Creating jobs is top priority for Moshe Kahlon

Moshe Kahlon
Moshe Kahlon

The Finance Minister tells "Globes" about his first year in office and his attempts to make Israel more business friendly.

The best traits of eternally smiling Minister of Finance Moshe Kahlon are his sharp senses, understanding of what makes people tick (especially politicians), and his ability to zero in on the real (and concealed) essence of every situation. That is what enables him almost a year into his job (he was sworn in on May 14, 2015) to be content, really satisfied, even happy, about himself, his capabilities, and his achievements.

"Globes": You smile more than any Minister of Finance ever has.

Kahlon: "Why not? I realized a long time ago that when I smile, the whole world smiles with me."

Sum up the year: where you failed or made a mistake, and where you succeeded and achieved something.

"I'm trying to think of what you want to hear so much, about failures and mistakes, but unfortunately, I can't, because you can't measure these things by the year - only in the longer term. I can say what we haven't gotten around to yet."

No failures? No mistakes?

"I can't find any, and I don't know about any. I'd be glad if you tell me where you see failure, and then I'll develop it… "

A whole year in the job, and you haven't made one mistake? You haven't learned any lessons? You have failed at nothing? This is a problem.

"I can tell you that this question is a really original question of reporters for the purpose of creating something - headlines or disputes. But you need someone who'll cooperate with you - and that's not me.

Cutting VAT by 1% did not really reach the consumers' pockets.

"I think that cutting VAT by 1% is having a effect right now, when everyone sees consumption growing. You pooh-pooh the NIS 5 billion in lost tax revenues from the 1% subtracted from VAT, but that's a lot of money that we in effect gave to the public by cutting taxes. We returned this money to the market, and it doesn't matter right now where the money stays with you, him, with the supplier, or the consumer. It encourages consumption. Look at the figures for this month. See where most of our growth is coming from.

There is no growth.

"Excuse me, there is growth, even if it's 2.5%."

It barely exists.

"But it does exist! There is growth in Israel. Right now, it's 2.5%, and that's growth, and most of it's coming from private consumption, in other words, because we lowered VAT and encouraged consumption. We want people to buy. There were two possibilities: either keep the NIS 5 billion in our treasury, or to give it to the market, to consumers. So we did the most correct thing and the most just thing."

You could have invested it in encouraging growth, business, and enterprises.

"We're doing that. We didn't spare a penny - not in opening businesses, not in investments, not in encouraging exports, nothing. We spared nothing - we did all of it. I want to tell you: it's possible to do all of it. That's why I say that cutting VAT by 1% was a very correct step."

You are creating a new economic chemistry: you can do everything.

"Right! The world doesn't always have to be out of shape, with some high and some low. The world can also be straight. You can't always go in one direction and leave the other in the lurch, and then call it balance.

"I'll give you one example of growth and creating jobs: the renowned plant in Shtula that makes defense products. It employs 100 workers, and it's about to close down because it's having trouble surviving. We've been working on that for two months already. This plant is in financial trouble, and we have to help it. We reestablished the small businesses fund, and got NIS 9 million for it from the industrialists, and another NIS 4 million. Unfortunately, the investor had a problem in the end - not with us - but we were already on the way with the check. I hope it works out. It's critical for us to help a project like this hang on."

Because it is in Shtula?

"No, because it's a factory that gives workers a living."

So Israel Aerospace Industries says, 'We give thousands of workers a living and we have a problem, so help us, too give us money."

"If it's necessary, we'll help, so we'll help where it's necessary. If jobs are created as a result, we're there. Now you'll ask me: 'Kahlon, what keeps you awake at night?'"

To tell you the truth, it seems that nothing is keeping you awake at night.

"There's one thing - real, not political - because that's all nonsense. There's one thing. I look you in the eye, and say: unemployment, employment percentages, and jobs - that's what I'm worried about. That's what I check every day - that’s the most critical. Employment is what interests me the most.

"I'll put it clearly and in the most extreme way: even if housing prices don't go down, and even if we don't get the prices of fruits and vegetables to come down, it's no great disaster. But a man without a job - that's a disaster for me. It's an economic disaster, a macroeconomic disaster, and a disaster for everybody, so it keeps me awake at night."

"Half of the public is satisfied with what I'm doing"

Kulanu got 10 seats in the last elections, but the last surveys gave you only 5-7 seats.

