Israel's major party candidates for prime minister in the upcoming elections, Kadima chairwoman and Minister of Foreign Affairs Tzipi Livni, Labor Party chairman and Minister of Defense Ehud Barak and Likud chairman MK Benjamin Netanyahu last night shared the podium for the closing session of the "Globes" Israel Business Conference.
Each candidate spoke on "Government's role in an economic crisis".
Netanyahu
We're in the midst of a crisis that jeopardizes both the jobs and savings of Israeli citizens. With the right policies, we can emerge from this crisis more quickly than we think. But this will require us to do certain things.
The first thing that we must do is to not to accept the global average. We don’t know what kind of curve we're in; it clearly isn't a V. We might be in a U, or maybe an L - Japan was there for a decade. V means a rapid descent into a recession and quick emergence from it; U means a more prolonged recession; and L means a sharp descent into a recession and staying there.
I said that we'll support a government plan, and we will still support one. In my opinion, the plan offered is too small for a great crisis.
This is until the elections. Afterwards, we'll have to climb the slope quickly, and that includes several things. If there's a missing component in this government, it's tax cuts as quickly as possible. Investors will come to countries with low tax rates, not to countries with high taxes. Tax cuts will keep companies, attract investment, and encourage growth.
It could well be that if we cut taxes we'll increase the deficit, but that's only a short-term scenario, and even then not a certain one. In any case, it's a necessary condition and it is missing. The first thing we'll do is to make long-term tax cuts immediately.
The second thing is to keep know-how. We must invest more heavily and in a more focused way in R&D oriented toward small businesses. The third thing is physical infrastructures. This leads me to the next change: restructuring of the Israel Land Administration.
For 18 months, I've been working on a true revolution in education. What should be done in education? We must let managers manage, help struggling students, and focus on the core curriculum at more than double the current amount. The synthesis of these points is the fifth element: raising the status of teachers.
I intend to lead this revolution, and I will keep the education portfolio in the Likud. The revolution will encompass higher education. It may be for us that there is one ministry for higher education and technology.
A few days ago, MK Gilad Erdan (Likud) told me that 11 MKs in realistic slots (up to 35 Knesset seats) are young. He said, "We remember what it means to be soldiers, new veterans, and to work as waiters while students. We haven’t forgotten. We want you to offer on our behalf the first year of academic studies for free for all IDF and National Service veterans. Those who give to the country are worthy of receiving from it. I've done the math, it's a minute fraction of the budget. I think that this should be a paramount priority."
To do these things, I certainly intend and want to receive majority support for my party, but I reiterate that we will establish as broad a national unity government as possible.
"Globes": You said that cutting taxes won't affect tax revenues, but you know better than anyone that Ministry of Finance officials will show you tables to demonstrate the amount of lost revenue. How will you finance the shortfall? Also, they will undoubtedly try to hit you with the Bachar committee for which you serve as the intellectual father. How will you respond?
In 2003, we were in the middle of an economic contraction, but we nevertheless decided to cut taxes because if we lowered the tax rates we'd collect more later. This is because if I increase the deficit on the tax cutting side, even if this creates a temporary deficit, it very quickly corrects itself. I believe that we must create a multiyear program of tax cuts because this will create a component of consumer confidence that they'll have more disposable income, in the same way as companies.
The Bachar committee is a reform that removed the provident funds from the banks. It didn’t put them into the market; they've in it since 1986. It is asserted that the banks would have continued to manage them better, but I want to remind you about the banks' condition in 2003, and I hope that their condition has permanently improved since then.
Ehud Barak
An Israeli comprehensive peace plan should be put on the table in response to the Saudi initiative for blocking Hamas and Iran. This will provide a tail wind for the various channels. The economic crisis is a leadership and economic crisis. Israel will ultimately be tested on its ability to recognize reality and to understand the failed world view and what should be the vision that we should return to. We shouldn’t repress or try to explain how wonderful we were.
2000 was a great year, but I don’t think it was because of the pretty eyes of Avraham Beiga Shochat, who was Minister of Finance at the time and who is sitting in this hall now. We'll jointly examine our ability to cooperate. The fact is that, until now, the Israeli government has not recognized the need to sit at the same table not just the regular agencies but also the Histadrut (General Federation of Labor in Israel). Histadrut chairman Ofer Eini or Manufacturers Association president Shraga Brosh? They are no less serious.
I don’t want to guess how we'll emerge from this crisis because it is too complicated. We must concentrate on what we need to do now. We need a steady hand on the steering wheel, feet on the ground, an ability to talk with economic representatives, the courage to make decisions, and the ability to carry them out.
This is an opportunity for a place with social solidarity, a society whose children can land on their feet anywhere in the world. They will decide for themselves to live here, and young Jews from all over the world will be proud of their affiliation to us.
We must provide a pension safety net, especially for the elderly and in a differential basis. As for small businesses, a month without credit will cause them to close, and two months without credit will shut down a medium-sized business.
I don’t think it reasonable that the perspective of the late Milton Friedman, and through Netanyahu, may he blessed with a long life, which is the perspective that created the conditions for this crisis, will be the basis for the solution for a quick U-turn in the crisis. This lacks common sense.
The Ministry of Finance, the Governor of the Bank of Israel, employers, and [National Economics Council chairman Prof. Manuel] Trajtenberg should all sit down together until the white smoke is emitted: a little less ego, and a little more cooperation.
Livni
Elections are approaching and I don’t mince words. I want the opportunity to succeed from the outset, and not allocate improvements like my two predecessors.
The question is not only what will be in 2009, but also what will be afterwards. This year might still be a year in which the public does not believe in the country's leadership, and we still may not be able to accomplish. On the other hand, in this year, we might be able to revert to what Israel should have been from the beginning, and to realize the vision of the country's founders, which is also our vision.
In order to create this turning point, it is not enough to talk about change, but to do several things. First of all, I am a strong supporter of changing the method. On the other hand, there is no meaning to a stable government if survival is the only thing that it does. On television, the survivor is one winner, and he is usually the manipulator. But in government - everyone loses.
Bibi, you knew how to persuade even when you raised student tuition, and not only now, when you offer them the first year of studies for free.
"Globes": You don’t believe in trickle down growth. So how will you help the poor?
Livni: It's not only I who doesn’t believe in extreme ideologies. The state's obligation is to provide for those who truly have nothing. We'll have to make changes in the eligibility periods for National Insurance allotments."
Published by Globes [online], Israel business news - www.globes-online.com - on December 16, 2008
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