Water policy has placed a fascinating spotlight
on a broad range of chronic Israeli policy illnesses and promising
signs of convalescence. Debate over this issue has intensified in
policy in Israel has become a symbol of everything that it is wrong
with public policy. Sound water policy is not really very complicated.
It's straightforward to calculate how much water falls each year and
what the variance is: you choose a reservoir capacity and a price that
will stabilize supply in the long term and make certain there are no
severe temporary shortfalls in the medium term. The approximate demand
curve for water is also pretty easy to calculate, so you have years to
fine-tune setting the price to attain any particular demand level.
However, government after government resisted pressure to set
water prices at a level where demand would equal supply, with the
inevitable result that reservoir levels declined year after year. When
the Kinneret reached the red line, which by law forbids further
pumping, they just drew a new line a little lower.
Instead of managing water supply by the price, successive
governments tried a simultaneous policy of supposedly discouraging
water use by ridiculous propaganda urging us to be careful washing our
hands, while at the same time actively encouraging waste by subsidizing
agricultural through water allotments that guaranteed the subsidies
could be realized only by wasting water.
One piece of this policy picture has been improving
for years: Subsidizing agriculture through water allotments has
remained, but the size of the allotments has decreased markedly.
However, this adjustment was not enough to allow water levels to
rebound to a reasonable level.
Last summer, policy makers did an about-face. Instead of
subsidizing water use, they decided to penalize it and imposed a
"drought tax" that imposed fines on water users. Instead of moving the
price upward a bit to a fair market price, the fines reached a level
several times the fair price. "Excessive" water use, where "excessive"
was defined in an arbitrary way and applied only to households, was now
a punishable offense.
Ultimately, following public pressure, the
government adopted a rational policy of a moderate and equitable price
increase. That policy immediately came under attack from Knesset
members who pointed out that poor families would bear a
disproportionate share of the price raise.
This is certainly true and is a valid policy consideration. But
it somewhat contradicts the moralistic approach to water conservation
that dominated official policy in past years. If all poor families
would follow all the water-conservation rules recommended by government
propaganda, I suspect their water bills would rise very little. In any
case, this problem could be solved by instituting a progressive price
schedule for water.
Based on this reservation, a Knesset committee requested that
State Comptroller Micha Lindenstrauss review the price-rise decision.
The request was outrageous because the comptroller's mandate is to
investigate irregularities, not policies that Knesset committees
disagree with. There was absolutely nothing irregular about the
decision or the way it was arrived at; it was not made hastily and not
in opposition to some expert consensus.
Lindenstrauss should really have come back and said there was
nothing to comment about. But I suppose that given the political
pressure, he can hardly be blamed for making a rather noncommittal
recommendation that the price rise be reconsidered and in the meantime
Appropriately, the government ignored his recommendations.
After all, it is not the comptroller's job to second-guess the policy
decisions of elected officials. Lindenstrauss's reaction was also
outrageous. He attacked the government, saying it was "inconceivable"
that it should ignore his recommendations.
I think it is inconceivable that the government should consider
them. If there were no substantive irregularities in the decision, then
Lindenstrauss's criticisms are those of citizen Lindenstrauss, not
comptroller Lindenstrauss, and they should be ignored.
"If oversight involves itself in policy decisions, we will need
someone to oversee the oversight," Finance Minister Yuval Steinitz
said. The comptroller owes his effectiveness to his lack of power. If
the role were given any substantive powers, then all investigations and
remarks would have to be subject to an equitable process and his moral
impact would be destroyed.
To this mix we add another classic Israeli policy gremlin: the
power of the public-sector unions. Just as the price hike was supposed
to go into effect, unionized workers at the Water Commission went on
strike. I cannot comment on the validity of their grievances, but they
made a rather bizarre threat: that without the workers the price
increase could not be implemented on time.
Evidently they imagined that the technical expertise necessary
to update the billing program was beyond the competence of the
nonunionized managerial staff (or that management wouldn't dare to
demonstrate how superfluous the workers really are). Their illusions
were shattered when Water Commissioner Uri Shani announced that the
necessary steps had been taken in time, without the need for the
A significant across-the-board increase in the marginal price
of water is a critical policy decision that is decades overdue. I
congratulate the government on overcoming the political obstacles and
bringing this about. (If the policy makers conclude that it harms poor
families disproportionately, making the price increase progressive is
an effective remedy.)
This is a rare and encouraging case where the appropriately
constituted organs of government carried out their functions in
exemplary fashion, despite the efforts of the unions and the judges to
Asher Meir is research director at the Business Ethics Center
of Jerusalem, an independent institute in the Jerusalem College of
Technology (Machon Lev).