Government bill · 18th Knesset · published as law 3 June 2010
חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Law on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010 · automatic translation · suggest a correction
Status: התקבלה בקריאה שלישית
Topics: State budget* · * from the Knesset's official law classification
What the sponsors propose
The Bill seeks to amend Section 6a of the Deficit Reduction and Budgetary Expenditure Limitation Law, so that the existing limitation on the rate of growth in government expenditure, which stood at 1.7% per year, will apply only to the budget years 2007 through 2010, and from 2011 onward a new limitation will be set: the rate of growth in government expenditure will not exceed the ratio of 60% to the debt-to-GDP ratio, multiplied by the average growth rates of gross domestic product over the previous ten years. According to the sponsors, the change is intended to preserve simplicity, certainty and transparency, and to continue reducing public debt relative to GDP, in light of the global economic crisis that erupted in 2008 and damaged the credibility of fiscal policy, as well as to maintain economic stability, address geopolitical risks and population aging, and free up budgetary resources for other needs.
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Hebrew original
הצעת החוק מבקשת לתקן את סעיף 6א לחוק הפחתת הגירעון והגבלת ההוצאה התקציבית, כך שהמגבלה הקיימת על קצב הגידול בהוצאה הממשלתית, שעמדה על 1.7% בשנה, תחול רק על שנות התקציב 2007 עד 2010, ומשנת 2011 ואילך תיקבע מגבלה חדשה: שיעור הגידול בהוצאה הממשלתית לא יעלה על היחס שבין 60% ליחס חוב-תוצר, מוכפל בממוצע שיעורי הצמיחה של התוצר המקומי הגולמי בעשר השנים האחרונות. לדברי המציעים, השינוי נועד לשמור על פשטות, ודאות ושקיפות, ולהמשיך את הפחתת החוב הציבורי ביחס לתוצר, לנוכח המשבר הכלכלי העולמי שפרץ ב-2008 ופגע באמינות המדיניות הפיסקלית, וכן לשמור על יציבות המשק, להתמודד עם הסיכונים הגיאו-פוליטיים ועם הזדקנות האוכלוסייה, ולפנות מקורות תקציביים לצרכים אחרים.
An automatic summary of the explanatory notes written by the bill's sponsors. These are their arguments, not an official Knesset summary. · The bill on the Knesset website
Readings
- 17 March 2010 · First reading · להעביר את הצעת החוק לוועדההצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010autoBill passed first reading52 for · 25 against
- 25 May 2010 · Third reading · אישור החוקהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010autoLaw passed51 for · 31 against
What was said in the plenum
The bill replaces the fixed fiscal rule (an annual expenditure growth of 1.7%) with a flexible formula that ties the government expenditure ceiling to the debt-to-GDP ratio and to the average growth rate over the last decade, so that in the coming years expenditure will be able to grow by approximately 2.6% instead of 1.7%, without exceeding the deficit target set in law. The debate, which included an opposition filibuster, focused mainly on whether increasing the deficit and expenditure is sound policy in the absence of a halt to tax cuts, and on the connection between this bill and the transition to a biennial budget that was raised in the same debate.
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Hebrew original
הצעת החוק מחליפה את הכלל הפיסקלי הקבוע (גידול הוצאה שנתי של 1.7%) בנוסחה גמישה הקושרת את תקרת ההוצאה הממשלתית ליחס החוב–תוצר ולממוצע הצמיחה בעשור האחרון, כך שבשנים הקרובות ההוצאה תוכל לגדול בכ-2.6% במקום 1.7%, מבלי לחרוג מיעד הגירעון הקבוע בחוק. הדיון, שכלל פיליבסטר של האופוזיציה, נסב בעיקר על השאלה אם הגדלת הגירעון וההוצאה היא מדיניות נכונה בהיעדר הפסקת הפחתות המסים, ועל הקשר בין הצעה זו לבין המעבר לתקציב דו-שנתי שהובא באותו דיון.
Arguments for
- The new fiscal rule, which ties expenditure to growth and to the debt-to-GDP ratio, is a flexible and innovative rule that replaces an arbitrary formula and enables improvement of public services without risking the continued reduction of the national debt.Yuval Steinitz (Likud), Moshe Gafni (United Torah Judaism)
- The responsible fiscal policy that led to the reduction of the debt-to-GDP ratio and to restrained expenditure is what saved Israel from the global economic crisis and brought it to a leading position in international ratings, and therefore it should not be recklessly endangered.
- Professional and international bodies such as the Bank of Israel and the International Monetary Fund also support the new fiscal rule and view it as a proper step and the first of its kind in the world.
- The very fact that the discussion of the fiscal rules was brought to the Knesset plenum, rather than being left as a technical appendix within the Budget Law as was done in the past, should be welcomed.Moshe Gafni (United Torah Judaism)
Arguments against
- There is no justification for increasing the deficit and expenditure while the government simultaneously reduces taxes, mainly for the wealthy and corporations, by billions of shekels; the tax cuts should be stopped and the money used for social needs instead of increasing the debt.
