Following a long meeting that ran through the night, Prime Minister Binyamin Netanyahu succeeded in passing in his cabinet the 2013-14 state budget by a wide margin early Tuesday morning, as he was set to leave for a one-day visit to Moscow.
The budget was approved with 21 voting in favor and just one against.
"The approval of the 2013-2014 budget is the first step in changing the order of things in Israel," said Finance Minister Yair Lapid. He added that soon the bill to equalize the burden of national service would be brought before the government for approval and a national program will be launched to bring down the housing prices.
It was decided to impose a 2 percent reduction across the board on this year's budget, and 3% on next year's, excluding the Defense Ministry and the Welfare and Social Services Ministry.
The ministers wrangled with Treasury officials on behalf of their ministries all night until the vote. Following its passage, the budget will have to be passed by next month in the Knesset, where opposition legislators have vowed to change it dramatically.
“Given the State of Israel’s national needs and the global economic crisis, it is important for... Israel to show that it is passing a budget,” Netanyahu said at the start of the cabinet meeting.
“We will do this today, and by the end of today, the State of Israel will have a budget.”
In his response to unsuccessful no-confidence motions in the Knesset plenum, Lapid’s deputy Mickey Levy deflected blame for the austerity measures in the plan. He said that he had woken up in a cold sweat worried about the national debt but that he and and Lapid had not caused it.
“We are on the job for two months,” Levy said. “We never guaranteed that there would be a miracle. We have no magic wand. What did you expect? That the largest deficit we ever had would disappear? That all the economy’s problems would be solved with populist statements?” Netanyahu intervened twice in the budget on Monday – first in the morning to decrease the Defense Ministry’s spending cut from NIS 4 billion to NIS 3b.
He plans to spend an extra billion shekels without otherwise affecting the budget by dipping into the reserves, using the discretionary funds for defense needs such as additional Iron Dome antimissile batteries.
Late at night, he also stepped in to prevent foreign tourists from losing their exemption and being saddled with 18 percent VAT on their purchases in Israel.
Tourism Minister Uzi Landau praised the move as a "responsible decision- not not only for the 200,000 people working in the tourism industry, but for the tourism industry and economy as a whole."
"I fought because because this fight is justified," he stressed. "Because I wasn't ready to accept a situation in which thousands of employees would have to go home; because I wholeheartedly believe in the power of tourism as an engine for the country's economic growth, and because it is our responsibility, as the government, to understand the long-term implications."
Before Netanyahu intervened, Landau had joined a demonstration of tourism industry workers. Taking the megaphone from the protesters, he warned that Israel would lose much more from the lost revenue from tourists who cancel their visits than it would gain via the tax.
The only minister to vote against the budget was Environmental Protection Minister Amir Peretz (Hatnua), who lamented that he had no power to restore cuts that hurt his ministry and the weakest sectors because his party won only six seats in January’s election. He said the public should blame itself for voting for Lapid’s Yesh Atid party.
A Panels poll taken for the Knesset Channel found that if an election were held today, Likud Beytenu would fall from 31 seats to 26 and Yesh Atid from 19 to 16. The main beneficiaries of those parties going down would be Labor, which would rise from 15 seats to 20 and Meretz, which would climb from six seats to eight.
As wrangling over the budget continued, several ministers throughout the day announced budgetary victories.
Economy and Trade Minister Naftali Bennett announced that the budget of the Chief Scientist’s Office in his ministry would remain untouched at NIS 1.3b. Proposed cuts had led to an emergency meeting of Israeli hi-tech companies on Sunday that were worried about the cut’s effects on research and development.
“A cut for start-ups was a cut in the growth hopes of the Israeli economy as a whole, and I could not agree to that,” said Bennett.
“This is the only way to get the nation out of deficit,” he continued. “Even if we are forced to cut back in the present, we cannot hurt the future.”
Justice Minister Tzipi Livni announced on Facebook that she and the Finance Ministry had agreed not to close three magistrate’s courts in the periphery (in Beit She’an, Afula and Nahariya) until further studies could be done to determine the social implications.
“If I find after the investigation that closing these courts will hurt the service and access to justice for the periphery’s residents, I will not allow it and will work to increase efficiency elsewhere,” Livni wrote.
Shas leader Arye Deri persuaded Lapid late on Monday night to cancel budget cuts in the haredi school system.
Despite Deri's apparent statements confirming the cancellation of cuts to the haredi education network, Lapid on Tuesday morning said it was not true though cuts would be postponed for six months, until a state network for haredi education was established.
All the faction chairmen and party leaders in the opposition met together on Monday to strategize. They vowed to “give Lapid hell” in marathon budget deliberations in the Knesset plenum.
“In the history of Israeli politics, there has never been such an absurd gap between what is said before and what is implemented after elections,” opposition leader Shelly Yacimovich said. “With this betrayal of the voters, a new nadir has been reached. The people of Israel were simply misled by Yair Lapid.”
Deri went further, calling upon Likud Beytenu and Yesh Atid voters to file a class-action lawsuit against the parties for defrauding them.
“It is a budget of cowards who don’t want to make decisions and are fleeing from leadership at a difficult time,” Deri said. “They fled from confrontations with the powerful people.
They made big headlines, but in the end we are left with nothing.”