"I can say that the figures for my performance as minister of finance are quite good. But I don't conduct the surveys you use. For example, in the survey you say gave us 'only' seven seats, 50% of those asked were satisfied with my performance, and my popularity was 58%. The polltaker said that a minister of finance has never had those numbers.

"But I'm not boasting. The main thing is that I'm not impressed by surveys - not the good ones, and not the ones that aren't so good. We don't have elections right now, and the subject isn't on the agenda. What's important now is that when there are no elections, 50% of the public is satisfied with my performance."

Check Point CEO Gil Shwed recently said that government policy is "pushing companies out." For you, people have to be poor for you to help them, and what about growth? Investments? Entrepreneurship? Who will increase employment?

"Wait a minute! We're doing exactly the opposite of what you're saying. The exact opposite! In data, in figures, in money, you're asking misleading questions, the figures are completely different. I want to put things straight. We've put hundreds of millions, over NIS 1 billion, in growth and encouraging growth and investments.

"I want to make this absolutely clear: we're not driving investors away; we're working on behalf of investors. This week, I had a meeting with a large part of the Ministry of Finance, and I told them, 'Guys, be more sensitive, look for how we can strengthen and make things easier."

"A very positive attitude towards business"

Have interested people come to you over the past year? Did you hold talks with investors about investments? Israelis, foreigners?

"Yes, they came. Intel people also came."

Maybe they wanted to know how much money they could get this time.

"You want to be cynical? I'm not at all cynical. Intel Israel is talking about another fab. They have plans for 2017-2022. They came to me, and of course got great backing. I think, I know, that we're very friendly to business.

"Investments are coming here, proposals are coming here. Any proposal here gets the biggest welcome possible. There are things being worked on, there are things on which progress is being made, and I can't give you names until after they talk about it. What's important is that the public, your readers and you, should know that there's a very positive attitude towards business here. Yes, it looks like there's a little conflict, because it's hard for the public to accept a social person with an awareness of free economics.

You are referring to yourself.

"Yes, I'm a free economics man. I'm a man of competition, I'm a man of growth and investments - and that's what I'm doing. It's true that at the same time, I'm more sensitive to the disadvantaged - I can't help it. That's what I am, that's where I came from. I'm more sensitive to the weak. Things that others aren't sensitive to, I am. I have a background in it."

Are you angry?

"Yes. All the apostles of a free economy who came before me did was raise taxes again and again and again, and they are supposed to be apostles of a free economy and growth… The only one who gave encouragement and cut taxes is me - the communist you see before you.

"What gets me mad, it's ridiculous, is that all of a sudden, I'm the one they're accusing. After all, raising taxes won't get you economic growth, high corporate taxes don't help business grow, employers' tax on successful employees and import taxes don't increase growth. Who cut import taxes here? I'm the only one. People demonstrate in front of my house constantly against opening markets, imports, cutting prices and competition. Right in front of my house.

But what will you say to businessmen who feel unwanted, when people in the street are screaming against them and ministers in need of votes join in? How will you answer Gil Shwed when he says, "Israel is pushing out high-tech companies"?

"I'll tell Gil Shwed that he's a valuable man in all respects, that we’re not doing that. Right now, a Ministry of Finance team is meeting to correct all these things. I'm not going to lie, either to myself or to the cabinet members an unpleasant atmosphere has developed here."

Haven't you yourself inflamed the atmosphere against businessmen?

"Absolutely not. I have my values, and I mean to stick to them. I'm the only one in Israel that opened competition here, created reforms, changed things, and didn't confine himself to monetary issues. If I make economic changes without fear, no one can tell me that I'm against business. I'm making the economy grow. Nothing just happens.

"There's a minister of finance here, and please excuse me for referring to myself in the third person, giving orders and leading and pushing where it's necessary - and things are happening. You can't say it's an accident that things are happening, that imports have been opened and import taxes reduced now. Is that a coincidence?"

What will be remembered about this year is that you limited executive salaries. You will be remembered as having intervened and restricted salaries. It was also written that if the political constellation becomes good enough, you will extend the restriction to all public companies. So you're not a communist, but…

"I don't remember saying anything about extending the restriction to public companies. In general, it seems to me that there's nothing bad that doesn't get attributed to me. In financial salaries, there was a kind of market failure, excessive salaries. Beyond that, I don't see where the accusation that I'm fostering this anti-public feeling comes from. I can give you lists and numbers of investments, enterprises, pushing things forward, our tours of industrial zones. Incidentally, do you know about Kochavit Kahlon?"

