Does anybody in Kadima still remember the "existential demographic threat" that supposedly motivated its plan to unilaterally withdraw from most of the West Bank - and hence the party's very formation? Judging by the proposed 2007 budget, the answer is no - because the budget contains not a single measure aimed at dealing with this threat. That might have been excusable some months ago, when the jury was still out on whether budgetary measures actually affect birthrates. But recent data seems to have conclusively answered this question: In Israel, unlike in Europe, money is a major factor in deciding whether to have more children. This point was dramatically illustrated by last month's Central Bureau of Statistics data on total fertility rates - the number of children an average woman will have in her lifetime. According to the bureau, the TFR for Israeli Muslims, which remained steady at 4.7 from 1985 to 2000, crept down to 4.5 over the next three years. But between 2003 and 2005, it plunged from 4.5 to 4.0 - a drop of half a child in only two years. Among southern Beduin, the drop was even more dramatic: Between 2003 and 2005, the TFR fell from 9.0 to 7.6 - a decline of 1.4 children in two years. In contrast, the Jewish TFR remained at 2.6-2.7, just as it has for the past decade. WHAT HAPPENED in those two years to so dramatically change Muslim birthrates, while leaving Jewish birthrates unaffected? The only plausible answer is the drastic reduction in child allowances that began in June 2003. Until then, child allowances were graduated: NIS 144 apiece for the first and second child, NIS 195 for the third, NIS 454 for the fourth and NIS 522 for each child thereafter. Thus a family of two would receive only NIS 288 a month, but a family of six would receive NIS 1,981 - at that time, about 60 percent of the minimum wage. In 2003, however, the government decided to gradually cut child allowances to a flat NIS 140 per child by 2009. For families with one or two children - some two-thirds of all Jewish families - the change was negligible, and therefore did not affect birthrates. But for families with four or more children - i.e. most Muslim families - the financial impact was dramatic. And hence, the dramatic drop in Muslim birthrates. Then, in September, published data indicated that the converse also holds true: Unlike elsewhere in the West - where the number of children declines as income rises - in Israel, the number of children increases as income rises. Citing Central Bureau of Statistics data, the article noted that while the average Israeli household numbers 3.7 people, in families with monthly incomes of NIS 50,000 or more, the average rises to 4.3. Nor is this surprising: According to a survey conducted by the Jewish Agency last year, the average Jewish Israeli family would like at least three children (the averages were 3.0 for secular couples, 3.6 for traditional couples, 5.5 for religious Zionists and 8.9 for haredim). And the primary reason cited by respondents for having fewer children was lack of money. THUS THE bottom line is that in Israel, money is a powerful tool for influencing demography. And since two-thirds of Jewish Israeli families have only one or two children, while Muslim families average four, this money should clearly be aimed at encouraging second or third births. One way to do this would be to increase child allowances for the first and second child - which would even make some financial sense, since the first child is when a family incurs the "big-ticket" expenses (crib, high chair, stroller, etc.). Raising the allowances enough to really matter might eventually require a budget increase, but the initial step would be budget-neutral: The money saved by the ongoing reduction in allowances for large families could simply be redirected into larger allowances for the first and second child. THE OTHER possibility is to reduce the costs associated with having children - particularly day care and education. For low-income families, where two earners are often essential, subsidized day care is critical to encouraging the birthrate. Currently, child care for children below school age can cost thousands of shekels a month, meaning that women who earn the minimum wage (about NIS 3,450 a month) come home with almost nothing after paying for day care. Such women therefore have a strong financial incentive to avoid having more children. Theoretically, subsidized day care would help Jewish and Muslim families equally. In practice, however, the main impact would probably be on the Jewish birthrate, since in the Muslim community the social prejudice against working women remains strong. The second issue is schooling. By law, "free" public schools are allowed to charge significant sums each year: Last year, for instance, the legal maximum was NIS 1,493 per student for high schools. And in practice, schools often exceed this limit: According to the Education Ministry, high schools actually charged an average of NIS 3,939 per student last year. To this must be added thousands of shekels a year for textbooks, which our "free" public schools do not provide. Nor can textbooks be recycled from child to child: Not only do they change frequently, but many are actually workbooks, meaning they can be used only once. FINALLY, many middle-class families spend thousands of shekels a year on extracurricular schooling, since that is the only way to ensure their children a decent education. Taken altogether, these expenses are an obvious disincentive to additional children for all but the wealthiest families. Significantly reducing these outlays - for instance, by eliminating school fees and requiring schools to provide textbooks - would make extra children much more affordable. Again, this would theoretically affect Muslim and Jewish birthrates equally. However, given the two communities' differing educational patterns, that might not prove true in practice. Thus if the government truly cares about the demographic issue, there is much it could do to affect the situation. And this would be a far better use of its energies than squabbling about inquiry commissions.

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