Litmus Paper - Dror Israel

15

description

A Call For a Change in the Socio-Economic Paradigm in Israel

Transcript of Litmus Paper - Dror Israel

Page 1: Litmus Paper - Dror Israel
Page 2: Litmus Paper - Dror Israel

2

Presented by

The Dror Israel Movement

Socio-Economic Guidelines

The way to a more just and egalitarian society in Israel is through a change in the fundamental economic paradigm and the implementation of a welfare state

Spring, 2011

Page 3: Litmus Paper - Dror Israel

3

Introduction

“Because politics is the coordination of the ends and the means in society’s affairs, there cannot be

any decisions which are made according to a measure other than the efficacy of the means in

attaining the desired end.”

Mordechai Martin Buber

“Any end can be reached so long as the means is imbued from the start with the spirit of the end.”

Gustav Landauer

For the past forty years, a revolution has been taking place in the direction and

destination of Israeli society. From a society which strove to be just, Israel became a

state which, in practice, enlarges socio-economic gaps, drives wide segments of the

public away from education, housing and healthcare, and deepens the inequality

between the very rich minority, and the poor and very poor majority.

In the process, the middle class has been squeezed while social bonds have loosened to

the point of existential danger to Israel itself.

No politician or public figure would ever admit that the Israeli dream and mission of a

just and egalitarian society are not part of their worldview or the priorities for which

they are fighting. Neither would they admit that in reality, in the political arena,

where means and ends are coordinated, policy which is diametrically opposed to the

egalitarian rhetoric is being implemented.

In order to examine the truth of politicians’ and public leaders’ statements in practice,

one must examine the actions they implement in attempting to fulfill the goals to

which they have publicly committed. Such an examination allows greater clarity about

our public servants who are charged with shaping the socio-economic reality via the

many means at their disposal.

This practice is common among right-wing political parties in Israel. Those politicians

who, at election time, swear allegiance to Eretz Yisrael Hashlemah (The Greater Land

of Israel) are closely watched afterwards by the active part of the public which elected

them to see if they will actually implement in practice the means for fulfillment of the

vision to which they committed. An outstanding example was the test of whether

these politicians actively opposed the “settlement freeze” or allowed it to occur. This

litmus test was not applied out of academic interest, but rather to understand whether

there existed any connection between inflated pre-election promises and their

enactment through all available means (laws, policy, etc.).

The relevant question to coordinate an understanding between means and ends, for

our purposes, is thus: What must be done and how, for Israel to return to its original

intended path of socio-economic justice through the establishment of a true welfare

state?

To fulfill this mission, a number of significant steps must be taken – including

legislation and policy – which will lay the groundwork for a constructive process to

change the socio-economic paradigm and create the actual foundations for the growth

of a welfare state in Israel.

Page 4: Litmus Paper - Dror Israel

4

For example: In order to achieve a true welfare state, there must be a significant

narrowing of economic gaps in Israeli society. The Gini Coefficient, which measures

the level of equality in the economy, is a scientific litmus test for examining the

breadth of these gaps. Thus, the way towards a true welfare state is through reduction

in the Gini Coefficient. Any change – positive or negative – in this coefficient during a

particular Government’s term represents a clear indication of the true platform of our

political representatives. Even so, in order to significantly decrease Israel’s Gini

Coefficient, a full series of measures directed and channeled towards this goal must be

implemented.

The goal of these measures is to gradually affect income distribution. Change in

income distribution will affect the breadth of social gaps and, in the wake of this

change, growing sectors of the public will return to the forum of basic civic dialogue in

Israeli society.

These are integrated processes which are based on the recognition that our elected

public servants are, in practice, responsible for implementing this change. What is

needed are not public declarations, but measurable deeds. We shall measure these

deeds and their effects on the basic economic paradigm.

Our platform is based upon four interconnected and complementary planks. The goal

of these components is simultaneously conceptual and practical: the establishment of a

true welfare state in Israel.

