Alalouf: Reducing poverty is ‘absolute responsibility’ of the government

Panel releases estimated cost for plan to reduce Israel's number of people living in poverty.

Poverty in J'lem 370 (photo credit: Marc Israel Sellem)
Poverty in J'lem 370
(photo credit: Marc Israel Sellem)
Reducing poverty of such magnitude and depth is the absolute responsibility of the government, Eli Alalouf, head of the Committee to Fight Poverty said on Monday.
“If the state will not take responsibility, and the Prime Minister and the government do not take responsibility, dealing with poverty will be unsuccessful,” said Alalouf.
He made this remark during a press conference at the Mikveh Israel School in Holon, where he presented the long awaited recommendations to combat to 7b. per year, to Welfare and Social Services Minister Meir Cohen.
The Committee to Fight Poverty was tasked eight months ago by the Welfare and Social Services Ministry to formulate a plan to reduce the number of people living in poverty and to reduce the depth of poverty.
To date, the government has not allocated any funds to address the phenomenon of poverty on a national scale. The committee was responsible for making recommendations on the actions required by the state to combat poverty in all aspects of life.
The makeup of the committee included a general plenum of 50 representatives from academia, nonprofit organizations, businesses and representatives of government ministries and municipalities. Five subcommittees were established to make specific recommendations regarding the economy and employment, family and community, housing, education and health.
According to the annual poverty report released in December by the National Insurance Institute and the Central Bureau of Statistics, in 2012 there were 1,754,700 people, including 439,500 families and 817,200 children, living below the poverty line – 23.5 percent of the population. This figure places Israel with the second highest poverty rate among Organization for Economic Cooperation and Development countries, after Mexico.
The committee called to reduce the poverty rates by 40% to reach the OECD average of 11% within 10 years. The report stated that the only way to accomplish this goal is to adopt and begin implementing all the recommendations within the next three to five years.
According to Alalouf, the committee aimed to create a “national plan” encompassing all populations, rather than focusing on specific sectors of society, referring to the ultra-Orthodox and Arab populations who have higher poverty rates. He said the emphasis of the report was on helping families and especially children escape the cycle of poverty.
Among the recommendations, the report called for increased allowances under the income support program, which allocates funds to people who, despite their best efforts, are unable to find employment. As such, the committee proposed the income support allowances be raised to 67% of the poverty line for the entire family.
Furthermore, the report stated that a person who did find employment should not be penalized by having the allowances revoked, reducing the motivation to enter the workforce. Instead, it called to set an income ceiling at 85% of the poverty line for which the allowances would serve as supplementary income to sustain needy families.
The cost of these recommendations to the state stands at NIS 1.2b. per year.
The report also called to increase the income supplement benefits for the elderly, allocating an additional NIS 200 per month to their living stipend, costing NIS 600m.
per year.
However the best way to lower poverty, the committee said it found, was to increase employment. It cited research that shows – remarkably – that higher numbers of employed persons in a household lower the poverty rate.
When there are no employed persons from age of 25-64 in the house, the poverty rate is 77.8%. The addition of one such worker lowers the poverty rate to 41.5%, while two gainfully employed people in the household results in a poverty rate of just 6.3%.
Negative income tax, and similar grants given to the working poor to encourage them to stay in the labor force, are an effective but underutilized tool. The report recommended existing grants by NIS 800m., which would reduce the poverty rate by 2.6%, rescuing 5,400 families (30,780 people) from poverty.
It also recommended increasing grants to single working mothers, a NIS 90m. annual cost to help 35,000 households, and to people with disabilities that earn an alternative minimum wage at NIS 5m. annual cost.
With regards to housing – a central issue in the fight against poverty – the committee made recommendations totaling NIS 1.63b.
per year.
The poor devote a larger-than-average share of their income to housing costs, the report found, with the poorest 10% of the population devoting 40% of their consumption on housing. In the center of the country, paying rent costs the poor 61% of their income, a figure that rises to 74% when water, electricity and property taxes are taken into account.
That leaves few resources for other important expenditures, such as education, transportation and health.
“The State of Israel does not sufficiently fulfill its duty to provide its poor citizens adequate housing at a reasonable cost,” the report concluded.
Its recommended policy changes included expanding the eligibility rules for public housing and rental assistance, as well as assistance programs for home purchases, including partial ownership, and aid for those who have trouble repaying mortgages.
Among the changes, the committee recommended spending an additional NIS 950m. on rental assistance, which would aid 96,000 households.
