"Elections aren't what Israel needs right now. There's no reason to have elections, and no real coalition crisis," Minister of Finance Yair Lapid said today at the annual budget department seminar. He was responding to recent media reports that Prime Minister Benjamin Netanyahu intends to hold early elections.
"I came here from a cabinet meeting in which there were disagreements, as always, but it was also clear to all the participants that they were in a functioning coalition, and that there's much left to do," Lapid said at the beginning of his speech. "We've got a commitment to continue working towards lowering the cost of living for the people of Israel. We'll go on working hard for a diplomatic horizon for promoting a regional settlement, in view of the reality in the Middle East that is changing before our eyes. As chairman of Yesh Atid, like all its 19 MKs, I will do everything to further this."
Lapid devoted most of his speech to a philosophic dispute with the Ministry of Finance professional echelon and the economists who ridicule his understanding of economics and the budget priorities he dictated. In this context, Lapid attacked some of those present in the hall, saying that he was asking all the critics of his 0% VAT plan, "If you know so much about the housing market, how do you explain the fact that prices went up 80%, and no one did anything about it?" He compared the economists criticizing him now to the socialist economists who disdained his father in the 1960s, but who turned out to be wrong, and claimed that they were no different than the intelligence organizations around the world who failed again and again to predict events like the "Arab Spring."
Later in his speech, Lapid directly attacked the Ministry of Finance budget department, saying, among other things, "Balancing the budget is part of the job, but if it becomes the whole job, we're not accomplishing what we're here for. I don't think that there's a single person in this room who wants his tombstone to read, 'Here lies Moshe, who kept the budget balanced.' I think that each of us wants to know that he contributed something to making Israel a less expensive, better educated country, in which no children go to bed hungry at night. 'Here lies Moshe, to whom many children owe their future,' is a fitting epitaph, and something worth devoting our collective talent and knowledge to. "
Responding to criticism in the Finance Ministry, the Bank of Israel, and the economic press of his raising the deficit target from 2.5% to 3.4%, Lapid said, "The dilemmas facing us are dramatic, and we have to address them in a spirit of modesty, and with a broad perspective. We all know how to explain why balancing the budget is important, but we have to admit that it is a choice between tomorrow's poor and those of today. We know how to explain with signs and wonders and Power Point presentations that the deficit is high, that if there is a crisis tomorrow, the economy won't have a safety cushion to protect it. But what if there is no crisis? What if there is strong growth in the international markets in 2016 and a real budget surplus? How will we explain to ourselves the fact that in the name of balancing the budget, with our eyes open, we deliberately deprived poor children in Beit Shemesh, Jerusalem, the communities around the Gaza Strip, and Kiryat Shmona of food, education, housing, and welfare? What will we tell them - and what will we tell ourselves - about denying them a chance because of a theoretical risk that may not materialize?"
Lapid devoted his main criticism of Finance Ministry personnel and economists to the cost of living. "Our number one problem, and our number one challenge, is the cost of living in Israel," he said. "There's one simple fact that can't be ignored: something's not working. The cost of living, the cost of food, and the cost of housing are impossible. Social mobility between the lower and upper deciles is among the lowest in the Western world, and the inequality indices are unforgivable. Our job is to change all this, and if the conventional tools don't work, we have to look for other tools.
"Incidentally, we not only have to lower prices; we have to start thinking together about the other side of the equation - salaries. Middle class salaries are stagnating. The Israeli worker earns the same amount, but his expenses are constantly growing. His productivity is low, the government isn't spending enough on his training and education, and more and more production lines are leaving Israel each year for other countries.
"Israelis are losing their trust in the system. The cost of living is killing them again each day, and they need renewed confirmation from us that they have a future in this country. They want to know that after their taxes were raised in 2012 and 2013 and they were sent down into the air-raid shelters in 2014, they are still living in a place that really notices them, with a government that really listens to them, and an administration that really cares about them. We have it in our power to restore their trust. I believe that the Finance Ministry can and should take this responsibility. We have it in our power to give them back the knowledge that their future is in this place. In the argument between Berlin and Jerusalem, we can determine what the answer will be," Lapid said.
He continued, "Balancing the budget is part of the job, but if it becomes the whole job, we're not accomplishing what we're here for. Right now, a child in Yeruham doesn't really have equal opportunity. Right now, a child from Ethiopia in Kiryat Gat, or a haredi child in Beitar Ilit can't escape the poverty cycle. Right now, we're not creating enough solutions to reduce inequality and improve the situation of the middle class, and as long as things are like that, we're sleeping on the job."
At the end of his speech, Lapid commented on the 2015 budget, saying, "The current budget was affected by Operation Protective Edge, but it's already headed in the right direction. This is a good budget. It's economic enough to maintain a balanced fiscal picture, and its social enough - and yes, also political enough - to preserve the hope and trust that right now are the most urgent need for Israeli society and the Israeli economy."
The audience, which included many present and former employees of the budget department, responded with obvious discomfort to Lapid's severe criticism, and the minister's speech ended to lukewarm applause.
Published by Globes [online], Israel business news - www.globes-online.com - on October 22, 2014
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