Page 5: Litmus Paper - Dror Israel

5

Overarching Goal

Establishing a Welfare State

Goal: Reducing the Gini Coefficient and Changing Income Distribution in Israel

o Use of the Gini Coefficient to measure the level of equality in the economy

o Target: Reduction of Gini Coefficient and a Change in Income Distribution

o In the first three years a target will be set for the reduction of the present

level of the Gini (measured at 0.39) to a level which was common in Israel

until the 1980s – approximately 0.3.

o In the following two years the level will be reduced further to the level which

is acceptable today in Scandinavia – 0.24.

o The goal will always be a continual reduction in the Gini Coefficient and the

promotion of a more equal society with each passing year.

The Means

Changing economic policy: Fulfilling the social rights of Israeli citizens; developing

national infrastructure; and planning and implementing the budget more

democratically.

Page 6: Litmus Paper - Dror Israel

6

Detailed Platform The detailed platform is based on four planks: Changing Economic Policy Page 7

a. Continuously enlarging the national budget framework through determining a new

counter-cyclical fiscal rule

b. Fair taxation: Remove the comprehensive tax burden on disadvantaged groups and the

middle class; implement progressive taxation

c. Creating continuous sustainable economic growth through pro-growth monetary and

fiscal policy

d. Ending currency speculation for the New Israeli Shekel (NIS)

e. Ending the national policy of privatization in all of its forms; forming a committee to

investigate past privatizations and to determine future guidelines for privatization if not

banning the practice altogether

Fulfilling Israeli Citizens’ Social Rights Page 9 f. Fulfilling Israeli citizens’ right to work and achieving the goal of high full employment

g. Strengthening the status of the worker in Israel, with an emphasis on working women

h. Fulfilling Israeli citizens’ right to education, health care and personal security

i. Fulfilling Israeli citizens’ right to housing

State Infrastructure Page 11 j. Defending Israel's Lands and ceasing their privatization

k. Developing the transportation and communication infrastructure throughout the country,

with an emphasis on the periphery

Democracy Page 12

l. Intensifying parliamentary supervision of the budget planning process

m. Delegating authority to government ministries in budget implementation by

institutionalizing an independent and effective role for a government financial adviser

“Where will the money come from?” Page 13

Page 7: Litmus Paper - Dror Israel

7

1. Changing Economic Policy

Poverty is consciously created by Prime Ministers

Zevulun Orlev (former Welfare Minister from the Bayit HaYehudi Party (National Religious

Party): “Ladies and gentlemen, I have said before and I am saying again: Poverty rates in the

State of Israel are not a plague from above and not a decree of fate. These findings, these

details, are the spoilt fruit of Israeli governments’ policy – I emphasize: Israeli governments –

of the past decades… To my chagrin, an extreme and irresponsible neo-liberal policy has taken

control of Israeli society, and there is a failure of social policy in almost every framework: in

the labor market, in the enforcement of labor laws, in the taxation policy… And I will say

something which I have never said before: this is the intended outcome of the economic policy.

Why do I say that this is an intended outcome which was known in advance? Because all of the

Welfare Ministers, each one during his term… warned, alerted, declared that these would be the

results of the economic policy. We presented a very clear reflection of the difficult results of this

policy, results of enrichment of the rich and on the other hand deepening and widening of

poverty. This is not a coincidence. The results of poverty are not a surprise, they are a

foreknown, clear and intended outcome of neo-liberal policy, which is an ideology.”

From a special debate in the Knesset chamber on the poverty issue,

19 October 2010

A. Continuously enlarging the national budget framework through determining a new counter-cyclical fiscal rule1

Resource growth – an essential tool in financing basic rights and narrowing gaps in

society – will be accomplished by continuous growth in the national budget framework

via the determination of a new counter-cyclical fiscal policy, which is based on the

stimulation of necessary growth through budget deficits (an optimal growth target

will be defined as 8%). Thus if X equals expected growth in the current year, and Y

equals the percentage of deficit in the new budget, the fiscal rule will be: 8 – X = Y (expected income: 20 Billion NIS).

