After 3 Years of Deadlock, Israel’s Cabinet Finally Approves a State Budget

Draft bill, including jump in health spending, most reforms, will survive parliamentary scrutiny, says expert

On Sunday, following tense discussions that stretched into the night, Israel’s cabinet unanimously approved a draft state budget for 2021-2022, more than three years after the previous version.

The budget still must pass three readings in the Knesset by a November 4 deadline, or else the government automatically falls and early elections are held.

The Knesset last approved a budget back in March 2018. Since then, despite the challenges created by COVID-19, the political instability that has plagued the country has meant government offices have had to operate based on pro-rated monthly budgets, based on the last one ratified, with funding packages – or “nonbudget boxes” – for special cases.

Now, the new government is moving forward with a budget that promises to bring forth a slew of reforms, including much-needed additional funding for Israel’s chronically underfunded health system. According to the country’s Central Bureau of Statistics, Israel spent 7.3% of gross domestic product on health in 2019, almost 20% less than the average expenditure in OECD countries of 8.8%.

Looking at the budget … for 2021, I am sad to say that I don’t think that it corresponds to the system’s needs. I think that the policymakers failed to reach the correct conclusions from the coronavirus crisis, with which the health system coped very well. For the system to handle a future crisis successfully, it must be preserved and strengthened, and not only in times of difficulty but during peaceful periods

“The health system suffers from insufficiency in much of its resources,” Prof. Gabi Bin Nun, from the Health Systems Management Department at Ben-Gurion University of the Negev, told The Media Line.

The professor pointed especially to hospital beds, doctors and nurses. This shortage “happens because Israel’s public investment in the health system is low compared to the Western world,” Bin Nun said.

The draft budget allocates an additional NIS 2 billion ($620 million) to the Health Ministry, in a compromise reached with Health Minister and Meretz party head Nitzan Horowitz, who had demanded an increase of NIS 5 billion. The added funds are to be directed, among other things, toward improving mental health facilities, shortening interns’ shifts and increasing the number of doctors and nurses in hospitals.

Bin Nun, however, said that “looking at the budget … for 2021, I am sad to say that I don’t think that it corresponds to the system’s needs. I think that the policymakers failed to reach the correct conclusions from the coronavirus crisis, with which the health system coped very well. For the system to handle a future crisis successfully, it must be preserved and strengthened, and not only in times of difficulty but during peaceful periods.

“It’s a step in the right direction” but it isn’t enough, the professor continued. Approximately NIS 5 billion would have been enough to address the issues afflicting the system, he estimates.

Other reforms approved on Sunday include a diverse set of controversial and long-postponed changes. Notable is one demanded by Finance Minister and Yisrael Beitenu party leader Avigdor Liberman that will immediately reduce import tariffs on eggs and some produce, and gradually reduce them on most others over five years, to reduce the cost of living in Israel, while providing some compensation to farmers.

Israeli farmers have expressed adamant opposition to the move, holding demonstrations throughout the country.

A second reform will raise the retirement age for women from the current 62 to 63 by 2024, and from 63 to 65 by 2032. This has also faced criticism, including from Merav Michaeli, transportation minister and head of the Labor party. The retirement age for men will remain unchanged at 67.

In addition, the income supplement for pensioners will rise to 70% of the minimum wage, in another change demanded by Liberman.

An especially loud cry was heard from the opposition in response to the plan to allow private bodies, under supervision by the Chief Rabbinate, to provide businesses with kashrut certificates.

Businesses – restaurants for example – pay for a supervisor to inspect the products they use and the methods of preparations, to guarantee that they are kosher in accordance with Jewish dietary law, and provide them with a certificate to that effect. At present, the Rabbinate enjoys a monopoly on providing this service, and its conduct has drawn criticism from many parts of Israeli society.

The budget bill also looks to improve regulations on the business sector, in an effort to lower barriers and enable financial growth.

The budget will pass; I am convinced of it

With a long list of reforms that were avoided and postponed for a later date by governments with a stronger base in parliament, it is unclear whether Prime Minister Naftali Bennett’s coalition will survive the battle to pass the bill in the Knesset’s plenum. Yet Prof. Moshe Hellinger, from the Department of Political Studies at Bar-Ilan University near Tel Aviv, told The Media Line, “The budget will pass; I am convinced of it.

“The government has issues when it comes to matters of ideology,” he explained, referring to the fact that the coalition and its government are composed of left- and right-wing parties, as well as the Islamist United Arab List. However, “when it comes to matters that do not touch on these topics” − the Israeli-Palestinian conflict, for example − “the government has more power to advance changes.

“Not everything” that appears in the draft budget “will make it, but a large part of it will,” Hellinger said.