Background: The rights and wrongs of Shas's bid to restore child allowances

Did Likud leader Netanyahu's cutbacks have the intended effect?

By RUTH EGLASH
Yishai brill 248.88 (photo credit: Ariel Jerozolimski [file])
Yishai brill 248.88
(photo credit: Ariel Jerozolimski [file])
With Kadima leader Tzipi Livni expected to pursue coalition negotiations in the coming days with Shas head Eli Yishai, the issue of increasing child allowances looks set to become a major sticking point between the two parties and could block Livni's efforts to form a new government. Shas's focus on restoring these allowances to their pre-2003 levels has been part of its platform for the better part of the last year, the obvious reason being that most of its support is derived from religious families with large numbers of children. These are the same people who were most hurt by the cutbacks five years ago, which are viewed as the brainchild of then-finance minister and current Likud leader Binyamin Netanyahu. Shas claims that these cuts have forced thousands more families - specifically children - below the poverty line. While the National Insurance Institute's (NII) poverty report six months ago did show an increase in those who are considered poor - a fifth of all families and one-third of the country's children - other independent studies suggest that Netanyahu's economic policy, aimed at encouraging people to rely less on welfare, might actually be working. Child allowances (kitzvot yeladim) were first introduced to Israel in the 1970s as an attempt by the state to boost the number of children per family. However, according to economics expert Dr. Dan Ben-David from the Department of Public Policy at Tel Aviv University, the system of child benefits "evolved quite differently and ended up being a huge incentive for people not to go out to work. "Child Benefits are supposed to be a way to induce work," he explains. "However, in Israel people were receiving the benefits whether they had a job or not." In the US, for example, families receive child allowances in the form of income tax deductions, meaning only those who work are eligible for them. Ben-David also points out that the absurdity of Israel's former benefits system was that the amount paid out by the NII to parents increased with each child, contravening the general assumption that the first child is actually the one that needs more financing. It meant that instead of working, certain families would just produce more children and live off the state benefits. In fact, prior to 2003, a family with 10 children was netting some NIS 6,500 a month in child allowances, not much less than today's gross average salary of NIS 7,800. Since Netanyahu's reforms, that amount has been brought down to around NIS 3,000 for a 10-child family, and all children born after June 2003 receive the same amount - NIS 150 a month - regardless of how many other dependents there are. "It's obvious that these cuts have hurt large families," said one source at the NII. "But how much cuts in child benefits has directly caused poverty is impossible to determine." What has been reported extensively, however, is that since the reductions in allowances there has been a fall in birth rates among the population groups that are more likely to produce large families. According to the Central Bureau of Statistics, in the Muslim or Israeli-Arab sector, the birth rate has fallen from 4.7 children per woman to 4, and in the haredi community the average woman is more likely to have eight children instead of the previous nine. Despite this, Shas has still decided to adopt a social-focused agenda that will speak to its voters - families that once relied heavily on welfare, especially child allowances, as a means of livelihood - and try to solve their deprivation in the short term. Only time will tell if Livni and her Kadima cohorts are willing to backtrack, too.