Israel's Minister of Finance Moshe Kahlon is still grinning, distributing money, and satisfied, and he wants to be minister of finance in the next government, too. This month will mark two years in the job, with increasing reports of a slowing, perhaps even an end, to the housing market rises. This, however, is where his ambivalence comes into play. On the one hand, he wants to boast, while on the other hand restraining himself for modesty's sake, and to avoid tempting fate.
Kahlon's temperament also has a current, fashionable, and post-populist aspect: attack the media again and again, because the voters like it. In his own way, Kahlon has adopted the anti-media attitude. US President Donald Trump speaks against the media with aggressive arrogance, while Prime Minister Benjamin Netanyahu does it with objectionable defensiveness. In contrast to both of them, Kahlon exudes an aura of persecution, accompanied with a smile, no bitterness whatsoever, and without even a trace of a grudge.
"I believe in the free market advocate, but I act from the heart. This country can be cruel to its people, do you know that?", Kahlon goes on the attack, while still wearing his smile. What bothers you the most is when we give things to people. I see the social workers, and my heart goes out to them. I see the nurses in the hospitals. They deserve everything - more than they get."
"The changes we have made in housing prices are irreversible"
"Globes": Are you more satisfied or nervous about the findings showing that housing prices have come to a standstill or are going down?
Kahlon: "From the first day, I believed in this plan. I believed, and I believe in it with all my heart. I didn't have a moment of hesitation, however surprising and immodest that may sound. I used it in my election campaign. I said that if the price of land goes up every day, you can't expect the price of housing to fall. That's why I'm now at the same emotional level at which I started. It hasn't risen or fallen.
The buyer fixed price plan is starting to make a change. You need this government to last for another 12-18 months in order to consolidate the proof of its success. That makes you vulnerable to blackmail. You can be pressed into accepting measures you don't like because it's critical for you for the government to survive longer, so that you can prove that you succeeded.
"That's completely false, and there's no connection between these things. All of our plans are already arranged. There's reform and change here. A long series of actions on housing have already been taken. Everyone thinks that it's the investors' tax the tax on a third housing unit, or some other tax, but the list of what we've done is long and broad, year after year. This can't be reversed. It's impossible for this dramatic change not to continue."
If you lose your way politically - yes or no to elections, when, building a coalition, and a new minister with his own ideas comes, your plans may vanish.
"I say that's wrong. We're here already. Forget about proving my personal success for a moment; that's not important. The main thing is that we're on the right track. The rise in prices will stop, and there will also be some kind of effect on housing prices. That's what I've said all along the way."
We'll get to cutting prices, which is a problem in its own right
"All right, that's yours, that's not my problem. Lowering prices, and by how much, is a problem for journalists. I don't deal with it. You just want headlines."
Your people haven't stopped talking about making prices go down a lot. Yes, we also want headlines. We've never denied that.
"And I never denied that I want to handle the housing crisis, and that's what I'm doing. Structural reforms in 2015, 2016, 2017 - one measures after another."
You and the plan both do need time for proof, stabilization, and eliminating the public's distrust. That is your weak point. Netanyahu, an expert and cynical politician, knows it.
"Do you know the difference between me and you? I'll tell you. You think it's a Kahlon crisis, and I see it as a housing crisis. Kahlon isn't the player."
Can Netanyahu leads you in the present government to where you do not want to be, but you will bend, because you need time to consolidate your success in housing? Do not evade the question.
"My answer's clear, and I'm not evading anything. I repeat: there is a housing crisis that must be addressed.
"The things I've introduced, the reforms and changes, are structural and irreversible. Everything we've done is irreversible. That's my answer, even if you don't want to accept it.
"You're asking whether Netanyahu wants something from me I can't agree with, but I'll accept it anyway, because I need time. No, absolutely not. I don't need more time, I don't have to say yes.
There's public psychology that's giving you trust and reinforcing the slowdown in purchases. If the government and you are on the verge of falling, the belief in the stabilization of prices will be undermined.
"I think that the belief isn't in me; the belief is in the plan. Can you see anyone repealing the investors' tax now? Cancelling the signature on a roof agreement with a mayor? There's no way to stop a roof agreement like the one signed in Lod totaling NIS 6.9 billion, in which everything is spelled out for roads, community centers, and classrooms. You can't stop that."
Not what has been signed, but what has not yet been signed can be canceled.
"No, I don't think so. The housing plans will go ahead, and in my opinion, no one will change them, even after I'm no longer here. They won't change them, because that's all there is right now. Maybe in five or seven years, after the crisis has really been solved, someone will lay their hand on it.
