To project political stability, Prime Minister Benjamin Netanyahu on Tuesday thanked coalition partners for jointly passing the 2023-2024 state budget, hours before the first part of the package went through the last two votes in the Knesset.
Lawmakers passed the 2023 budget by a vote of 64 to 55, following the lead of the coalition on Wednesday just before 2 a.m. A 2024 budget and accompanying bill that will provide for the use of the funds are also expected to be passed before the final hammer.
The budget approvals give the Netanyahu government 18 months before it has to pass another budget or face snap elections. This clears the coalition’s biggest political hurdle since the Knesset returned from recess on April 30.
“I think our ability to do this rests on the cooperation between friends,” Netanyahu stressed in his remarks at the parliament building, calling his fellow coalition partners by name after days of bickering over the budget.
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“This government will exist every four years,” he added in a comment addressed to opposition politicians.
Members of the Knesset began voting on elements of the budget late Tuesday, despite an opposition filibuster dragging the process for hours into Wednesday morning.
The votes cap months of infighting within the hard-line government that have exposed fault lines within the Netanyahu coalition, with sections of three parties publicly withdrawing their support for the budget unless additional appropriations are made. Two of the three items were settled on Monday, ensuring the majority needed to pass the budget in the last two votes, days ahead of the May 29 deadline.
Finance Minister Bezalel Smotrich (L) and Shas Party leader Aryeh Deri attend a Knesset press conference before voting on the 2023-2024 state budget on May 23, 2023. (Yonatan Sindel/Flash90)
Accompanied by coalition leaders, Netanyahu said the two-year trillion shekels ($270 billion) plan will positively “surprise” the public, while criticizing it for channeling funds to sectoral interests but not doing enough to meet rising demand Combat Israel’s cost of living.
“We are fighting on all fronts. “We are actively involved in the fight against the cost of living,” said the Prime Minister in a speech together with his coalition partners.
Finance Minister Bezalel Smotrich reiterated that message, saying the budget will “bring stability and certainty to the economy,” but without commenting on warnings from credit agencies and the drop in tax revenues amid government efforts to reform the judiciary. Smotrich also pledged to fight the cost of living.
The comments sparked a backlash from opposition leader Yair Lapid, who reiterated criticism that the budget was geared towards political interests but lacked measures to deal with rising prices.
“This government is terrible for the economy. It said it would lower the cost of living, in this household there is no relation to the cost of living. “There is no reform to lower the cost of living,” Lapid said.
Lapid also criticized the state budget as “ruthless” and the portrayal of the next generation as “poorer than their parents”.
“This budget is reckless, it is a disaster for the Israeli economy and society, and it violates the social contract with the State of Israel that we, our children and grandchildren will pay for,” he accused.
The opposition leader has regularly attacked the government’s allocation of NIS 13.7 billion ($3.7 billion) in discretionary funds, most of which serve sectoral interests. This includes generous budgets to finance religious scholars and schools, whose studies often do not enable them to be successful in their professional lives.
Opposition leader Yair Lapid holds a press conference on the state budget in Tel Aviv, May 16, 2023. (Tomer Neuberg/Flash90)
“Think about what could have been done with that money instead of condemning an entire generation to poverty. What they are doing now says that not only will Haredi children be doomed to poverty, but our children will too. This will be the first generation in Israel’s history where children will be poorer than their parents,” Lapid said.
“They will not be able to make a living, someone will have to support them,” added party leader Yesh Atid, who has long criticized ultra-Orthodox supporters’ lower participation in the workforce and in the military.
As the Knesset began voting on the budget, thousands of protesters gathered in Jerusalem, waving Israeli flags and calling out against the government’s “looting” of the state coffers. Protesters also criticized the budget, which channeled billions in grants to the ultra-Orthodox community while allowing men in that community to avoid employment and military service.
Demonstrators march towards the Knesset in Jerusalem to protest against the state budget. May 23, 2023. (Yonatan Sindel/Flash90)
The budget provides at least NIS 5.9 billion ($1.6 billion) in discretionary funding to fulfill political promises to ultra-Orthodox parties, including grants for yeshivah students, unregulated religious schools that don’t teach core subjects like math and science , and funding a food stamp program that is not labor-tied and has been criticized for being tailored to disproportionately benefit the ultra-Orthodox community.
Netanyahu and Smotrich on Monday agreed to fund expanded scholarships for yeshiva students of up to NIS 250 million ($68 million), using excess funds from ultra-Orthodox schools. That deal, which crushed the uprising by a subgroup of ultra-Orthodox politicians, also included authorization to retrospectively pay yeshivah students a stipend as if the funding applied from early 2023.
Haredi Jews attend the Lag b’Omer celebrations in Meron on May 8, 2023. (David Cohen/Flash90)
On Tuesday, the Treasury Department’s legal adviser threw a spanner in the works on the latter plan, saying the funds are expected to come from surpluses and therefore cannot be allocated until October.
The finance minister’s legal adviser, Asi Messing, wrote in a statement that the government had failed to obtain the necessary legal opinions and that any future distribution “is subject to the obtaining of those opinions as a precondition for the actual allocation of the funds”.
During the Knesset session, Messing was the subject of a brief display of inter-coalition tensions when Likud MP David Amsallem called him a “professional saboteur” from the podium. Smotrich protested the insult to an officer who was unable to respond, and easily fought Amsallem over the microphone for several seconds.
Netanyahu secured the final votes needed to pass the state budget by making a promise similar to the one he made to Smotrich of the far-right Otzma Yehudit party on Monday night. Otzma Yehudit also protested unless she received the same funding for her main priorities, particularly more money for a party-led ministry supporting development in the Negev and Galilee regions.
Netanyahu and Smotrich resolved both issues without opening the budget’s NIS998 billion ($270 billion) limit, which would have risked prolonging the process as it would have required a return to Knesset committees, to approve the changes.
While glossing over internal pressures, Smotrich said the budget has withstood “enormous pressure from interested parties, irresponsible strikes and media campaigns” but the government “has not capitulated”.
Specifically, he pointed to the government’s controversial plan to shift part of municipal taxes from more economically active cities to less commercial cities. This so-called Arnona Fund launched multi-day strikes in negatively affected communities, including Tel Aviv and Haifa.
“We have proven in the budget that we will not capitulate and will not capitulate,” said the finance minister, who was sitting next to Netanyahu.