Manuel Trajtenberg, the Zionist Union nominee for finance minister, unveiled the party’s economic platform on Tuesday, in which he called to provide land in the public domain for housing developments for free and to increase overall government expenditure.
Speaking alongside party leaders Isaac Herzog and Tzipi Livni at the Academic College of Tel Aviv-Yaffo, Trajtenberg said that state spending should return to and stay at a level of 40 percent of GDP.
“Over the course of 30 years, the share of government’s budget share of output fell all the time, including last year. We fell below 40%, which is lower than the OECD average,” he said, promising to maintain responsible spending. “We always said we have to decrease [the government's size], but we crossed the threshold long ago. We won’t allow the government share to fall any further.”
According to OECD statistics, the average government expenditure as a share of GDP in 2012 was around 46%. The 2014 state budget planned spending at around 39% of GDP; that 1-percentage point difference could add up to about NIS 10 billion of expenditure.
Trajtenberg said there would be no need to raise taxes for the nearly NIS 7b. Zionist Union plan, which he estimated would cost NIS 3.4b. in 2016.
The Bank of Israel, where his wife, Nadine Baudot-Trajtenberg, is deputy governor, is set to release a fiscal outlook report later in the week.
The plan, which includes sections on housing, education, health, cost of living, poverty, inequality, elderly care and employment, is meant to help the “double-sandwiched” generation, squeezed in one direction as they try to care for children and elderly parents while also being squeezed by the high cost of living and the housing crisis.
The center of the housing policy is to make land available at no cost: “The land is on us, the apartment is yours.”
By making land, which makes up a considerable portion of the cost of housing, free, the prices would drop.
Koolanu chairman Moshe Kahlon, on the other hand, has called for breaking up the Israel Lands Authority, which is responsible for releasing land in the public domain to developers, in order to lower the price.
According to Trajtenberg, people should only spend 10%-30% of their income on housing, and the government should subsidize long-term rentals on a sliding scale.
He called to appoint a senior minister to run a “situation room” for housing that includes representatives from all relevant government bodies.
The plan called for legislating the “fair rent” law that Livni and Yesh Atid chairman Yair Lapid presented before the government coalition collapsed.
Trajtenberg said Israel must clear up its bureaucracy, and aim for breaking into the top 10 of the World Bank’s Ease of Doing Business ranking. It is currently ranked 40th.
The government should invest in training the 50% of people who do not go to college to increase their skills, increase subsidies for daycare and after-school programs, ensure teachers are directly employed and not contract workers, and find incentives to make wait times for medical care shorter, he said.
Regarding the natural gas market, where regulation has been in flux in recent weeks, he called for both price controls and greater competition, and an emphasis on building infrastructure to hook industry up to the gas supply.
Trajtenberg called to extend benefits to self-employed people and small businesses, and increase competition in the financial sector. All pension funds should offer a fee-free benchmark portfolio by default, he said.
Herzog said, “We are presenting a real and deep revolution today, a revolution that will be felt in the pocket and bank account of every one of the citizens of Israel. The resources of the public belong to the public; therefore, after years where the public money was scattered in all directions, we are giving it back to the public.”
His running mate Livni added, “Zionism, in our view, is a model society and mutual responsibility. It’s time to change the way we do things: the country does not belong to the government, it belongs to the public, to the citizens of Israel.”
The Zionist Union was attacked from both Left and Right following the presentation.
The Likud said the plan was a bad check that would empty the state coffers.
“The Left has no clue how to create growth and how to fill the register.
The entire funding for it is based on economic growth, and that, the Left simply doesn’t know how to do,” a Likud statement said.
As in the last election, the Likud has not offered an economic platform of its own, but the statement pointed to its record of sustained growth, which has exceeded that of most OECD countries in recent years, and low unemployment.
Meretz, on the other hand, slammed the plan for failing to redistribute assets.
“There is no word on a new distribution of the national wealth. Free land allocation is indeed welcome, but alongside it there must be an initiative to build a budget for providing comprehensive solutions to the problem of housing in Israel, increasing public housing, affordable housing and rental housing,” Meretz MK Ilan Gilon said.
Conspicuously absent from the event were other leading Labor politicians, who were reportedly unhappy about the platform.
According to a Channel 2 report, a major dispute broke out among the party elite in a meeting on Monday, in which Labor members accused the party leaders of giving Trajtenberg, whom they see as too much of a capitalist, free rein with the socioeconomic platform.
Meanwhile, Koolanu offered up a banking reform proposal that would, among other things, split credit cards from banks in order to increase competition, a reform that Kahlon said would save families thousands of shekels each year.
“This is a brave program that will break the banks’ monopoly, an area that nobody has dared touch for decades,” he said. The proposal is based on recommendations by Hebrew University economics expert Avi Ben-Bassat.
The reform would also consolidate financial sector supervision, ease regulation and capital requirements to let in new players, establish a common technological platform, and break down existing banking groups.
Like Trajtenberg, Kahlon recommended the creation of a cooperative bank, and increased Internet banking.
Lack of competition in the banking system costs the average family NIS 3,000 a year, Kahlon said.
According to Koolanu, banks charge interest of 7-12% for loans while paying interest of 0.25% on deposits, a spread the party called “unfathomable,” and which helped banks rack up NIS 41 billion of profits in 2014.