The Ministry of Finance plans for 2004 include breaking the monopolies of the Tnuva food marketing cooperative and the Mekorot National Water Company, tighter restrictions on early retirement and deep cuts in early retirement benefits, and setting up a special police unit to handle fraud and abuse involving National Insurance Institute allowances.
Minister of Finance Benjamin Netanyahu and budget director Uri Yogev today presented the second stage in the economic recovery program the transition to growth to the cabinet. Ministry of Finance senior officials are preparing for difficult struggles against the Histadrut (General Federation of Labor in Israel) and the workers’ organizations, since determined and forceful action against monopolies and strong economic entities is planned.
For the first time, clear budget and economic policy targets have been set for the next four years: a better standard of living for all of Israel’s citizens by giving top priority to encouragement of growth, helping economically disadvantaged sections of the population, streamlining the public service, and defending consumers by breaking and weakening the large monopolies.
Structural reforms will be used to shrink the public sector, and make the business and manufacturing sectors more competitive. Among other things, the Ministry of Finance is proposing to split the Ports Authority into a number of competing companies, split up and sell Oil Refineries, and privatize the Standards Institution of Israel and the Israel Postal Authority.
The public sector will be reduced by closing units, and by laying off 1,500 workers. The Ministry of Finance is also proposing to close down the Public Works Department (PWD), and Israel Educational Television, and consolidate districts, initially Haifa and the northern district.
Dramatic action will be taken on the pension age and on unfunded pensions, in order to cut costs. Among other things, the preferred civil service retirement ranks will be eliminated, early retirement will be restricted, and tax exemptions for those taking early retirement will be eliminated.
In order to strengthen economically disadvantaged populations, and provide incentives to work, allowances will be further reduced, and taxes on foreign workers increased. The Wisconsin plan for eliminating welfare will be put into operation next year for the first time, requiring those receiving unemployment compensation to appear at Israel National Employment Service (INES) offices five days a week. The tax on employment of foreign workers will be gradually raised to 40% of wages. The tax will be raised to 20% on January 1, 2004.
Also planned is a cut in the quota of legal foreign workers in construction and agriculture, and harsher punishments for those employing illegal foreign workers, including lengthy prison terms.
The Ministry of Finance plans to protect consumers by breaking monopolies. Two key measures are proposed: eliminating Tnuva’s monopoly, and subjecting it to the authority of the Antitrust Authority director general. A new law will be proposed for the water economy to weaken Mekorot’s monopoly. Mekorot will be completely forbidden to compete with the private sector in fields such as water desalination and treatment of wastewater.
A large computerization project for government services is planned which will make it possible to obtain information from, and make payments to, government ministries through the Internet.
Published by Globes [online] - www.globes.co.il - on September 8, 2003