Manufacturers: Defense budget cuts to cost industry thousands of jobs

One of the first big obstacles the Olmert government is facing is the long-overdue 2006 state budget, which is still far from its second and third readings.

defense budget 88 (photo credit:)
defense budget 88
(photo credit: )
The Manufacturers Association warned that the expected cuts in the defense budget relating to goods purchased in Israel as part of the 2006 state budget is poised to cost the local industry more than $1 billion in lost defense production and thousands of jobs. Fearing a cut in the defense budget, Shraga Brosh, president of the Manufacturers Association, said he would strongly demand from Finance Minister Avraham Hirchson a change in the prevalent conception governing budgetary allocations to defense relating to shekel purchases. Brosh said the change would incorporate a fixed defense budget allocation for military procurement in the domestic market, which should already be included in the planning of the 2007 budget. This measure would not allow the defense establishment in the future to make cuts in the local procurement budget, which currently stands at NIS 6b. One of the first big obstacles the Olmert government is facing is the long- overdue 2006 state budget, which is still far from its second and third readings. It includes proposals for streamlining measures in the defense budget and expense cuts resulting from increased efficiency and structural changes in various areas. The budget must be approved in less than four weeks or new elections will be called. Brosh warned that streamlining procurement from the local industry would lead to 10,000 lost jobs, the majority of which would be in the periphery, and the closure of more than 100 factories. The defense industry employs about 70,000 people working in 350 factories mainly located in the periphery. Separately, Hirchson approved the allocation of an additional NIS 360 million for the basket of health services on Sunday, some NIS 110m. short of the amount requested by the health basket committee. The additional funding will come from a NIS 210m. contribution from the national budget and NIS 150m. from the coalition agreement, a Finance Ministry spokesman said. The decision came as colon cancer patients continued their hunger strike calling for the inclusion of the Erbitux and Avastin life-extending drugs in the basket. In justifying the exclusion of the drugs, Hirchson reasoned that even if the government gave the additional NIS 110m. to the health basket, these drugs would still not be included. The drugs, the spokesman added, had very low priority on the committee's list. Despite calls from Prime Minister Ehud Olmert to bring it to an end, the hunger strike continued as of press time Sunday evening. Avi Krawitz contributed to this report