Yair Lapid: Deficit could cause collapse

Finance Minister: The austerity measures will stop Israel reaching the conditions in Europe with high unemployment.

"The idea that we have people here whose lives are at risk because they are doing their jobs is intolerable in a proper democracy," said Minister of Finance Yair Lapid in his opening remarks at the Union of Local Authorities in Israel, referring to the "loathsome" economic measures he has taken. He said that without these measures, the deficit would balloon to NIS 70 billion within two years.

"We must make changes together. We must do this in two stages. The first, and short, step is to emerge from the deficit. The steps we've taken are painful, I admit it. Raising VAT is painful, raising income tax is painful, but you are people who understand budgets, so it is easy for me to explain this to you: the deficit is not a one-time event, it's structural. If we don’t stop it now, it will continue to grow and grow until it buries us," Lapid said.

"If we don’t take all these loathsome measures now, next year, in 2014, the budget hole would grow to NIS 62.2 billion, and in 2015 it would exceed NIS 70 billion. This means collapse, and it is my job to protect the country from collapse. People complain about taxes and they are right, but the worst blow to a person is the loss of his or her job, and this is what we have prevented."

Lapid said that the measures he has taken have prevented Israel from falling into the economic conditions in Europe. "25% of young people in the bloc are unemployed. More than 50% of young people in Spain are unemployed, and almost 60% of young people in Greece. That is what we have prevented. Even now, even with the budget cuts, we'll pay NIS 41.7 billion in interest. I don’t want to pay interest, I'd prefer using this money for you. I'd prefer using it for education, healthcare, security, and welfare.

"Our real test is our ability to work together. This test rests on three pillars. The first pillar is jobs. Israel's unemployment rate is low, less than 7%, but it is artificially low. It is low because we have entire communities, especially haredi (ultra-orthodox) men and Arab women, who are simply not part of the equation. They are not recorded as unemployed because they are not even looking for work. We're now changing this.

"The format of equal sharing of the burden, together with the national job training plan which we are now building with the Ministry of the Economy, will change the Israeli labor market. We will train people to work in high tech and industry, and we will support local ventures and small businesses, we'll strengthen regional industrial zones in the north and the south, and will give tax breaks to every multinational which will establish development centers and factories here, creating jobs and which will put us at the forefront of global technology and innovation."

As for housing, Lapid said, "The fact that I am turning to you does not absolve the government of its responsibilities. The government created most of the problem, and the government should solve most of the problem. Today, housing is the number one problem of every young couple in Israel. It is why we are now working day and night to remove the obstacles and allow holistic work which includes everyone. For the first time ever, the minister of finance, the minister of housing, the minister of the interior, the minister of transport, the minister of environmental protection, the minister of Galilee and Negev development, and the Israel Land Administration are sitting at the same table and solving problems. If you have a problem with housing, I now have an address for you."

Published by Globes [online], Israel business news - www.globes-online.com - on July 2, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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