Likud ministers criticized the proposed state budget for 2005
when Prime Minister Ariel Sharon presented it to cabinet this
week. Health Minister Danny Naveh in particular said that it
will cause great harm to the sick and the elderly.
Sensitive to charges that his government so far has been
cruel to the helpless, Sharon told the ministers that the
budget will take care of the weak sectors of the population,
while continuing the reforms in the economy.
But the other ministers did not agree. Health Minister Danny
Naveh said that the proposal was simply not socially just and
even Deputy Prime Minister and Trade Minister Ehud Olmert,
who is usually a close ally of Sharon, said that the budget
was not good.
Some pundits said that Olmert's detailed criticism was
coordinated with Sharon and was partly, or indirectly,
directed at Finance Minister Netanyahu as well as at his
budget. Netanyahu and Sharon have had their differences over
the past six months.
No decisions were taken Sunday, and discussions about
specific cuts and how the budget will be allocated were
postponed until the next meeting, on Sunday August 8, and
also to the Knesset socioeconomic committee headed by Finance
Minister Binyamin Netanyahu.
Finance Minister Benjamin Netanyahu said that the budget was
designed to maintain the growth in the economy and to
strengthen certain social elements. This would be done via
assistance to the elderly, the gradual implementation of the
reforms in the education system (according to the
recommendations of the Dovrat Commission), funding for new
immigrants and the hot meal program for schools.
Netanyahu said the government's main objective had to be a
long-term growth rate of 4-5 percent, although the treasury
is expecting only a 3.8 percent growth rate in 2005. He said
that social gaps should be closed through broad based growth
that will benefit everyone.
Experience in other parts of the world has shown that the
movement to a free economy brought rapid growth, he added,
and thus the treasury was proposing privatization in a long
list of sectors such as electricity, water, sewage and the
capital market.
Naveh declared: "The budget that the treasury is drawing up
will be antisocial. Without significant additions to the
health basket -- and with medicines being taken off the
basket, hospitals being closed, fewer hospital beds, and no
additional help for frail patients -- this will merely be a
budget with yet more and more decrees and cuts."
The minister charged that the treasury is creating two kinds
of medicine in Israel: for the rich and for the poor. "The
treasury officials want us to pay more from our pockets for
medication and medical services, and they want the government
to invest less in health," Naveh said, adding that it was
essential to have more funds for hospitalizing the elderly,
for premature babies and for cancer treatments.
It is clear that if health care is financed by individuals
and not by the government, the rich will be able to afford
more.
The Health Minister and Treasury officials who were present
exchanged harsh words. Naveh said that the Treasury was
planning to set up a fifth health maintenance organization
fund run by insurance companies without consulting the Health
Ministry. Treasury officials responded that they had met six
times with Health officials. Naveh said the subject of the
new HMO had never come up in those discussions for a serious
debate. Banging his fists on the table, he proclaimed that
the Treasury was hiding the truth.
Olmert accused the Finance Ministry of being dogmatic and
inflexible, explaining that a NIS 6-7 billion cut could be
counterproductive and cause a slowdown in the economy and
further unemployment. He proposed that the budget be raised
by 1.7 percent next year, the same as the population
growth.
The proposed budget for 2005 will again adversely affect
people who receive benefits from the National Insurance
Institute. The most significant proposed step is that
employers pay less toward their workers' NII benefits. This
is intended to encourage employment and to compensate
employers for having to pay toward the workers' pensions. The
1.5 percent deduction the employers will get will, however,
mean a loss of NIS 5.3 billion to the NII.
Welfare Minister Zevulun Orlev warned Sunday that this would
lead to cuts in allowances, welfare budgets, education and
health, and added that his National Religious Party would not
be able to support a budget of this kind.
Together with talk of economic reforms and reducing
unemployment, Sharon reiterated the importance of moving
ahead with the disengagement plan.
Treasury officials said the 2005 budget deficit would not
exceed 3 percent of gross domestic product and government
expenditures would not expand by more than 1 percent compared
to the 2004 budget, as agreed in the framework of the US loan-
guarantee deal.
Coalition negotiations may force the government to make
changes in the budget and the arrangements bill that
accompanies it. The cabinet is likely to approve the
Treasury's proposals next week, which include cuts of NIS 6
billion. The total budget is expected to be NIS 222b.
The Defense Ministry is expected to sustain the single
largest cut -- NIS 2b. to NIS 3b. The Defense Ministry is
also very much against the budget. The Treasury wants to cut
another NIS 2b. to NIS 3b. from the budget mainly by lowering
public sector wages.
Industry, Trade and Labor Minister Ehud Olmert called for
increased transparency during the budget-making process. One
of Olmert's recommendations is the adoption of two-year
budgets in order to send a message of stability to the world
markets. He added that the two-year budget scheme would free
ministries and government offices to devote more time to
providing services and less time to annual bickering over
budget cuts.
