Coalition-stabilizing moves face obstacles at every turn

Treasury officials slammed two-year budget.

May 4, 2016 03:12
Finance Minister Moshe Kahlon

Finance Minister Moshe Kahlon. (photo credit: MARC ISRAEL SELLEM)

The government’s longevity took hits from several directions on Tuesday, with several moves by Prime Minister Benjamin Netanyahu to stabilize his narrow coalition facing obstacles.

Netanyahu and Finance Minister Moshe Kahlon are expected to hold talks about a two-year budget for 2017- 2018, mandated by the coalition agreement.

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Kahlon has been a vocal opponent of the two-year budget, though he said he would accept a moderated version for the sake of coalition stability, a stance he reiterated this week.

Netanyahu championed the two-year budget in part because the annual budget fight can so easily fray a coalition.

New elections are called automatically if a budget fails to pass on time.

The Treasury’s budget division made its disapproval of the move clear at a Knesset Finance Committee meeting on Tuesday.

Budget Coordinator Itai Temkin argued that though the first year of two-year-budgets often left large surpluses that could be reallocated in the second year, those funds tended to be used for spending instead of paying down Israel’s expensive debt.

The Knesset generally starts working on the budget during its summer session, which begins May 23.

The use of a two-year budget was an Israeli innovation that went into effect in 2009, earning plaudits from the economic intelligentsia in advanced economies as a method of enabling better long-term planning, and removing the annual political battle that usually surrounded the budget.

In 2012, however, unexpected shifts in the economic landscape led to a deficit, exploding to over twice the target set for the latter year in the 2011-2012 budget.

When Yair Lapid became finance minister in 2013, he decided to go back to the oneyear budget, arguing that financial predictions were not accurate enough to properly plan so far ahead. Still, the last two budgets passed in two-year chunks because they were late.

Failure to approve both the 2013 and 2015 budgets on time (toward the end of the previous year) helped lead to early elections in those years, so both budgets passed well into the fiscal years they were meant to plan, alongside the following year’s budget.

Yesh Atid MK Mickey Levy, who served as deputy finance minister to Lapid, blasted Kahlon for warming up to the idea, which senior Finance Ministry officials oppose.

“Even the head of the budget divisions at the Treasury agrees that a two-year budget is tantamount to a game of Russian roulette with the Israeli economy,” he said, alluding to a letter that Finance Ministry budget director Amir Levy (no relation) wrote to the committee in April, opposing to such budgets.

MK Yoav Kisch (Likud) spoke in favor of the proposed budget, saying “intensive dealings with preparing the budget for eight months of the year prevents government offices from focusing on using the budget and harms the citizens of Israel.

“If we need to, we will allow changes in the budget after a year, we’ll add flexibility, expand safety margins and create economic stability and certainty,” said Kisch, who hopes to get a promotion in an expected Likud’s shuffle in positions.

Another way to stabilize the coalition, by extending it beyond its current 61 members, continues to look unlikely.

Amid reports of negotiations between representatives of Netanyahu and of opposition leader Isaac Herzog (Zionist Union), several members of the latter’s faction, as well as Bayit Yehudi sources, came out against the move.

Sources close to Education Minister Naftali Bennett said Bayit Yehudi will not give up the Justice Ministry to allow Zionist Union to join the coalition. Bennett has long said publicly that he will not remain in the coalition if its guidelines are changed to allow Zionist Union to enter.

MK Eitan Cabel, a Herzog ally, told Army Radio that he doesn’t know of such talks, and that if he is not involved, along with other senior party members, there is no chance the party will join the coalition.

“We cannot, under any circumstances join a unity government that is only meant to give Herzog a job,” Cabel added.

MK Shelly Yacimovich, one of Herzog’s rivals for Labor’s leadership, said she opposes joining Netanyahu’s government.

“Herzog knows that he can’t make a move like this by himself and that he needs support not only from me, but from others,” she told Army Radio. “I assume I have the power to prevent it.

I don’t want to say I have more control than I do over what happens, but I assume I have an influence.”

Meanwhile, as the Knesset’s summer session approaches, trouble may be brewing in the form of a bill instituting term limits.

The coalition may not have enough votes to reject a bill by Zionist Union faction chairwoman Merav Michaeli, supported by all the opposition parties’ leaders, which would limit prime ministers to two terms. Michaeli proposed two versions of the bill, one that would apply to the next, 21st, Knesset and another that would apply to the 22nd Knesset.

“Democracy is not a monarchy and we must not have a government with the same person at its helm for many years,” the bill’s explanatory section reads. “The clearest example of this model is the US, where it says in the constitution [Amendment 22] that the president cannot serve for more than two terms.”

The explanatory portion also points out that Netanyahu supported term limits in the 1990s when there were direct elections for prime minister.

The 61-seat coalition, which is expected to oppose the bill, will not be able to rely on at least one vote, that of rebellious Likud MK Oren Hazan, making it difficult to get a majority.

Hazan said in an interview to ultra-Orthodox radio station Kol Barama that he supports the bill, arguing it promotes government stability, because prime ministers will have a greater interest to have the Knesset serve a full term before going to an election.

“It’s nothing personal against the prime minister,” Hazan clarified.

“The proof is that it applies in two Knessets,” he said, assuming that Netanyahu will not be prime minister by then.

In February Hazan was punished by coalition chairman Tzachi Hanegbi (Likud) for skipping votes without permission and without finding an opposition lawmaker to offset him.

Hazan was subsequently removed from some Knesset committees and quited the rest of the committees he was in, stating that he is no longer obliged to voting with the coalition.

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