Labor party chairman Amir Perez leaves no one in any doubt as to what his positions are. “I support a free market and competition. I oppose increases in taxation on jobs, capital gains and small business. I am in favor of substantially increasing the budget for the Chief Scientist, for the purpose of supporting and promoting technology incubators and young people with new ideas and initiatives.”
”Globes:” “Please go on.”
Perez “I am in favor of improving the ability of young couples to buy their own homes by recognizing mortgage repayments as a tax deduction. I support initiatives to encourage builders to build rental properties and think we should work with the contractors in the same fashion as we did regarding the construction of Highway 6. The state will make up the differential between the estimated construction needs and the rate of apartment rentals in practice and will be a guarantor to the builders, in the event that they cannot rent the properties they built.”
What about inheritance tax?
”We originally supported the levying of inheritance tax but later we decided to abandon the idea. Unfortunately we found ourselves subject to scaremongering tactics so we changed our position. They said we would charge tax on estates of NIS 100,000 and people panicked. When we weighed the damage against the expected revenue from inheritance tax according to our estimates, we concluded that the panic was out of proportion.”
They say that you turn down contributions.
”Anyone who wishes to contribute must make a commitment to support my agenda. I am not willing to accept donations from someone whose economic outlook is different to mine.”
Do donors change the color of their money?
”They certainly do. There is no getting away from the fact that the commitment to the donor is far more substantial than anyone could conceive. There always comes the time when your donors will try to influence your positions. If a donor tells me he wants to make a contribution just because he feels like it, or if I see that the size of a contribution is incompatible with the name behind it, I will want to know first what that donor’s opinions are.”
You have focused on one socio-economic issue: poverty
”I am dealing with a cultural concept called poverty. This concept is perceived as giving bread to the poor but for me it is much broader than that. In a modern state, poverty is not just bread, it is also education, employment, housing, culture and also solidarity. Instances of a society in the throes of disintegration also worry the wealthy and the more power sectors of the population.”
Have you met with such people?
”Sure. I’ve met them at home meetings and at big money events. They are willing to give of themselves if it means the country will no longer have to witness scenes like these.”
Will they make a donation or place the right slip in the ballot box?
”I believe that their support will also find its way to the ballot box. The attempt to paint the middle and upper wealthy classes as remote is artificial and is a state of affairs that could never happen here. In the final event, the sons of daughters of people from all backgrounds meet in the IDF and serve together.”
The middle class lives on a salary and feels threatened by someone like you who will promote monopolies, strengthen workers committees and inflate the public and civil service sector, all of which will cost money.
”I am the greatest reformer in this country; I am the one who actually carried out reforms rather than just talking about them. I was the one who, in defiance of the workers’ preferences, pushed through the most radical of reforms: switching the public sector from unfunded to funded pension schemes. I stopped the hemorrhaging of a massive actuarial deficit that been accrued in unfunded pension schemes. Nobody dared try before me. I was a full partner in the reform of the telecommunications market. I signed the first agreement for reform in this market back in 1992 together Yitzhak Rabin, Shulamit Aloni and Avraham (Beige) Shochat. We started it then and it has continued just as we expected it would.”
How many strikes were there on the way?
”The strikes only happened because the framework agreements we signed were violated. When examining strikes, you need to look at who they serve. The strikes harmed me the most.”
You?
”Yes, because it harmed me and my position and popularity. Certain groups displayed antagonism towards me without reason. What we need to look at here is who profited the most from the strikes, who strengthened his public standing? In this case it was Minister of Finance Benjamin Netanyahu.”
I oppose the privatization of infrastructure
What about the Israel Electric Corporation (IEC), structural reform, profit centers and companies?
”I think that people should listen to what I am proposing. My ideas are more creative, more acceptable and do not run contrary to any kind of reform. Additional private franchisees should be allowed into the electricity generating market, but nothing should be privatized at the IEC, not even power generation. As long as Israel is under a state of siege and we do not have an access to backup power source, IEC must not be transferred to private ownership. There is a need for cost efficiency measures but that is another issue.”
How many surplus workers do you think there are at the IEC, because of the monopoly and the political power and protection you give the company?
”I don’t think there any surplus workers there. IEC is one of the world’s most efficient and advanced companies, with one of the world’s lowest generating costs.”
What about privatization?
”I oppose the privatization of infrastructure, social services and hospitals. Introducing competition between hospitals will simply wind up with hospitals trying to outperform one another in cutting down on drugs for patients.”
And what about competition?
I am in favor of competition in all areas of the economy, everywhere and in every sector. Anyone who wants to is welcome to join. A rather odd thing happens in Israel when it comes to public companies that go private. While they’re still under state ownership, all their faults are held up for public scrutiny. Yet as soon as they transfer to private ownership, everything is fine. It is most odd. When we have a case of system failure in terms of inadequate perception, methodology and regulation, they try to blame the failings on the company and the workers. Look at what’s happening in the defense industries and how they’re being choked to the point where they are on their knees, begging to be privatized.”