"And as for my political future, if it is decided to hold elections, we'll run in the elections. We were almost there a month ago with the issue of the broadcasting corporation. There was a second when the man said, 'We're going to elections.' Politics is politics, and economics is economics. I see no connection between the two things. Early elections are a political matter, so let it happen. We'll be ready."
Will this government finish its term?
"I don't know. We saw a moment in which it almost fell. Forget about housing, the soldiers, the senior citizens, the disabled, growth; what difference does the economy make? Politics is politics. One more moment, and we'd have gone to elections. They told me on television that there would be early elections. I'll tell you honestly: it looks all right now, but it can change. Before the issue of the corporation, I never would have said that there would be elections before November 2019, but today, it can happen at any moment."
Do you think that the prime minister's decision about elections also depends on the investigations?
"I don't think there's a connection, I don't touch these things. The fact is that he wanted to go to elections because of the broadcasting corporation. What has that got to do with investigations?"
Some people think that he will bring about elections in the period between the police recommendation on one of the investigation cases and the decision by Attorney General Avichai Mandelblit.
"I don't know about this. I don't think that, and I don't touch it."
Do you still not want to be prime minister in the future?
"I'll run in the next elections, but not for prime minister. Kulanu will run as social and economic party."
And what will you be?
"Minister of finance, what's wrong with that?"
Are you signing up for a long time?
"Minister of finance is a serious and important job (breaks out laughing). It seems to me that the journalist who is interviewing me now is alarmed about it… Maybe you have three apartments, or three cars, so you're afraid of me."
She doesn't. In short, sir…
"I like this job. I enjoy it a lot; I'm doing what I wanted to do. I'm also here in the future. If there are elections, I'll run again for minister of finance. We're an important economic and social party, and that's how we'll run in the next elections."
Do you think that housing prices have stopped rising, or are even going down?
"I read the figures just like you do. It's obvious that the price increases that there used to be here have stopped, and we see a slight drop recently. In recent years, prices went up 8-9% a year. It went down a little over the past five months, and I don't even remember how much. The number makes no difference; the main thing is I know that it's all right. I don't check it every minute, or every day."
The Central Bureau of Statistics says that there was a 2.9% decrease in the last quarter.
"The market has cooled off - that's what I'm sure of. I also know that the actions we took had an effect. We definitely can't say that the project has been completed. We're in the middle, we have a lot more to do, and we're doing it."
How much of a fall can the economy and the public stand? Families who bought in recent years when the prices were high are liable to find themselves in a mortgage crisis, not to mention the banks and the Bank of Israel.
"I don't want to get into that."
You are the minister of finance.
"I don't arrange the market forces. I intervene with certain actions, and the market arranges itself. I believe in a free economy. I cut taxes, encourage growth, and encourage investment. I believe in a free market."
Your job is to think ahead.
"The market does all right. I have never touched that; I don't arrange the percentages. I think that the housing prices numbers became ridiculous, out of context, disproportionate to the cost of the land, the cost of construction, and the cost of development. The numbers here reached absurd levels. Young couples were taking it left and right. It had to stop, and we're acting to stop it and reduce the price of housing. At the end of the process, prices will fall, I've no doubt about that. How much? Let's wait and see."
On taxation, Kahlon believes that the level of taxation in Israel is reasonable and he has no plans, for example, for lowering the purchase tax on cars.
How come the Ministry of Finance has so much money all of a sudden?
"The economy is growing, taxes are collected, there are revenues, we revise growth forecasts and change our priorities."
"Our biggest problems are global problem that do not depend on us. There can be economic crises around the world. But the main problem that I see that really does depend on us is participation in the job market. The ultra-orthodox, Arabs, the disabled, other populations, everybody who can work. What is clear is that as long as we have high participation in the job market then we will have growth."
"My father would always tell me. If you don't want to be poor then go out and work These aree our working principles: assistance for working families, negative income tax and more and more. Participation in the work force, that is our main target as a country. In terms of the Ministry of Finance that is the direction and it includes investment in vocational training, education generally, technological education, so that people will be better equipped and that will close the social gaps. The numbers of the participation in the work force - this is the nightmare, these are the problems of the Minister of Finance."
Will the situation improve?
"Yes, but not enough. If heaven forbid in the next 20-30 years participation in the work force were to decline, in other words more people won't work, then economics won't matter. High-tech and revenues won't matter. There is a limit to how much a small group can support a large group. That's the main thing that we are working on."
Published by Globes [online], Israel Business News - www.globes-online.com - on May 30, 2017
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