(photo credit: )
Any Knesset deliberation which somehow touches on the national budget offers a
matchless occasion for shrill and showy free-for-alls. But, remarkably, there
was little media resonance to the Knesset’s decision this week that the
country’s next budget, for 2011-12, will also be a two-year one. The biennial
budget bill passed by a hefty 63-32 majority.
To be sure, there was great
sound and fury during the plenum debate. Former Finance Minister Ronnie Bar- On
(Kadima) went as far as to brand the extended budget “sabotage against
democracy.” Labor’s Shelly Yacimovich protested that “this government turns
Israel into the world’s guinea-pig only in order to prolong the coalition’s
Anti-extension MKs correctly note that Israel is the first
country to opt for a longer-term budget and that the precedent – the
budget – was at the time hyped as an ad hoc emergency measure. The fact
government chooses to go down the same path yet again, it is argued by
critics, is an abuse, demonstrating that in Israel there is nothing as
as something temporary.
The first two-year budget was instituted by the
government when it took office in 2009, after inheriting a budgetless
during the worst global economic crisis in decades. Yet that budget,
we still operate, has indisputably served the country well, earning
numerous accolades, not least from the OECD. The latest kudos came from
International Monetary Fund Managing Director Dr. Dominique Strauss-
lauded “the original idea of a biennial budget.
These are exactly the
kind of initiatives capable of improving the economic
Strauss-Kahn advises the same for others as well, explaining
that it “helps stability and long-term planning.
Since a transition to
biennial budgets might help economic performance of other countries, we
recommend IMF members to adopt it.”
Like Strauss-Khan, Peter Doyle, head
of a recent IMF mission to Israel, considers the longer-duration budget
“integral to the success of the new fiscal rule… It will avoid the
annual budget negotiations and thereby allow greater focus on efficient
implementation of expenditure policies.”
Significantly, both the IMF and
OECD approve of the Israeli innovation despite the admitted inbuilt risk
the longer the budget’s applicability, the lower its flexibility.
times of drastic changes, it might conceivably prove more difficult to
incorporate important adjustments. Yet such corrections would be equally
in the event of crises triggered during a one-year budget. In any
tools for modification always exist. Israel managed throughout most of
its 2008 budget configurations, devised long before the worldwide
THE MORE trenchant argument against biennial budgets is that they
inherently strengthen the executive branch, weaken the legislative
hence upset the delicate political equilibrium. Extended budgets do
theoretically rob parliamentary pressure groups of an entire year’s
political capital, which they rake in as each budget- season reaches its
springtime climax. In the Israeli context, however, this might not be a
thing. In fact, it may be eminently desirable.
It is here, indeed, that
the core cause for harsh criticism from certain, hardly disinterested,
The two-year budget plainly deprives politicians of
They lose half their ability to protest – instead of yearly
critiques, they are reduced to a two-year cycle.
Budget-time offers an
incomparable opportunity, bitter experience has shown, for unabashed
blackmail, predicated on the premise that no government can lift more
political weight. A crazy-quilt coalition cannot dismiss the interests
components. This year, too, when the new budget is put together and
submitted for parliamentary approval, we can expect the familiar
the red-herrings, the outrageous extortion, the threats and the
and/or apparent compromises.
However, if the double-duration budget
eventually passes, we will be spared similar hijinks the following
Industrial quiet will be assured and time will be secured for less
jittery economic management.
Plainly put, political tugs-of-war are
detrimental to the national economy. The less frequent the tussles, the
off we are. Economically speaking, greater coalition stability,
whose coalition it is, is a good thing.