The Knesset Finance Committee had a stormy session today over the disclosure that spending limits in the 2006 budget have been exceeded by 4%.
As first reported by “Globes” online, senior Ministry of Finance officials revealed the breach during a meeting with Labor Party Finance Committee representatives last night. The officials wanted to persuade the representatives to support an across-the-board NIS 2 billion budget cut to finance part of the costs of the war in the north.
Finance Committee chairman MK Yakov Litzman (United Torah Judaism) was the first to criticize the budget breach, saying, “The Ministry of Finance has broken the law.” He was referring to Foundations of the Budget Law (5745-1985), which would have to be amended in this case.
Litzman said he would not put the budget cut to a vote in the committee today, either, nor did he set a new date for a vote. He is waiting for Minister of Finance Abraham Hirchson’s response to his invitation on Friday to explain the reasons and purposes of the budget cut to the committee. No vote on the budget cut will be held before Wednesday.
A Kadima Party source told “Globes” that Hirchson has so far avoided pressuring Litzman to hold a vote on the budget cut, in the wake of the revelations about the breach in the budget framework, which requires Hirchson to first correct the legal problem.
Ministry of Finance budget director Kobi Haber rebuffed the Finance Committee’s claims about an illegal breach in the budget framework. He told “Globes” that the cabinet had not raised the 3% of GDP deficit target, or the 1% increase in government spending target. “However, ministries’ actual budget performance in 2006 will be higher than the multi-year average,” he said.
Haber said that, were it not for the war, ministries’ actual budget performance would have been 98-99%, but that because of the war it would rise by 2-3% to 101%.
Haber said, “This is proper budgetary activity. Before the government does anything else, such as breaching the budget framework, it must fully utilize the available budget. Most of the increase in the actual budget performance will be in the defense budget, because of the war, but the budget performance by the Ministries of the Interior and Education will also be proportionally higher. This is unrelated to the Foundations of the Budget Law; on the contrary, this is the proper use of tools available to the government.”
He added, “It’s a pity that the figures are being distorted to win headlines. Every private business, before increasing its budget, would exploit its internal resources by diverting or using available reserves.”
When asked why Ministry of Finance officials did not attend today’s Finance Committee meeting, Haber replied, “Committee chairman Litzman notified me last night that the meeting would be held on Tuesday, not Monday.”
Published by Globes [online], Israel business news - www.globes.co.il - on August 28, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006