The government has declared war on excessive levels of regulation and bureaucracy. Prime Minister Naftali Bennett, Finance Minister Avigdor Liberman, Justice Minister Gideon Sa’ar and Deputy Minister in the PMO Abir Kara presented a new government plan to significantly reduce excess bureaucracy in government offices.
Regulation has become a major block in the economy, Liberman said at a press conference announcing the new plan. “These changes will save NIS 7 billion-8b. a year, and will help us to avoid raising taxes in the future.”
The country’s regulatory environment is full of laws that have become outdated, or that are solving problems that don’t exist anymore, Liberman said. “We can’t have a situation where businesses have no idea what is required of them, or that they are forbidden from opening because of a law that they didn’t know about.”
“In order to avoid becoming like Don Quixote fighting against windmills, we have to change the rules of the game,” Liberman added.
The plan was formulated by the Prime Minister’s Office, the Finance Ministry and the Justice Ministry as part of a project that began several months before the new government took office.
A “smart regulation” team has been working for the past six months to formulate a national plan in the field of regulation to address the challenges of getting out of the coronavirus crisis, with extensive international reviews and consultations.
The new legislation will help turn Israel into a paradise for small and medium-sized businesses, Bennett said. “Part of the reason that Israel’s hi-tech sector is so successful is that it is not subject to all of the types of regulations that a pizzeria in Rishon Lezion has to follow.”
According to various estimates, the economic potential of improving regulation on GDP is about NIS 58b.-100b. The OECD estimates that improving regulation in Israel, even just to the OECD average, will increase GDP per capita by 3.75% within five years and 5.75% within a decade (about NIS 75b.), the report said.
The plan includes the enactment of a regulatory framework law that will establish long-term infrastructure for the formulation of regulation in Israel and the establishment of a regulatory authority that will oversee new regulatory processes, and work to reduce the excessive regulatory burden. The law will establish principles for optimal regulation based on international standards, promoting a competitive economy, reducing the cost of living and adapting to the needs of small and medium-sized businesses.
“The easier it is to do business, the more prices will go down and we all live better,” said Kara, who ran for Knesset on the platform of helping small businesses. “We will cut off unnecessary regulation and bureaucracy with a machete. Among other things, we will repeal unnecessary regulations and forms and ensure that the new regulation is worded in a smart and effective manner, such that it does not harm business owners. We will all enjoy this growth, and every family in Israel will reap the rewards.”
The central recommendations of the report include:
• Establishment of a regulatory authority to examine, measure, coordinate and report on the matter
• Set a system for defining the guiding principles for smart regulation
• Audit existing regulations, measuring effectiveness and costs and require an “adopt or explain” approach to many existing regulations
• Taking control of the regulatory system, by establishing a research division and regulatory registry
• Promoting coordination and cooperation between regulators
• Providing guidance, training and counseling
• Adopting additional mechanisms aimed at improving regulation when relevant