The prime minister gave the most important economic speech of his current government. He lamented on housing prices and the budget deficit, as if he did not lead and contributed to the negative effects on the economy. And the growth? That depends on who you ask.
By YEHUDA SHARONINetanyahu at economic conference 370(photo credit: Avi Ohayon/GPO)
Prime Minister Binyamin Netanyahu gave the most important economic speech of his current term at the Caesarea Conference on Wednesday.The prerecorded speech was excellent, and Netanyahu said just the right things, but it was a talk more suitable for a renowned economist or an analyst, not a prime minister.Netanyahu did not hesitate to share his frustrations with the participants at the Caesarea Conference, who all knew a thing or two about the economy and the market.He spoke like a member of an International Monetary Fund delegation that came to us in order to rank the way the Israeli economy is performing.Incredibly, he criticized economic phenomena for which he himself was responsible.For instance, the prime minister spoke yet again on the necessity of lowering housing prices. But, hello – you are in your third term as prime minister, and during that time housing prices have been rising. In your second term (in early 2009), the prices hiked up by more than 50 percent. So maybe it’s time to stop talking and start doing? The prime minister is against increasing the budget deficit.That’s great... except that in June 2012, in the midst of his term, the decision was made with his approval to withdraw from the deficit target (2%) and raise the target in 2013 to 3%, much to then-Bank of Israel Governor Stanley Fischer’s chagrin.Mr. Prime Minister, why exactly were you reelected for another term? Is it just to complain, or are you going to start acting? Netanyahu came out with another strange sentence: “We promised 4-5% growth and we kept that promise.” But 5% growth has not been recorded in Israel in these five years. The forecast growth for this year is 3.5% on average, and in 2014, it is expected to drop to 3%.One must not disregard percentages – any additional percentage growth means additional production of some NIS 10 billion. Netanyahu also calls for “fiscal responsibility,” but he was the one who approved the “fiscal rule” change in 2010 that allowed 3% growth in government expenses, far beyond the market’s natural growth. “I don’t like this and this is done with butterflies in my stomach,” the prime minister whined, and then continued to behave as if he were from the UN.The strangest part of Netanyahu’s speech was his claim that he is against raising taxes. “We mustn’t raise the corporate tax; otherwise companies will leave Israel”; “We must not raise taxes on the rich”; “We must not raise taxes.”That all sounds excellent. But right at the end of July 2013, the government and Knesset approved a one-percent increase in tax and a 1.5% increase in corporate tax. The hikes will go into effect on January 1, 2014. If Netanyahu is serious, the first thing he must do is cancel the tax increases that “hurt growth.”For the rest of his speech, Netanyahu rambled on about monopolies, cartels and increasing competitiveness, as well as the need to turn Israel into a cyber-power. This is the kind of stuff you can always get away with, without actually having to account to anyone for your actions.Translated by Yaara Shalom.
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