B. Fair taxation: Remove the comprehensive tax burden on disadvantaged groups and the middle class; implement progressive taxation

Comprehensive taxes, which are customary today, are an unacceptable burden on the

disadvantaged and the middle class. A program of fair and progressive taxation must

be implemented which will increase the financing for government programs which

fulfill citizens’ social rights guaranteed by Israel’s Basic Laws, thus narrowing social

gaps. Therefore, it is necessary to:

1. Cancel the income ceiling for Social Security payments (estimated income: 1

billion NIS)

2. Reduce the VAT gradually to 5% (estimated cost: 15 billion NIS)

From the government spending perspective the rule would be: (8%-X)+(x*1.4%) = Z

X equals the expected growth percentage; Z equals the growth of government spending as a percentage of the GDP (and

not of the budget). 8% is the optimal growth rate and 1.4% is the exchange coefficient between growth and tax revenue.

The "Israel 15 vision" document, published by the Reut Institute, shows that Israel needs 25 years of consistent 7%

growth per year to put Israel in its proper position.

The funding needed for this deficit will be raised as an internal debt from pension funds. This will give the State a

trustworthy funding source and will give the funds a solid investment option.

Page 8: Litmus Paper - Dror Israel

8

3. Implement the tax brackets proposed by the Rabinovich Committee and add

an additional taxation bracket of 55% for those whose income exceeds one

million NIS per year (estimated income: 21 – 23 billion NIS)

4. Apply income tax to all types of income including from interest, stock

holdings and dividends (estimated income: 6 billion NIS)

C. Creating continuous sustainable economic growth through pro-growth monetary and fiscal policy

Monetary policy which allows moderate inflation and prevents the revaluation of the

New Israeli Shekel will diminish the danger of unemployment and recession, assist

Israeli industries in exporting overseas, and support growth. Therefore it is critical to

identify engines of growth in the economy and support their development. In order to

do so, it is necessary to:

1. Set a moderate, not overly low inflation target of 3% - 5%2

2. Encourage exports through a slow, but continuous devaluation of the NIS via

the renewed implementation of the "Diagonal Strip"3

D. Ending currency speculation

The Israeli economy is subject to speculative activity on two tracks. First, trade in the

New Israeli Shekel is exposed to manipulation by speculators, raising the currency’s

value in a way which encumbers growth and exports, and is therefore liable to lead to

recession and unemployment. Additionally, speculative activity takes place in the sale

of stocks.

A number of simple means, commonly used in other countries, may prevent

speculative activity:

1. Set a graduated tax on stock sales in inverse proportion to the length of their

holding, i.e. the longer the period for which the stock is held, the lower the tax is

(estimated income: 0.1 billion NIS)

2. Apply a 0.25% tax on all currency activity (“Tobin Tax”)4 (estimated income: 4.4

billion NIS)

E. Ending the national policy of privatization in all of its forms; forming a committee to investigate past privatizations and to determine future guidelines for privatization if not banning the practice altogether

In just a few decades privatization has become a value in itself, as if the transfer of

collective assets to private hands, turning basic social services into merchandise,

“outsourcing” basic government activities and all the rest of the idolatry of

privatization benefit the citizen and society. In reality, the damage wrought by

privatization is immeasurable. This policy must be ceased immediately.

Privatization must be completely halted until a governmental committee to investigate

past acts of privatization is convened. This committee will recommend how, or

whether, to privatize so that natural resources and State responsibilities (enforcement,

planning, and implementation) are not transferred to private hands.

