image Photo: Flash90

Israel passes nat’l budget

Prime Minister Benjamin Netanyahu described the approval as important for economic stability and a first step in the fight against the cost of living (COL).

By Erin Viner

The government controls 64 of the Knesset’s 120 seats, a comfortable majority that clinched relatively swift ratification of the of the ₪484 billion shekel ($131 billion or €121,849 billion) and ₪514 billion shekel (nearly $138,136 billion or €129 billion) 2023-2024 spending packages.

55 Members of Knesset (MKs) voted against the bill along opposition lines.

Ahead of the final vote, Netanyahu insisted, “We are passing a reasonable budget, a budget that stays in bounds. To our colleagues in the opposition: don’t get your hopes up. This government will last its full four years.”

“A new day dawns,” the Prime Minister told Channel 14 TV upon emerging from the all-night parliamentary debate, pledging to next tackle inflation, which stands at 5%.

Netanyahu said yesterday that he has already instructed the Cabinet Secretary to submit a draft decision within a week to establish a ministerial committee to work on reducing the national COL that he will head with Finance Minister Bezalel Smotrich, Economy Minister Nir Barkat, additional ministers and professionals.

“I request that the ministerial committee submit to me a working plan, with a clear and detailed timetable, on the fight against the cost of living with all means including encouraging investment, lowering customs and breaking monopolies,” the Israeli leader said during his weekly Cabinet meeting, adding, “the fight against the cost of living tops our government’s list of national priorities. We will take determined and strong action to lower prices in all areas. I am convinced if we work together, together with the budget we passed, along with the reforms in the Arrangements Law, we will succeed in stemming the cost of living and in assisting all citizens of Israel.”

Passage of the budget ended a coalition crisis over the controversial distribution of discretionary funds. The ultra-Orthodox Jewish United Torah Judaism (UTJ) political party had threatened to bolt the government if its demand for grants was not met.

The latest budget increases funding to religious seminaries attended by men who do not perform national military service, in a move that economists warn means that even fewer will enter the broader workforce.

Thousands of Israelis demonstrated during the final vote against the financial privileges awarded the ultra-Orthodox sector, which amounts to around 13% of the country’s population.

Centrist opposition leader and former premier Yair Lapid denounced the budget as “a breach of contract with Israel’s citizens, which all of us – and our children and children’s children – will yet pay for.”

The Movement for Quality Government in Israel (MQG) non-governmental organization (NGO) has already filed a petition against the budget to the High Court of Justice, arguing that “a two-year budget is not only anti-democratic and irresponsible” in that in prevents further debates on the 2024 package, but that it also failed to consider poor economic forecasts for that year following financial turmoil stirred by the mass public dissent against the judicial reform. One of the most significant tools of oversight has been taken away from the Knesset” exactly “when the importance of the separation of powers is at the center of public discourse,” asserted MQG attorney Ariel Barzilai.

The Hiddush – For Religious Freedom and Equality NGO has also notified Netanyahu, Prime Minister Benjamin Netanyahu, Smotrich and the Attorney General Gali Baharav-Miara of its intention to appeal the High Court over the the unequal allocation of funds to the ultra-Orthodox institutions it says surpassed treasury assessments, thus necessitating cuts in ministerial budgets at the expense of the broader public.

Passage of the national budget also indicates advancement toward the resumption of the government’s highly contested judicial overhaul.

Opposition politicians, many of whom joined the protests, have been in compromise talks with the government over the proposed reforms since they were suspended in late March.

The nation has been gripped by unprecedented weekly nationwide demonstrations following the 4 January 2023 announcement that the Netanyahu coalition – which took office only days before on 29 December 2022 – of a sweeping “reform of governance” to limit Supreme Court rulings against government moves or Knesset laws, while increasing politicians’ input over nominations to the bench.

Israel’s right-wing 37th government, an alliance between the Premier’s Likud party with several smaller religious and hard-right nationalist factions, asserts it holds the mandate for changes, deemed necessary to curb overreach by activist judges and restore balance between the legislative, executive and judiciary.

The court’s defenders say it plays a vital role in holding the government to account in a country that has no formal constitution, and that the government’s overhaul would weaken the courts, endanger civil liberties and harm the economy. The proposal has drawn fierce condemnation from Opposition Members of Knesset (MKs), legal officials, military reservists and advocacy groups – further broadening already deep political divisions in Israeli society in what has been described as Israel’s worst-ever crisis.

Prime Minister Netanyahu, who is himself on trial on corruption charges which he denies, had dismissed the protests as refusal by leftist adversaries to accept the results of the 1 November’s election which resulted in one of the most right-wing governments in Israel’s history. He has ardently defended the judicial overhaul.

Under pressure by the ongoing demonstrations, the deadline for a 15 March Knesset vote on the matter was delayed to 15 June to allow for compromise negotiations brokered by Israeli President Isaac Herzog.

The introduction of the reforms have also spooked some foreign investors as well as international credit agencies.

The same day as the budgetary vote, the national currency tumbled nearly 1% against the dollar to 3.735, its weakest since March 2020 – in what analysts saw partly as a response to the prospect of redoubled political and economic furor. Tel Aviv share indexes also slipped 1%, while government bond prices shed as much as 0.5%.

When asked by Ch. 14 if the judicial reforms were also now back on the agenda, Netanyahu said: “Certainly. But we are trying to reach understandings (in the compromise talks). I hope we will succeed in that.”

Lapid immediately called on President Isaac Herzog, who has been mediating negotiations between opposition and government MKs, to demand a clarification from Netanyahu. Herzog did not immediately comment, although he has previously voiced cautious optimism over reaching a resolution.

Fellow Opposition leader and former Defense Minister Benny Gantz wrote in a message posted on Twitter that if the judicial overhaul is advanced, “we’ll shake up the country and stop it.”

Negotiations aimed at resolving the dispute are due to resume tomorrow.