Knesset approves return to two-year budget

Yesh Atid MK Mickey Levy said the two-year budget is bad for the Israeli market and economy, and the motivation for passing it is purely political.

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August 2, 2016 21:22
2 minute read.
Moshe Gafni

Moshe Gafni. (photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)

 
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The next state budget will be a two-year budget, for 2017-2018, after the Knesset approved legislation making the change in a final vote Tuesday.

The temporary amendment to Basic Law: State Budget, requires the government to submit a report to the Knesset Finance Committee by the end of 2017 on its economic forecasts for the next year. Any changes to the budget must be brought to the committee for oversight.

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If no report is brought to the Finance Committee by the end of the year, the government will have to submit a new budget by the end of January 2018, and if there is no budget by the end of March, the Knesset will be dispersed and an election will be called.

“A two-year budget requires forecasts for 32 months, as opposed to a regular budget, which includes forecasts for 20 months. The longer the period for which the forecasts are made, the greater the chance it will be mistaken,” the bill reads, explaining the need for oversight at the end of 2017.

Finance Committee chairman Moshe Gafni (United Torah Judaism) said that while there will be a vote on one budget, the 2017 and 2018 budgets will actually be separate because of the way his panel changed the bill.

“In the past, when the Knesset approved a two-year budget, it would be done with the matter, but this time it is different,” he stated. “My personal opinion is that we don’t need a two-year budget, but I signed a coalition agreement... It has advantages and disadvantages.”

The advantage of the two-year budget, Gafni said, is that it creates political stability, which also helps the economy.



Opposition MKs spent the entire afternoon criticizing the two-year budget.

MK Erel Margalit (Zionist Union) said: “I want to remind us what happened last time there was a two-year budget, and talk about it openly… The market reached a deficit of NIS 50 billion We had to raise value- added tax, a tax that hurts the weakest sectors, and we had to cut welfare benefits, which hurt a lot of the population. We hurt 50,000 families that dropped below the poverty line.”

Yesh Atid MK Mickey Levy said the two-year budget is bad for the Israeli market and economy, and the motivation for passing it is purely political.

“There is no logic, there is no purpose, there is no economic thought in its favor. It is about nothing but the prime minister’s political survival,” Levy argued. “We don’t know what economic changes will happen in the world, and certainly not in the Israeli economy.”

MK Manuel Trajtenberg (Zionist Union), former chairman of the National Economic Council, recounted that Israel adopted the two-year budget in 2009 because it was an election year and the government had been working without a budget for months.

“The necessity turned into a method. At the time, the prime minister didn’t like the idea, because he understood, and maybe he still understands economics. Over time, it became a tool that the prime minister thinks has political benefits, even though in Israel no government has fallen because of a budget not passing,” he said.

Trajtenberg expressed concern that two-year budgets will become a permanent fixture, and wondered why Finance Minister Moshe Kahlon did not insist on a one-year budget.

Kahlon, like Gafni, opposed a two-year budget, but allowed it to go forward because of coalition agreements.

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