Therefore, it is necessary to:

1. Define the current level of State employment of subcontracted labor as the legal maximum

Page 9: Litmus Paper - Dror Israel

9

2. Convene a public committee to determine how the State can decrease subcontracted

employment

2. Fulfilling Israeli Citizens’ Social Rights

F. Fulfilling Israeli citizens’ right to work and achieving the goal of high full employment

Part of the responsibility of a state to its citizens is creating places of employment, in

order to reach the target of full employment. The social reasons to achieve this aim go

hand in hand with the economic reasons: a society in which people work and provide

for their household, is also a society with a high level of consumer demand which

keeps the economy moving. Therefore, it is necessary to:

1. Establish employment and industry centers in the Israeli periphery (estimated

cost: 1 billion NIS)

2. Create a system of free vocational training frameworks paid for by the

government, along with an increase in unemployment compensation for the first

year of unemployment to 100% of the worker’s previous salary, inspired by the

Flexicurity model used in Denmark5 (estimated cost: 1 billion NIS)

3. Act to integrate populations that are not part of the workforce into the job

market, with an emphasis on Arab women, ultra orthodox Jewish men and the

disabled6

G. Strengthening the status of the worker in Israel, with an emphasis on working women

In Israel, a good framework of laws exists for defending the working public, but this

framework is not enforced or implemented. Strengthening the working class (which

comprises the majority of Israeli citizens) with a particular emphasis on creating

parity between men and women will increase purchasing power, which in turn will

create higher demand in the economy. For this reason the minimum wage must also be

raised and unions strengthened. Similarly, public sector workers must also be

strengthened.

Therefore, it is necessary to:

1. Peg the minimum wage to market productivity increase, so long as it remains at

least 50% of the average market wage (estimated cost: 1.5 billion NIS)7

2. The full government stipend for disabled citizens that is currently distributed to

people determined to be at or above a level of 74% disabled should be fixed to

the minimum wage and should remain at that level. All excess government

stipends should be fixed every 6 months to the greater of the following two:

changes in the average wage or the consumer price index of the fifth decile

having the lowest income (estimated cost: 0.35 billion NIS)8

3. Add 210 inspectors to full-time positions in labor law and effective enforcement

of protective legislation with particular emphasis on laws dealing with

workplace gender equality (estimated cost: 0.02 billion NIS)

4. Double the wages of social workers and teachers (estimated cost: 1.5 billion NIS)

5. Peg the wage of State employees to the increase in economic productivity9

6. Obligate employers, through legislation, to negotiate collective agreements with

any representative organization in which at least one-third of its employees are

members

Page 10: Litmus Paper - Dror Israel

10

7. Convene a public committee that will recommend a program for how to shorten

the work week in Israel to the level accepted in Germany and France without

decreasing wage levels. In addition, the committee will recommend how to

reduce the work week by additional hours, also without decreasing wage levels

H. Fulfilling Israeli citizens’ right to education, health care and personal security

This program is based on the premise that the State is obligated to grant all of its

citizens a number of essential services. When the State fails in this task, citizens are

compelled to purchase these services on the “free” market, resulting in the inability for

the poor to receive these essential services. This is the situation in Israel today. We see

education, health and personal security as essential services of this type, and it is

incumbent on the state to provide them for all.

In each of these fields, comprehensive reform is necessary:

1. Education – Legislate free childcare from the age of three months; implement a

longer school day and decrease the average number of students per class to the

standard level for OECD countries (21.4 students per class) (estimated cost for

the first year: 4 billion NIS. Total cost: 16 billion NIS)

2. Health Care – Increase hospital beds to the standard level for OECD countries

(5.6 beds per 1000 people); purchase suitable technology, including MRI

machines, at a level of 11 machines per one million people and distribute them

throughout the country in proportion to the size of population; increase the

number of doctors to 3.8 per one thousand people as is standard in comparably-

sized Western countries. (estimated cost: 6 billion NIS)

3. Personal Security – Increase police officers to the standard level for OECD

countries (3.25 per 1000 people); increase firefighters (640 per one million

people) and fire trucks (5.5 per 100,000 people) (estimated cost: 1 billion NIS)

I. Fulfilling Israeli citizens’ right to housing

The increase in housing prices is one of the most grievous burdens on the shoulders of

the middle class and the poor. The establishment of a welfare state includes fulfilling

the rights of Israel’s citizens to housing, whether through ownership or rental.