No.

"I invented the term 'Kochavit Kahlon.' I said, 'Let anyone who has trouble and wants or needs help, whether with the Israel Land Authority, land allocations, production, development, opening a plant with five workers or two workers, call me directly. Yes, that's right, me, Moshe Kahlon, personally, I'll deal with it and open and release all the barriers.

"Gil Shwed and people like him are very, very important to me, to us, and we're there, we're here for them, because this, and not only this, is the real thing.

"In the main thing, this is my message to Gil (Shwed, S.K.-L., A.B.) and his people. I met high-tech people a number of times, in Israel and overseas. People in my ministry meet them again and again. I'm telling them, and you, clearly: even if questionable things have been done, we're correcting them and we'll correct them. You're important to us, productivity is important to us, we're working day and night to deal with this. Come and check us out - by our deeds. You're an economic newspaper, a business newspaper, and it's very important to me to tell your audience: we're with you. Our door is open to factories, enterprises, in any area. I, my office, and the entire Ministry of Finance are committed to this."

What exactly are you talking about?

"I met a number of times, in New York, too, with Israeli high-tech people, and I asked them clearly: 'What can I do to bring you to Israel? What do you want?' We heard from them about the barriers, what's bothering them - and we're dealing with that. We appointed an excellent man, Nadav Shemesh, to the position (former Babylon CEO, S.K.-L., A.B.), and that's what he's doing."

"Had I told you a year ago that in 11 months, you could get an apartment in Afula for NIS 700,000, you would have said, 'He forgot to take his pill.'"

Did you think that housing prices would go up 8% in your first year?

"Look, we got here in May. We started moving right and left, passed things. Authority for housing was transferred in August. I can say that I've been pleasantly surprised at the extent of marketing, the number of plans. We're wearing two hats in working on housing: supply - the most important - and to solve the housing problems for young couples. Young couples are now getting apartments for NIS 300,000 less than the regular price, and this is making progress."

When will they start building the first buyer fixed price building?

"Yesterday. They began drilling the foundations of three buildings in Afula yesterday."

It looks like you and Netanyahu are playing cat and mouse. You take a small dig at him, and then go back to working with him "I don't want a two-year budget," you said, "but what can I do? Bibi wants it… "You are also hitting Governor of the Bank of Israel Karnit Flug below the belt, stinging her here and there, making speeches ridiculing her mistaken forecasts. There is a feeling of instability, an absence of a mature and responsible team."

"I don't think that's correct. With the Governor of the Bank of Israel, I presented the facts; I have no hostility. I have a weekly or biweekly meeting with her. The most recent was a day before you came, and the most recent telephone call was a few minutes before you came. Everything is in order. There are arguments, and there will always be arguments. It's foolish to think that the world can be managed without arguments and criticism."

What about the prime minister?

"With the prime minister, it's other issues. We're also politicians. We look ahead, see how to do the best we can, and we have to get along, because each of us depends on the other. It's unavoidable."

The defense budget you signed a much-heralded agreement, and it looks like you pulled a trick on us, or they pulled one on you. We asked where the numbers were, and they told us that they depended on approval from the Accountant General.

"There's a defense budget, the budget numbers are clear, everything works, but there are struggles of reporters in the media."

It is easy to blame "reporters," but there are struggles between the Ministries of Finance and Defense.

"I told you - there aren't any struggles between the Ministries of Finance and Defense. They got everything we promised, down to the last shekel."

You kept your word, but what about what you were supposed to get? You were supposed to get transparency and cost cutting.

"If it's not forthcoming, they won’t get the money (if they do not meet their commitments, S.K.-L., A.B.), but I'm sure they will. There's an agreement here, and I'm confident that they'll meet their transparency and cost-cutting obligations, because it's worth their while."

One last question you constantly tell people that you only want to be Minister of Finance, and after you finish your changes, you'll be satisfied and get out of politics. Do you think anyone believes you?

"I think they ought to believe me."

Don't you want to be Prime Minister? Ever? 20 years from now?

"No, not even if you ask me nicely."

Published by Globes [online], Israel business news - www.globes-online.com - on April 26, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Moshe Kahlon
Moshe Kahlon
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