Budget is Presented to Cabinet, Launching a Debate on Priorities

Sparring over national priorities began in earnest this week as the Israeli government’s 1993 budget proposal came under fire from within the coalition.

Presenting the 97.6 billion shekel ($41 billion) budget to the Cabinet on Sunday, Finance Minister Avraham Shohat praised it as a good plan that reflects “the new national order of priorities.”

Shohat, who came to the Cabinet meeting from a stay at the Hadassah-Hebrew University Medical Center at Ein Kerem for treatment of a leg infection, said the budget is aimed at fostering economic growth and long-term job expansion.

Proposing an overall drop of some $4 billion from the current year, the budget slashes $375 million from several ministries, particularly funds used to build housing in the administered territories. The savings are channeled to investments in infrastructure and education.

Proposed cuts in funds for religious institutions as well as a shift in allocations from the territories into Israel proper prompted a threat by Interior Minister Arye Deri of the fervently Orthodox Shas party to quit the government.

The draft budget chops $20.8 million in grants to yeshivot, $6.3 million from the religious councils as well as $16.7 million from allocations to the Jewish Agency Settlement Department.

The new budget foresees an unemployment rate of 10.7 percent, only a slight drop from the current rate of 11.1 percent. This prompted criticism even from members of Prime Minister Yitzhak Rabin’s Labor Party.

Shimon Shetreet, minister of economic planning, said the budget fails to respond to the plight of the lower strata of Israeli society. He called for more funds to fight unemployment and improve social welfare.

Similarly, Police Minister Moshe Shahal said the budget “stammers” and does not meet real needs.

Ministers of Labor’s left-wing coalition partner, the Meretz bloc, had threatened to vote against the budget. But they sounded less combative after a meeting with Rabin, who, they said, assured them the budget would answer a number of “social needs.”

But Energy Minister Amnon Rubinstein of Meretz said a major stumbling bloc remains in the form of government ownership of 42,000 housing units, a legacy of the pledge by the former Likud government to purchase apartments that had not been sold in the free market.

“This number should be reduced, either by halting the building of those flats or selling them at reduced prices,” said Rubinstein.

Knesset member Ran Cohen of Meretz, deputy minister of housing, urged a $2 billion cut in allocations for building in the territories and abolition of reductions in the employers tax, to create resources for reducing the rate of employment to below 10 percent.

Bank of Israel Governor Jacob Frenkel criticized the draft budget for falling short in investment in infrastructure to ensure economic growth and reduction in unemployment over the longer term.

He urged cuts in defense and housing. The draft budget cuts housing allocations to about $3 billion, the level at which it stood before the wave of aliyah began in late 1989. The defense budget was cut by $83 million.

The Cabinet was scheduled to meet Tuesday to approve the new budget after a bargaining process between the ministries. Once approved, it goes to the Knesset, where it is likely to undergo a lengthy process of discussion before becoming a binding document.