IMI workers are exceptionally industrious
Israel Aircraft Industries Ltd. (IAI) received a cash injection while the cost of keeping Israel Military Industries Ltd. (IMI) afloat has already run into billions.
”So what? Is this not a service to the country? We must not hand over our defense industries to private ownership.”
And what about a company that can’t survive?
”Why shouldn’t it survive? And if it can’t survive why would a private employer want to buy it?”
Perhaps he might make it more efficient.
”IMI is the most efficient industry in the economy with salary tiers that are low compared to any other military industry in the world. It has the best team of workers you could wish for, all exceptionally industrious. There is only one problem: From the moment privatization was in the cards, the state, as the owner, blocked any further development, new product lines, and entry into new fields, in the belief that the private owners will do all that once they take over.”
The private owner will do all that as well as carry the cost whether it is a success or a failure.
”Really! Will a private employer take over a government company without being guaranteed of a pool full of cream? Take the case of Israel Discount Bank (TASE: DSCT). Several months before it was sold, it was alleged that the bank had collapsed and was worth nothing. These claims were premeditated. Eventually someone came along, bought the bank at a knockdown price and made a profit. As it happens, we supported the privatization of Discount since it was a privately owned enterprise by tradition. The workers also didn’t want to continue under government ownership; they said it choked them. I suggested giving the bank to the workers. Let them buy it and manage it. The Ministry of Finance would have none of it. It’s a matter of perspective. They want to dispose, by devious methods, of all the country’s assets right down to the last item.”
Wherever I go, I find there’s debt
Isn’t the public sector too inflated and too costly?
”The smear campaign against the public sector has caused considerable damage. Even in the private sector you have the odd clerk that come in late and doesn’t do a great deal. I don’t think the public sector is too costly. While we don’t need to add more people to the workforce, we do need to improve its quality and protect it, and develop a proper civil service. You can’t achieve this when the rates of pay are inadequate.”
When the Histadrut (General Federation of Labor in Israel) was in dire financial straits, you also fired workers.
”I decided that the Histadrut would not receive government assistance and that it would have to survive on its own. The measures I took were done in consultation with the workers’ representatives. The agreements we reached, including severance pay and pension benefits, were the best in the economy.”
Where did you find the money? The Histadrut owes a fortune.
”When I took over the organization it had debts of NIS 3 billion. Today, the debts to the banks have been settled. There isn’t a single shekel in the budget that’s not backed up by appropriate reserves. Our current balance went from a deficit of NIS 570 million to a surplus of NIS 120 million. We launched a membership recruitment drive and now have 700,000 members.”
Supposing you are in the government. Will taxes be lowered? And what about VAT?
”There will be no tax increases. As for VAT, I will aim to bring it down to 13% within four years. It can be done. The more we lower VAT, the greater the benefit to the weaker sectors of the population. You won’t get that by lowering income tax.
What about old age pensions?
”What we need to ask is whether we see this as part of our value system or just an act of mercy. I am in favor of raising old age pensions for everyone. This is a value in its own right, and anyone with additional substantial sources of income can pay income tax. The same applies to child allowances. It should be paid to everyone, regardless of their financial means and income, which are matters that can be settled by the income tax authorities.”
Education for the unemployed
Your economic program is based on revenue from growth of 5%. Have you set any priorities in the event that there is lower growth and less money?
”Education comes first. Education will be free, from the age of one up to academic study at Bachelor degree level. Second on the agenda is independence for workers. We will raise the minimum wage to $1,000 and reduce the use of employment agencies. Third on our list is rights for pensioners. We will increase the health service basket, raise old age pensions and introduce legislation guaranteeing a pension for all.
When you say a pension for all, do you refer to every citizen or every working citizen?
”Every citizen.”
You have talked about your national project. Could you tell us what it is?
”A national project for rehabilitating our human infrastructure. By this I am referring to the unemployed, who will all have a chance to study, instead of the Wisconsin program (also known as welfare-to-work), which should be scrapped.”
What will happen to the unemployed when they finish studying?
”They won’t have to stop studying. As long as he has to live on income support ,a person should be able to continue studying as part of the community. I want to put an end to the culture where people sit around and stagnate at home. A person must become part of a framework and once he is, this will generate the desire to find work and stay employed. People are accustomed to working. I take exception to the approach that claims that people want to get money without doing anything for it.”
Don’t you know of such people?
”What if I do? Is it their fault?”
Aren’t people supposed to take responsibility for themselves?
”People are responsible for themselves but the state must give them opportunities. That is its job. I want to change attitudes towards people. I will tell them that I believe in them and am not out to get them. I want to make them partners in a positive and beneficial experience, so that they will make their own contribution to Israel’s creativity. I have no doubt that this will change the country.”
Published by Globes [online], Israel business news - www.globes.co.il - on March 23, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006