The number of public housing units have dropped from a peak of 108,000 in 1998 to 70,000 today, while eligibility conditions for mortgage assistance and public housing, it said, had not been updated in 45 years.
The committee recommended setting 5% of housing aside for public housing, a percentage it says is relatively low among OECD countries. That would require the government to add 700-1,000 new public housing units a year for the next 15 years, at a cost of NIS 450 million each year.
With regards to social services, the committee called to allocate additional funds totaling some NIS 200m.-500m. per year to the Welfare Ministry’s budget for flexible expansion, which it uses at its discretion to fund emergency health related costs and other basic necessities for needy families.
The committee also recommended providing additional funds to increase the number of social workers who would be able treat 50 to 60 families, instead of carrying caseloads of 100 or more families, and assist them in all aspects of dealing with poverty. This recommendation is set to affect 130,000-320,000 households at NIS 200m.-400m. per year.
In addition, the committee called for the implementation of a “targeted intervention plan” by social workers to improve the economic situation of 20,000 families, estimated at NIS 200m. annually.
The report also called to allocate NIS 300m. to 350m. towards education, including establishing centers for early childhood development and building additional daycare centers to encourage women to enter the workforce as well as providing additional hours and assistance to children with learning disabilities and programs aimed at reducing school dropouts.
In addition, the report called for NIS 500m.
towards health expenditures, primarily towards decreasing co-payments for medications and doctors’ visits, as well as establishing a public dental health package for the elderly, valued at NIS 200m. per year.
“Israel has sinned for many years in its treatment of poverty,” Finance Minister Yair Lapid said on Monday.
Lapid said that in the past few months the Finance Ministry was “in contact” with the committee and understood “the committee recognizes the key to getting out of poverty is entry into the workforce.”
Lapid said he would study the recommendations and “transform” them into a longterm plan to fight poverty and minimize gaps in society.
Yet despite the finance minister’s comments, government officials and experts alike expressed concern the government will not allocate the necessary funds to adopt the recommendations. In the weeks leading up to the release of the report, several committee members, including Alalouf, publicly expressed concern that behind closed doors finance ministry officials had no intention of funding all the recommendations.
“Poverty is not an act of fate and you can fight it by setting clear goals and domains while taking out hundreds of thousands of Israeli citizens from it,” said opposition leader Isaac Herzog (Labor).
“Unfortunately, it seems the government has no intention of adopting the committee’s conclusions and the next budget will also be cruel for the weakened populations.”
MK Zehava Galon (Meretz) blasted Lapid, saying “despite the serious findings of the Alalouf committee, it seems the Treasury intends to bury them along with the Trajtenberg recommendations.”
Galon criticized the government’s policies to date, which she said distributed necessary national funds to the settlements and the security infrastructure.
Rabbi Yechiel Eckstein, founder and president of the International Fellowship of Christians and Jews also responded to the committee recommendations.
“If Israel were to accept these findings, meaning the prime minister and the Treasury will fund it in full, you would have a wonderful situation of the country moving forward and eliminating poverty.”
However, he charged, the chances of this are basically “nil” and the real issue at hand is how much money the government intends to allocate towards reducing poverty, which he estimated at “maybe one billion shekels.”
“It is a moral stain on the government of Israel to be touting with pride, as they should, our huge innovations and technology and what we have to bring as a light unto the nations, in medicine and agriculture and technology and a huge moral blight that it does not take care of its poor,” Eckstein said.
Gidi Kroch, CEO of Leket Israel, a national food bank, commended the committee for the report and for its “perfect timing, releasing it just as the government begins to work on the 2015 budget.”
“However, the problem is implementation, and I am not optimistic, given the bureaucracy, that this report will garnish real results and bring about a new reality.
The state needs people like Eli Alalouf to dream and think strategically, like many who founded the state, but my inclination is that the state will discuss it once, if that, and then forget about it,” he said.
Kroch alluded to the report by Prof. Dov Chernichovsky, released a few months ago, which addressed the needs of 300,000 families living with food insecurity, saying it seems to have been “completely tabled.”
“I am truly hoping that this is not the fate of the Alalouf Report and that the government takes it seriously; making all the time and effort it took to produce it worthwhile for the benefit for Israel’s poor.”
Welfare Minister Cohen responded to the vast criticism upon receiving the report and said it was “legitimate” that the Finance Ministry said it did not have the funds, though despite this he assured the committee that the recommendations would be implemented.
“With 1.8 million people living in poverty, the situation cannot continue.”