In Israel, big changes are planned; they happen. To be exact, people exploit opportunities to make change without thorough debate. This time it is the proposal to what the Ministry of Finance, in classic understatement, calls a "two-year budget."
The government submitted its first two-year budget last year, following the elections because of the little time left in the 2009 fiscal year. The government saw that it was good, and the ad hoc is becoming permanent. The significance of the move, in simple English, is to reduce Knesset and public oversight of fiscal policy and to enable the finance minister to evade awkward explanations about his policy management.
Why has the proposal come up at all? Allegedly, it is a recommendation by the OECD, according to the government. In truth, the proposal is being made because it is convenient for the administration, and it is convenient for Prime Minister Benjamin Netanyahu and Minister of Finance Yuval Steinitz.
The administration sees how much easier life is when MKs do not really know what is going on in the budget, and how nice it is when there is no need to explain various budget items once a year, and how wonderful it is when officials do not have to mention what the government will do in various parts of the economy.
The proposal to increase government spending by 2.6%, instead of the legally mandated 1.7% per year, is a good example to what is liable to happen in the absence of public oversight on the government's actions. On the face of it, there are good reasons to increase government spending by more than the current level. There is a need to expand government services for citizens, improving infrastructures, and giving the government greater flexibility for its activity.
The question is: Who will pay for the higher expenditure? Do Netanyahu and Steinitz intend to continue cutting taxes for Israel's richest people? What will happen if the budget deficit grows more than expected?
A public response to these questions should occur during discussions on the government's priorities - in other words, during the debate on the state budget. This is the function of public debate on the annual budget. It is an inconvenient ritual; it is flawed and a bit nauseating, but it is a key tool for the country's citizens to get an idea about the government's priorities and policies.
The administration has no choice but to agree to bring all these questions up for discussion by the end of the present year, but it will easy to pass a budget in the middle of the government's term. Steinitz and his pals will be able to spend the second half of the government's term on pleasantries, without the need to answer hard questions.
Steinitz will also save himself the need to make decisions in 2011 which would require a thorough understanding of complex economic issues.
Finally, Netanyahu will be able to glide through 2011 with political quiet. He will be able to sign coalition agreements, cut taxes, and hand out goodies. Only the friendly and harmless Knesset Finance Committee will stand in his way. There will be no need to read documents submitted as part of the budget bill, no need for detailed discussions. If he could, Netanyahu would also abolish submitting a two-year budget presentation.
Published by Globes [online], Israel business news - www.globes-online.com - on March 2, 2010
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