ISRAEL AT WAR - DAY 149

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Haredi parties said to demand hundreds of millions more to back budget

Agudat Yisrael faction reportedly seeking additional funds for education in exchange for its support, threatens to renew ultimatum on draft exemption law

Likud party chairman Benjamin Netanyahu, right, shakes hands with United Torah Judaism party leader Yitzhak Goldknopf in the Knesset plenum in Jerusalem on November 21, 2022. (Yonatan Sindel/ Flash90)
Likud party chairman Benjamin Netanyahu, right, shakes hands with United Torah Judaism party leader Yitzhak Goldknopf in the Knesset plenum in Jerusalem on November 21, 2022. (Yonatan Sindel/ Flash90)

Days after the government approved NIS 13.7 billion ($3.7 billion) worth of discretionary funds to meet coalition commitments to support ultra-Orthodox institutions and programs, Haredi politicians were reportedly demanding more money to secure their votes in favor of the state budget.

The government of Prime Minister Benjamin Netanyahu has less than two weeks to pass the proposed two-year, 2023-2024 trillion-shekel overall budget before its May 29 deadline, or risk triggering an automatic dissolution of parliament and snap elections.

According to a Tuesday report by public broadcaster Kan, lawmakers with Agudat Yisrael, the Hasidic faction within the United Torah Judaism (UTJ) party, are demanding additional funds for ultra-Orthodox education and have threatened to withhold their votes on the budget.

They have also reportedly threatened to renew demands for a controversial law exempting Haredi community members from military service, which they dropped temporarily to see the budget through.

In recent weeks, Haredi Knesset members had leveraged the upcoming vote on the 2023-2024 state budget to push for progress on the exemption law, and criticized Netanyahu for failing to deliver.

The coalition agreement between UTJ and Likud includes an explicit pledge to approve such legislation before the budget is passed.

The Knesset Finance Committee votes on the national budget, in the Knesset, Jerusalem, May 16, 2023. (Danny Shem Tov/Knesset spokesperson)

Out of the approved NIS 13.7 billion in discretionary funds, about NIS 3.7 billion is promised to be spent on increasing the budget for stipends at Haredi yeshiva student institutions. About NIS 1 billion is directed as an allowance for a food voucher program being pushed by Shas leader Aryeh Deri. Another NIS 1.2 billion is budgeted for private, non-supervised educational institutions, which do not teach core subjects such as math and English. Additional funds will be funneled for ultra-Orthodox education, constructing religious buildings, and supporting Haredi Jewish culture and identity.

The coalition funds are higher than the previous call for NIS 12.5 billion in spending.

The Kan report did not specify the amount demanded by Agudat Yisrael, which has just three lawmakers in the 64-seat coalition but whose demands could end up also being backed by UTJ’s non-Hasidic faction, Degel HaTorah.

The Ynet news site reported that the demand stood at NIS 500 million (about $137 million). The report further said that associates of Finance Minister Bezalel Smotrich, of the far-right Religious Zionism party, said there would be no more funds: “There’s nowhere to draw from, not even a shekel.”

Ahead of the approval of the NIS 13.7 billion in funds on Sunday, the Finance Ministry warned that the promised money could lead to trillions of shekels in lost gross domestic product in the coming years.

The Finance Ministry’s Budgets Department head Yogev Gardos warned that the allocation of funds to ultra-Orthodox institutions and initiatives creates negative incentives for Haredi men to seek employment and will harm the country’s labor market and the economy as a whole.

Finance Minister Bezalel Smotrich, left, with the ministry’s Budget Department head Yogev Gardos after a press conference at the ministry in Jerusalem on May 14, 2023. (Noam Revkin Fenton/Flash90)

“Increasing the budget for non-supervised private educational institutions, while establishing a mechanism for the provision of allowances through the distribution of food vouchers, and raising yeshiva budget funds are expected to create a system of anti-economic incentives that encourages an exodus from the labor market and lower the earning capacity of ultra-Orthodox society,” Gardos wrote in a report.

“Even before the implementation of the government’s decision and its expected negative effects on the economy, with no change in the employment rate among ultra-Orthodox men, the loss of cumulative GDP until the year 2060 is expected to be NIS 6.7 trillion,” the report warned.

Furthermore, Gardos cautioned that if the employment participation rate among Haredi men is not encouraged, by 2065 the government will have to increase direct taxes by 16 percent to maintain the same level of services that it provides without increasing the deficit.

Israel’s Haredi population, which makes up about 13.5% of the country’s total population, is expected to grow to 16% in 2030. The ultra-Orthodox population’s current growth rate of 4% is the fastest of any group in Israel, according to Central Bureau of Statistics data.

The Knesset is preparing to vote on the 2023-2024 overall budget, allocating NIS 484.8 billion this year and NIS 513.7 billion in 2024, up from NIS 452.5 billion in 2022.

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