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Budget now heads to committee before final readings

In boon to Bennett, Knesset fully okays 2021-2022 budget in its first readings

Financial plan moves forward for 1st time since 2018 after coalition compromises; PM hails ‘budget that cares for citizens’ while Netanyahu pans it as ‘terrible’

Finance Minister Avigdor Liberman, left, shakes hands with Prime Minister Naftali Bennett during a Knesset vote on the state budget, September 2, 2021 (Olivier Fitoussi/Flash90)
Finance Minister Avigdor Liberman, left, shakes hands with Prime Minister Naftali Bennett during a Knesset vote on the state budget, September 2, 2021 (Olivier Fitoussi/Flash90)

The Knesset gave its approval Thursday night to the 2021-2022 state budget in its first readings, passing four separate bills making up the legislative package, in a major milestone for the coalition.

It was the first time budget legislation was approved by parliament since 2018. Recurrent government collapses and repeated elections since the end of that year have left Israel without a budget for over two years.

The budget is a crucial test for Prime Minister Naftali Bennett’s new government as it seeks to solidify its hold on power. The bills were passed after understandings were reached in the coalition on various issues under contention.

The plenum first passed the budget framework bill, then the accompanying Arrangements Law — which determines how funds will be implemented — and finally the 2021 and 2022 budget bills themselves.

All bills will now head to parliament’s Finance Committee and must pass their second and third readings in the plenum to become law.

“After three years without a budget, we approved tonight in its first reading an excellent budget,” Bennett said following the vote. “This is a budget that strengthens the security and health systems and looks out for the income of citizens of Israel. This is a budget that cares for citizens and not for political interests.”

Bennett said he was “proud of the way that disagreements were solved through goodwill and real partnership. That’s how we get to better results for the sake of the people of Israel.”

Prime Minister Naftali Bennett seen with Minister of Finance Avigdor Liberman during a vote on the first reading of the state budget in the Knesset, September 2, 2021. (Olivier Fitoussi/Flash90)

Foreign Minister Yair Lapid praised the government for “holding normal and responsible budget talks” that led to a budget “that is not designed for politicians but rather for the good of the citizens of the State of Israel — for education, security, health, the economy and Israeli innovation.”

Opposition leader MK Benjamin Netanyahu addresses the Knesset from a special COVID-19 quarantine area in the guest gallery during a plenum session on the state budget, September 2, 2021. (Olivier Fitoussi/Flash90)

Addressing lawmakers, Finance Minister Avigdor Liberman called it “the most social budget in the history of the country.”

By contrast, opposition lawmaker Moshe Gafni, who leads the United Torah Judaism party and is a former chair of the Knesset Finance Committee, said that “this is the most anti-social budget that has been in the Knesset in the 33 years since I have been an MK.”

Opposition leader Benjamin Netanyahu participated in the proceedings from behind a glass partition in a specially set up quarantine section in the public viewing gallery of the plenum. Netanyahu recently returned from a holiday in Hawaii and, in keeping with coronavirus guidelines, is required to isolate for a week.

Speaking from the gallery, Netanyahu called the budget “terrible.”

Opposition leader MK Benjamin Netanyahu addresses the Knesset from a special COVID-19 quarantine area in the guest gallery during a plenum session on the state budget, September 2, 2021. (Olivier Fitoussi/Flash90)

“It has cutbacks and raised taxes, in complete contradiction to your assurances,” he said. “You have harmed the farmers, the weaker classes, the periphery, the middle class.”

But beyond Netanyahu’s condemnations, the opposition didn’t put up much of a fight as the day’s proceedings went on. Liberman himself commented that he was surprised that the deliberations weren’t more intense.

“I have to say I am myself shocked at how calmly this budget is being passed here… I was pleasantly surprised,” he said at the podium.

Failure to pass the pair of budget bills in three readings in the Knesset plenum by a November 4 deadline would automatically dissolve parliament and trigger elections.

Knesset legal adviser Sagit Afik has published an opinion that has criticized some of the reforms in the Arrangements Bill.

Afik said that it was problematic to push through such wide-ranging reforms in the bill and not through standard legislation. She singled out the regulatory reform and parts of an agriculture reform plan.

Opposition leader Benjamin Netanyahu seen in a virus quarantine section of the Knesset plenum during a vote on the state budget, on September 2, 2021. (Olivier Fitoussi/Flash90)

Earlier this week, Liberman predicted both bills will have a majority backing in the Knesset, though the coalition government has only the slimmest majority of the parliament’s 120 seats.

He rejected any possible political fighting over the Arrangements Bill, which can be more prone to partisan dispute, telling reporters that lawmakers will have to support both bills together.

“They are a single unit. You can’t vote for the first and oppose the second,” he said.

Liberman presented the plan on Monday at a press briefing in which he said that the two-year budget would allocate NIS 432 billion ($135 billion) for 2021 and NIS 452 billion ($140 billion) for 2022.

The two-year state budget includes sweeping reforms of the kashrut establishment and the agriculture industry, steep taxes on disposable plasticware and sugary drinks, and considerable changes to import policies.

Negotiations on the budget had continued until the last moment, with the parties resolving several disagreements.

A compromise was reached Thursday evening on the controversial formation of a regulatory authority to streamline regulatory issues and bureaucratic hurdles. Meretz, a coalition member, had expressed concern that the reform will benefit business and industry at the cost of public health and the environment.

The authority will now be formed as an advisory body only, with any additional potential powers subject to further legislation.

Agreements were reached Thursday morning on two other problematic issues that threatened to derail the budget.

One of them was a reform that would see import restrictions eased on agricultural products. Proponents within the coalition — including Yamina and Yisrael Beytenu — have been pushing the reform, saying it will lower the prices, while critics — including Labor and Meretz — say it will harm the local industry.

Agriculture Minister Oded Forer (Yisrael Beytenu) said that the reform would be separated from the Arrangements Bill at the demand of Labor and Meretz, in order to hold discussions with representatives of Israeli farmers. Agriculturists have held protests against the reform.

Israeli farmers block junctions all over Israel in protest of the Finance and Agriculture ministries plan to open up the fruit and vegetable market for import, at the Bilu Junction, on July 29, 2021. (Yossi Aloni/Flash90)

Another area where agreements were reached was a reform to gradually raise the retirement age for women from 62 to 65 over the course of 11 years, at a rate of four months a year for three years, and three months a year for a further eight years.

Several female lawmakers had opposed the plan. As part of the understandings on Thursday, it will go forward, but coalition officials agreed to boost aid for women who will be hurt by the changes.

The cabinet approved the budget at the beginning of the month, the first time a budget has been approved in three years, following political deadlock and multiple elections that eventually ended with the installation of the current coalition in June.

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