Therefore initiation, planning, development, and marketing of housing units in the

Negev and Galilee regions must be implemented; public building projects must be

carried out; “evacuation-building” development must take place in the center of the

country; and the rights of public housing residents and those entitled to such housing

must be defended. The target is to build 30,000 housing units per year on Israel Lands

(estimated cost: 4 billion NIS)

Page 11: Litmus Paper - Dror Israel

11

3. State Infrastructure

J. Defending Israel's Lands and ceasing their privatization

Israel Lands are property of the public and comprise the single most important resource at the

public’s disposal: a priceless resource of great social, economic, national and historical significance.

Therefore the plan to transfer Israel Lands to private hands, including all of the building reserves in

Israel, must be halted. Similarly, agriculture in Israel must be strengthened in order to protect public

lands.

K. Developing the transportation and communication infrastructure throughout the country, with an emphasis on the periphery

The State must reinforce its presence throughout the Galilee and the Negev in

educational frameworks, health, personal security, and employment, and link all these

components to the center of the country. In this manner the Israeli concept of

“periphery” will be eliminated in both its social and geographical meanings. Such

action necessitates the creation of suitable infrastructure beyond the other initiatives

mentioned in this plan including:

1. Pave additional roads and lay additional railway tracks (estimated cost: 30

billion NIS over the course of ten years)

2. Develop public transportation in the periphery to connect them to the center

and further develop public transit within the metropolitan areas (estimated

cost: 2.5 billion NIS)

3. Upgrade the home and business connectivity infrastructure throughout the

country (estimated cost: 0.5 billion NIS)

4. Correct the National Earthquake Preparedness Plan (known in Hebrew as

TAMA 38) to publicly finance earthquake reinforcement for buildings in the

Negev and Galilee (Cost estimate unavailable at this stage)

5. Connect all Israeli towns and villages to a suitable sewage treatment system

(Cost estimate unavailable at this stage)

Page 12: Litmus Paper - Dror Israel

12

4. Democracy

L. Intensifying parliamentary supervision of the budget planning process10

Israel has recently switched to a system of two-year State budgets. This has weakened

parliamentary supervision of the budget planning process, causing the dampening of

public debate on budgetary matters, thus weakening Israel as a democracy. Therefore

the legal mechanism of “time limitation” which enables the authorization of two-year

budgets must be cancelled, and the use of the Economic Arrangements Law must

cease.

M. Delegating authority to government ministries in budget implementation, by institutionalizing an independent and effective role for the Government Financial Adviser11

Research shows that the Israeli Finance Ministry is among the most centralized in the

Western world: it has total control over the expenditures of government ministries.

This is one of the reasons for the fact that over the past few years government

ministries have time after time ended the year with budget surpluses which were then

used for paying off deficits instead of being used for their intended purpose. A renewed

balance between government ministries and the Knesset, as the supervisor of

government activities, is expected to bring a more correct and complete

implementation of the budget.

The following actions must be taken:

1. When money is being transferred from one budget category to another, the

Finance Ministry’s approval will be required, but the Ministry must justify any

denial. When money is being transferred from one line item to another the

Finance Ministry’s approval will not be required

2. A Financial Advisor to the Prime Minister of independent status will be

appointed, whose recommendations will be binding (similar to the Attorney

General) and who will have at their disposal the authority and ability to conduct

planning, inspection and evaluation of the economy of Israel (in contrast to the

situation today in which the economy is managed by a small homogenous group

of Finance Ministry clerks who conduct their work in total seclusion)

Page 13: Litmus Paper - Dror Israel

13

“Where will the money come from?”

One of the first questions that arise when calling for these measures to create a more just society in

Israel is, “Where will the money come from?” This question originates in the belief, carefully

cultivated by economists and politicians, which maintains that there is a shortage of money in Israel.

