The story of Israel’s most recent finance minister is a depressing one, where a politician pursued popularity instead of doing what was needed.
By Nehemia Shtrasler, HAARETZ
Finance Minister Yair Lapid as the treasury presented its 2015 draft budget, September 28, 2014.Photo by Emil Salman
The Finance Ministry’s farewell ceremony for MK Yair Lapid was interesting. The head of Yesh Atid outlined an impressive plan to bring down the cost of living, a plan with everything: “Reducing tariffs, doing away with quotas, reforming imports, increasing competition, dismantling of economic concentration…”
Lapid claimed the plan was “multiphased” and that it would have been set out soon, but when Prime Minister Benjamin Netanyahu pushed up the election, everything went down the drain, so we will not be able to enjoy its sweet fruits.
Does he think we are idiots? The plan he presented is exactly the same as the one he himself scrapped as worthless throughout his entire term as finance minister. It is precisely the plan that the treasury’s budgets department tried to get him to pursue time after time, both in the 2013—2014 budget and the 2015 budget — and he adamantly refused. This writer also tried to talk to him, heart to heart, about lowering tariffs, doing away with quotas, dealing with the agricultural production boards, and introducing competition to the large monopolies. But he preferred to listen to his special adviser, Uri Shani, and shy away from conflict. No wonder, then, that the price of food skyrocketed and the price of housing is only rising.
Lapid’s term can be divided into two parts. In the first he found himself in a deep budgetary pit and did the right things: He slashed 17 billion shekels (about $4.3 billion), and raised taxes by 14 billion shekels. That move pulled the economy out of crisis, and for that he deserves credit. But his voters hated the move and came complaining: You promised us a rose garden but gave us only thorns and thistles.
And so he decided to change direction and turn into “Yair 2”: good to everyone, handing out goodies, increasing spending, the Israeli Santa Claus — a man everyone would love. But his “I have it” policy led to bad results — a large deficit for 2015, a lowering of Israel’s credit rating and a decline in the growth rate.
In his pursuance of public adulation, Lapid also decided not to implement any reforms that required him to face off against powerful entities — except for the important reform that sees the ultra-Orthodox joining the labor market, sharing the military burden and studying the core curriculum. He also decreased the size of government, brought down the salaries of the financial leaders and abolished political appointments in government companies.
But he did not bring managerial flexibility to the civil service, did not deal with budgetary pensions, nor did he touch the spiraling pension problem in the Israel Defense Forces. He refused to cancel VAT exemption on fruit and vegetables. He did not reform the Israel Electric Corporation, …read more