Minister of Finance Yuval Steinitz today warned that unless the hike in the water tariffs was implemented, a NIS 1 billion across-the-board budget cut would be necessary. He told the Knesset State Control Committee that without a water tariff hike, he would be forced to choose between two alternatives:
- An across-the-board budget cut, or
- Delaying water projects, including construction of desalination plants.
Steinitz said that the second alternative was liable to cause Israel's water situation to deteriorate to the conditions on Cyprus. "Raising the price of water isn't easy, but it's essential for fixing the water economy so we don’t end up like Cyprus, where taps are dry."
During the meeting, an altercation broke out between Steinitz and State Comptroller Micha Lindenstrauss, who accused the government of ignoring his recommendation to freeze the water rate hike. Lindenstrauss said, "This isn't how matters should be run, either legally or in terms of proper administration. Even before the ink is dry of the State Comptroller's Report, which the State Control Committee adopts, we're told here that the government is ignoring these decisions."
Steinitz replied, "It's very important to maintain the difference between criticism and policy-making. Policies are always set on the basis of an overall perspective of all the measures and considerations, whereas legal and administrative criticism should be capable of dealing with specific points in a specific way. Setting policy is the responsibility of the government."
Water Authority director general Uri Shani says that the water tariffs should be raised. He told "Globes" today, "We need every one of the NIS 2 billion to finance the new water system, which includes the pipelines and desalination plants. The rate hike is also needed to deal with cost of desalination, which supplies more expensive water than what we've been used to until now. If it is possible to spread the remaining installments of the rate hike through the state budget, we won't object."
Shani added that it was important to distinguish between the short and long-term aspects of the water tariff hike. "In the long term, we think that the higher price of water must be reflected in the tariff, otherwise water will be wasted and its cost won't be covered. In the very short term, since the rate hike is so high, it is proper to alleviate it through the state."
Sources believe that Shani will quit if the government decided not to continue the water tariff hikes already decided on while not allocating alternative budgets to cover the NIS 320 million that the upcoming July rate hike will raise.
Published by Globes [online], Israel business news - www.globes-online.com - on January 5, 2010
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