The implementation statistics for the State budget, as published by the government, show time after

time that there are surpluses and not shortfalls.

In the year 2010 alone, tax revenue was 12 billion NIS higher than planned and this is not the first

time it has happened. In fact, in the past ten years State tax revenue has been continuously higher

than planned. In the past five years these surpluses have totaled 27 billion NIS. In addition,

government ministries have not spent their full budget, primarily because of limitations imposed by

the Finance Ministry. In the past five years, the State coffers accumulated approximately 57 billion

NIS which were allocated to different ministries and were, ultimately, not used.12

The platform we are proposing here is not based only on the use of existing funds, which are

already in the State budget and not being used, but also on enlarging the framework of the State

budget either by setting a growth target or setting a deficit target. A sovereign state has tools to do

so, and there is no reason to fear the possibility of a credit rating reduction, higher debt-production

ratio or other ghosts which economists from the Finance Ministry and Bank of Israel invoke.

So is there enough money? Let’s see if it would have been possible to implement the suggested plan

in 2011.

Page 14: Litmus Paper - Dror Israel

14

Cost of implementing measures to create a more just and equal society (estimated in billions of NIS): Lowering VAT to 5%13 15

Protecting Israel's lands 0

Ending privatization processes 0

Establishing and supporting centers of employment

and industry in the periphery14 1

Establishing professional training frameworks;

Flexicurity (Danish-style) unemployment payments15 1

Raising the government stipend for disabled citizens for the severely disabled

(who are unable to work)16 0.35

Investing in education: Applying a mandatory education law from age three

months, longer school day and building classrooms17 4

Investment in health: Increasing number of hospital beds, medical equipment

and doctors18 6

Investment in personal security: Increasing Number of police officers,

firefighters and equipment19 1

Supporting dispersed population in the Negev and Galilee by improving

transportation and communication infrastructure20 3

Raising the minimum wage21 1.5

Doubling the number of labor law inspectors22 0.02

Achievable realization of housing rights23 4

Doubling the wage of education workers and social workers24 1.5

Democratization of budget preparation and implementation

process through strengthening parliamentary supervision25 0.1

Total 38.47

Additional funding sources manifested in the 2011 budget plan (estimated in billions of NIS): Continual growth of the budget framework 20

Applying 2010 tax brackets 6-8

Applying income tax graduation according to

Rabinovich Commission recommendations26 15

Applying income tax to real income from interest, stocks and dividends 6

Cancellation of income ceiling on National Insurance tax payment 1

Ending speculative activity on the NIS (“Tobin Tax”) 4.4

Applying a graduated tax to stock sales 0.1

Total 52.5

As seen here, the suggested plan creates significantly expanded sources of funding

towards carrying out the suggested measures. The claim that “there’s no money, cuts

must be made” no longer stands as an axiom which cannot be changed or affected.

Page 15: Litmus Paper - Dror Israel

15

1 The need for a counter-cyclical economic policy is demonstrated clearly in the works of J.M. Keynes, Abba Lerner,

Joan Robinson and others. Another counter-cyclical policy proposal was made in 2008 by Ptachya Bar-Shavit in

Financial Immunities to raise Israel's deficit to 7%. See:

http://www.immunities.co.il/_Uploads/dbsAttachedFiles/112%281%29.pdf 2 Frederic Mishkin, former member of the Board of Governors of the U.S. Federal Reserve, recommends setting an

inflation target higher than 2% in his 2007 article: Does Inflation Targeting Make a Difference? published by the

