“I didn’t come here to appease anyone. My responsibility is to do what is right for Israel’s economy,” declared
Finance Minister Avigdor Liberman
at the beginning of a briefing for journalists in Jerusalem. “I am not
expecting to be popular, but I am prepared to do what is necessary. The
most important thing is to make the treasury normal again, after
two-and-a-half years without stability.”
“My dream would be to maintain 5% economic growth for the next four years,” Liberman added.
Liberman
discussed the treasury’s plans for the upcoming years, as well as the
many controversies and surprises that have already come up during his
first 30 days in office. And there have been many.
Liberman enflamed the ultra-Orthodox community last week when he
revoked child care subsidies
for fathers studying full-time in yeshiva, saying that both parents
must now work or study in a non-religious educational institute for at
least 24 hours a week in order to receive the benefit.
“I
heard them calling me a Cossack,” Liberman said. “But I didn’t reinvent
the wheel. Netanyahu did something similar in 2003 as finance minister
and Yair Lapid did so in 2012, and both times, it boosted ultra-Orthodox
participation in the labor market.”
“My
intention is not to harm them, it’s to help them,” he continued. “Shas
and United Torah Judaism (UTJ) are the ones harming haredim by ensuring
that they will always be dependent on handouts and interest-free loans.
Their biggest opposition is to teaching the core curriculum to be taught
in schools, depriving students of an education so they’ll have a
captive audience during elections. My goal is to pull the haredi
community out of poverty so people can earn a living honorably.”
Liberman
emphasized his goal of increasing economic growth without raising taxes
by making structural changes to improve efficiency. A plan presented
last week to significantly reduce excess bureaucracy in government
offices should add an extra NIS 8 billion to state coffers each year for
the next five years, he said, citing OECD economists.
Two
units within the Finance Ministry have already been closed because they
were redundant, with similar tasks being filled in other ministries, he
noted.
Regarding
Israel’s housing crisis, Liberman attributed high real estate prices to
two main factors: the lack of housing available, and the glut of cheap
money available for buyers due to record-low interest rates. While real
estate prices rose an average of 5.6% in the past year, Israelis took a
record-high NIS 11.6b. mortgages in June.
“The
housing market is not in a bubble,” Liberman said. “People have saved
money and they have no other viable investment channels, so they are
putting it into apartments.”
In
order to restore balance to the real estate market, Israel needs to
build 75,000 new units a year, Liberman said, instead of the
approximately 50,000 a year that has been added since 2016. Liberman
added that he is totally on board with Interior Minister Ayelet Shaked’s
plan to introduce an updated version of the
Tama 38 urban renewal plan by November.
That
being said, the Finance Ministry has no target price level or forecast
for the housing sector. “Our goal is only to restore the balance between
supply and demand,” said Finance Ministry Director-General Ram
Belinkov. “Any attempt to lower prices artificially would not be a
serious response.”
LIBERMAN
stressed that his most immediate goal is to have a budget approved in
November for 2021 and 2022. An initial budget will be presented to the
cabinet as early as August, and there will be time for initial readings
and discussions.
“We
won’t have time to solve all of Israel’s problems in the next four
months, and some things will have to wait,” he noted. “Since we have
such a short time, we are trying to focus on the things where there is
most agreement.”
While
some in the opposition have indicated that they would try to use the
budget to bring down the coalition, Liberman said he was unconcerned.
“Even in the opposition, most people do not want to go back to the
polls. The most wrong thing would be to drag in a fifth election,” he
said.
Israel
finished 2020 with a budget deficit of 11.6%, after a 4.2% deficit
before the pandemic, and the deficit currently stands at 10.1%, Belinkov
noted. It is not unrealistic to expect that Israel will cut the deficit
to 7.1% by year’s end, he added.
Regarding
the cost of living, Liberman visited a nearby supermarket before the
briefing to check on prices. “How much did avocado cost? There was no
avocado in the supermarket. Peaches were NIS 21 a kilo. There will need
to be changes in this sphere, but we won’t be able to address them in
the upcoming budget.”
Asked
how a clause in the Economic Arrangements Law that would raise
residential property taxes is consistent with his promise not to raise
taxes, Liberman responded that such property taxes go to local
authorities, not the treasury, and therefore are not considered taxes.
Another
item that came out of the Economic Arrangements Law was the proposal
for a traffic congestion charge for drivers in the Tel Aviv area. Asked
about Transportation Minister Merav Michaeli’s opposition to the bill,
he backtracked: “ I’ll honor whatever the transportation authority
decides on this.”
Another
clause of the law would gradually raise the retirement age for women
from 62 to 65 by 2032. “Life expectancy is now 84 years, compared to 66
years several decades ago,” Liberman commented.
Regarding
Israel’s hi-tech sector, “every shekel that Israel invests in
innovation returns five shekels,” the finance minister said. “It is the
engine of Israel’s economy. I don’t want to think about where Israel’s
economy would be without it.”
