Pension funds clash holds up economic stimulus plan

Committee breaks down amid war of words.

Ronnie Bar On 88 248 (photo credit: Ariel Jerozolimski)
Ronnie Bar On 88 248
(photo credit: Ariel Jerozolimski)
Finance Minister Ronnie Bar-On lambasted the Knesset Finance Committee for boycotting the approval of the economic stimulus package because of disagreements over the proposal of a pension safety plan. Finance Committee chairman Avishay Braverman declared at the meeting on Sunday that "the committee will not vote on the economic and financial stimulus package. The plan that has been presented to us is flawed since it does not include a solution for pension savings and it is unclear whether the measures suggested will be implemented quickly. Thus, it is not sufficient as an emergency plan to cope with the demands of the economy." He continued, "I have been updated by Prime Minister Ehud Olmert and Histadrut Labor Federation chairman Ofer Eini regarding the progress made on the discussions for formulating a pension safety net plan. For this reason, I am allowing a 24-hour extension for the prime minister, the finance minister and employers' representatives to continue negotiations and present the plan to the Knesset Finance Committee. I am calling on the Finance Minister to overcome his ego and to cooperate with a plan that is acceptable for everyone." Bar-On warned that a delay of the vote on the proposed economic and financial package plans would be dangerous for the economy. "Everyone apart from you [Braverman] wants to pass the stimulus plan today," said Bar-On."We are asking for a vote today. A vote won't prevent any subsequent discussion on other plans. A delay in the vote puts the economy in danger and is irresponsible." The majority of Knesset members on the committee were against a delay on the vote, but attempts to overturn the decision failed. After 50 minutes of heated discussion, which turned into a war of words between Bar-On and Eini, Braverman decided to call for the meeting to be closed. Former Finance Committee chairman MK Stas Meseznikov (Israel Beiteinu) accused Braverman for abusing citizens' interests ahead of the primaries, adding that any delay in the approval of the Treasury's economic and financial measures in such a critical time would bear a high price for the economy. "The Treasury's plan is not complete, and many elements are missing, but failure to approve its framework will do great damage to the economy," said Meseznikov. During Sunday's cabinet meeting, Olmert, who is in favor of a broader pension program, dismissed suggestions that Braverman's decision was politically motivated. The prime minister said he would not let the economic plan become part of pre-election "political tensions." Speaking to The Jerusalem Post Braverman said that he had spoken to Olmert prior to the meeting at the Finance Committee and that the prime minister assured him that he was working on a plan that will include a solution for pension fund losses. "The easy thing for me would have been to approve this plan, which is partial, and to go back and deal with the primaries we have this week at the Labor Party but I got into politics for a reason and I am strict about staying professional all the way," said Braverman rejecting claims that he was using his authority for political gain. Over the weekend, Olmert conducted meetings with Eini and Israel Manufacturers' Association president Shraga Brosh in an effort to reach a broad agreement on the model of a pension safety net. "Without an agreement on measures for a pension safety net, it will not be possible to vote on the economic stimulus plan at the Knesset Finance Committee," said Olmert at the weekly cabinet meeting. "I hope that today [Sunday] additional meetings will be held between teams of the Finance Ministry, the Bank of Israel and the Prime Minister's Office to formulate a proposal that is also acceptable to other bodies in the public." Following the clash at the Finance Committee, Olmert convened a special meeting Sunday evening in the presence of Bar-On and Bank of Israel Governor Stanley Fischer, in a move to mitigate the dispute. The meeting ended with no results. Later on Sunday evening a letter attacking the prime minister's interference in the Treasury's plan was sent by senior finance ministry officials to the prime minister's economic adviser. Foreign Minister Tzipi Livni called the Finance Committee's failure to approve the plan "outrageous." "Politics cannot override what is correct," she said at the cabinet meeting. "Critical and vital economic decisions have been unnecessarily postponed. The Treasury's plan must be approved quickly, although improvements should be made to the plan which would give long-term security to savers." Also attending the Finance Committee meeting, Brosh said that the Treasury stimulus package presented to the committee was not adequate, and added that Olmert had taken the right decision for the economy amid a global crisis - that is, to try and forge a plan acceptable to the government, the Bank of Israel, employers, the Histadrut, and Knesset committees. On Wednesday, Olmert declined to approve the Treasury's limited pension safety net plan in favor of the broader program, in an effort to avert a general strike in the public sector. The following day, the prime minister met with leaders of the large political parties to discuss the Treasury's proposed economic and financial packages. At the end of the meeting on Thursday, party leaders had agreed to give their approval to the Treasury's limited package on Sunday, even though a broader pension safety plan had not been agreed upon. Shelly Paz contributed to this report.