem on August 11, 2016. (Emil Salman/Pool)

The cabinet on Friday morning unanimously approved the state budget for 2017-2018 after close to 24 hours of marathon negotiations.

The 2017 budget stands at NIS 359.7 billion ($94.1 billion) and was set at NIS 376.7 billion ($98.8 billion) for 2018, according to the Finance Ministry.

Over some 21 hours, including all-night talks, several ministers pushed for increased funding for their respective offices, led by Health Minister Yaakov Litzman and Education Minister Naftali Bennett.

Litzman on Thursday announced he would vote against the two-year budget, arguing that it did not offer sufficient funding for Israeli healthcare. But by Friday morning, the Health Ministry said a compromise had been reached with the Treasury, under which the ministry was given a “significant increase in resources,” including some NIS 3 billion ($787 million) in funding and a pledge to increase the number of hospital beds by 2,100.

Bennett on Friday morning said the Education Ministry budget would grow by NIS 4.7 billion ($1.2 billion), with a total annual budget of NIS 57 billion ($14.9 billion). The Finance Ministry said some of those funds would be allocated toward building 17,000 new classrooms.

Among the goals listed by the Finance Ministry in the two-year outline was a plan to shut down slot machines, run by Mifal HaPayis, and to end local betting on horse races abroad — both of these measures as part of a larger effort to crack down on legal gambling. In addition, the Finance Ministry aims to increase competition in Israel’s TV market in a bid to lower prices. The ministry also said it would ease restrictions on imports of electronics and cosmetics into Israel; and apply tax benefits to encourage hi-tech investment in Israel.

“We have a strong, developing economy,” said Finance Minister Moshe Kahlon on Friday. “In the upcoming budget, there are both engines of growth and an increase in social budgets. We will continue to govern Israel’s economy responsibly and with careful consideration.”

Ahead of the cabinet meeting, Prime Minister Benjamin Netanyahu on Thursday praised Kahlon’s plan.

“The budget will encourage investment, increase competition and lower the cost of living. I would like to reiterate: Growth is the most important foundation in managing the economic and social policy of the State of Israel. There is no social policy without an economic policy that encourages growth and creates resources. Everything else is talk about allocation and reaping the fruit from the tree,” said Netanyahu.

“We must constantly see to it that the fruit increases, to cultivate the tree; therefore, thanks to the growth of our economic tree, tax revenues are coming in which allow the state to finance all its needs — the social services in education, social welfare, health, security and all other fields. Therefore, the budget includes several vital steps to increase growth,” the prime minister continued.

From the opposition, Yesh Atid MK Yaakov Peri responded to the cabinet vote on Friday by declaring: “The budget is a verdict of bankruptcy for the State of Israel.”

“The real picture is emerging: Kahlon in the Finance Ministry is a loss for us all,” he added.

Zionist Union MK Shelly Yachimovich alleged that “not a single minister read the budget” before voting. “Only a handful read the budget for their offices,” she added in a tweet.

The budget will now be sent to the Justice Ministry to draft the legislation for Knesset votes. The Knesset will vote on the budget in its first reading when it returns from its summer recess in late October. The two-year budget must clear the Knesset in its second and third readings by the end of the year. If it fails to pass, the government goes to elections.

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