Chilean Central Bank. Furthermore, IMF Chief Economist Olivier Blanchard has recommended setting the US inflation

target to 4%. A similar proposal was made by the San Francisco Federal Reserve Bank's President John Williams. See:

http://online.wsj.com/article/SB10001424052748704511304575075902205876696.html 3 The "Diagonal Strip" is a system that was implemented in Israel in the 1990s based on a "band" in which the NIS is

allowed to fluctuate; the band is determined by the difference in inflation rates between Israel and its major export

markets. Ptachya Bar-Shavit writes extensively on this subject. For example, see this article from 2010:

http://www.immunities.co.il/_Uploads/dbsAttachedFiles/33%281%29.PDF

Or see:

http://www.ynet.co.il/articles/1,7340,L-1450708,00.html 4 Nobel Prize winner James Tobin suggested this in a lecture at Princeton University in 1972 following the collapse of

the Bretton Woods accords, which regulated currency relations until then. 5 A similar change was suggested by the Reut Institute under the section "Security for the Employee"

6 A detailed proposal can be read in the Reut Institute's Israel 15 Vision.

7 The proposal to peg the wage to market productivity was made by Esther Alexander in her book The Power of

Equality in the Economy and by Abba Lerner in Economics of Employment, chapter 14. 8 The state is obligated to ensure the proper living standard of those who can not work. This stipend rate should fulfill

this obligation. 9 The proposal to peg the wage to market productivity was made by Esther Alexander in her book The Power of

Equality in the Economy and by Abba Lerner in Economics of Employment, chapter 14. 10

Thorough research into the Israeli budgeting process by Momi Dahan and Avi Ben Bassat. 11

Thorough research into the Israeli budgeting process by Momi Dahan and Avi Ben Bassat. 12

The data for the years 2005-2010 on the State's deficit and its funding was taken from the Israel Accountant General’s

website on 19.07.2010. 13

Immediate reduction would cost 60 billion NIS; we suggest a gradual reduction over four years. 14

Based on pricing in the proposal for government decision presented by the Industry, Trade and Labor Ministry. See:

http://www.tamas.gov.il/NR/exeres/3FABC258-B628-48B6-A41A-A3693AD76D54.htm 15

Calculated in relation to unemployment benefits paid out by the National Insurance Institute. 16

The proposed amount is a maximum amount, since the office of Social Security does not publish numbers of

"severely disabled". The calculation is based on all current stipend receivers (210,737 people) and not just on the

severely disabled. Therefore it is safe to assume that the actual amount would be much lower. 17

The cost of a mandatory early childhood education law is estimated at some 2.5 billion NIS (Yuval Vergen,

Information and Research Center of the Knesset – 01.07.2009). Execution will take place over four years and therefore

the cost in the first year will be 600 million NIS. The cost of moving to a longer school day is also 2.5 billion NIS

spread over four years, so in the first year the cost will be 600 million NIS (Lior Dettel, The Marker, 13.12.2010). The

cost of reducing classroom size is estimated at about 12 billion NIS (Or Kashti, Ha’aretz 19.11.2007), based on

Education Ministry figures. All of this together, spread over four years, reaches a total cost of 4 billion NIS per year. 18

Cost of hospital beds from the State Comptroller’s Office Report 2009. Cost of MRI machines from Yair Ettinger in

Ha’aretz, 21.06.2006. Cost of doctor training from Amnon Ated, The Medic, 03.07.2007. 19

Figures for police wages from the 2010 Police Budget on the Israel Police website. Figures on firefighting from Yael

Guterman, Globes 30.12.2010. 20

Plan of 30 billion NIS spread over ten years (plan calculated relative to the cost of the Connect Israel transport

infrastructure plan). 21

Finance Ministry announcement, Haim Beor and Motti Basok, The Marker, 03.01.11. 22

Shai Niv, Globes, 09.06.2010. 23

Comparable sum to the state subsidy for 10,000 housing units per year, where the average cost of purchasing an

apartment decreases by 49 monthly salaries. 24

Based on salary figures from the Education Ministry and Welfare Ministry spread over ten years. 25

Despite referring to a process which should increase efficiency and which may have no cost, in order to be

conservative we budgeted this estimated cost for establishing a small new government wing and transferring the

budgeting wing to the Prime Minister’s Office. 26

Execution timeline will be parallel to the decrease in VAT.