- The shift to a new rule and to a biennial budget reflects an unexplained ideological zigzag by the government, which for years fiercely defended the old restriction and is now abandoning it without explaining why specifically now, raising suspicion that its real purpose is to buy coalition quiet and paper over political cracks ahead of the end of the term.Chaim Oron (Meretz), Yoel Hasson (Kadima)
- The increase in the deficit and expenditure is not directed toward reducing social gaps or addressing weak populations, the middle class, the Arab sector, or the periphery, but mainly serves to continue a policy that increases poverty and gaps and benefits wealthy individuals.Shlomo (Neguse) Molla (Kadima), Meir Sheetrit (Kadima), Majallie Whbee (Kadima), Dov Khenin (Hadash), Amir Peretz (Labor), Orit Zuaretz (Kadima), Jamal Zahalka (Balad), Hanna Swaid (Hadash)
- A biennial budget (presented together with the law) harms the government's ability to make fine-tuning adjustments to changing economic data, and even the OECD itself recommends against a permanent shift to a biennial budget.Meir Sheetrit (Kadima), Orit Zuaretz (Kadima), Otniel Schneller (Kadima), Nachman Shai (Kadima), Yaakov (Katzeleh) Katz (National Union), Hanna Swaid (Hadash)
- The new formula, based on the debt-to-GDP ratio and growth, is not sufficiently transparent and lacks an agreed mechanism for a situation in which the deficit increases in the future, which could lead to cuts in social spending or to continued tax cuts without real oversight by the Knesset.Moshe Gafni (United Torah Judaism), Hanna Swaid (Hadash)
Who spoke (32)
| Member | Faction | Readings | Speeches | In the final vote |
|---|---|---|---|---|
| Yuval Steinitz | Likud coalition | First reading, Third reading | 17 | for |
| Chaim Oron | Meretz opposition | First reading, Third reading | 15 | against |
| Shlomo (Neguse) Molla | Kadima opposition | First reading, Third reading | 29 | against |
| Meir Sheetrit | Kadima opposition | First reading, Third reading | 20 | against |
| Ruhama Avraham Balila | Kadima opposition | First reading | 1 | against |
| Yohanan Plesner | Kadima opposition | First reading, Third reading | 37 | against |
| Majallie Whbee | Kadima opposition | First reading | 3 | against |
| Dov Khenin | Hadash opposition | First reading, Third reading | 8 | against |
| Amir Peretz | Labor coalition | First reading | 4 | no record |
| Orit Zuaretz | Kadima opposition | First reading, Third reading | 13 | against |
| Otniel Schneller | Kadima opposition | First reading | 1 | against |
| Nachman Shai | Kadima opposition | First reading, Third reading | 13 | against |
| Yitzhak Cohen | Shas coalition | First reading | 5 | for |
| Avishay Braverman | Labor coalition | First reading | 1 | for |
| Moshe Gafni | United Torah Judaism coalition | Third reading | 21 | for |
| Ronnie Bar-On | Kadima opposition | Third reading | 7 | against |
| Mohammad Barakeh | Hadash opposition | Third reading | 1 | against |
| Ahmad Tibi | Ra'am–Ta'al opposition | Third reading | 18 | against |
| Yaakov (Katzeleh) Katz | National Union opposition | Third reading | 11 | no record |
| Jamal Zahalka | Balad opposition | Third reading | 14 | against |
| Silvan Shalom | Likud coalition | Third reading | 1 | no record |
| Shalom Simhon | Labor coalition | Third reading | 2 | no record |
| Hanna Swaid | Hadash opposition | Third reading | 15 | no record |
| Ilan Gilon | Meretz opposition | Third reading | 6 | against |
| Uri Yehuda Ariel | National Union opposition | Third reading | 17 | no record |
| Tzipi Livni | Kadima opposition | Third reading | 1 | against |
| Arieh Eldad | National Union opposition | Third reading | 3 | no record |
| Afou Agbaria | Hadash opposition | Third reading | 7 | no record |
| Michael Ben Ari | National Union opposition | Third reading | 12 | against |
| Michael Eitan | Likud coalition | Third reading | 4 | for |
| Uzi Landau | Yisrael Beytenu coalition | Third reading | 15 | for |
| Yoel Hasson | Kadima opposition | Third reading | 22 | against |
An automatic summary of the plenum transcripts: the debate on the bill at every reading it was voted on. Arguments are given as the speakers made them; this is not an assessment. The list of speakers comes from the transcript, without a model. A very long debate: every speech was shortened to the same length before summarising. Transcripts of the sittings: 1, 2
Reservations, sections and other votes (8)
In order. Votes on reservations and individual sections are shown separately from the vote on the bill as a whole.
- 25 May 2010 · Second reading · שם החוקהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto49 for · 28 againstVote on sections of the bill
- 25 May 2010 · Second reading · הסתייגותהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto28 for · 49 againstVote on a reservation (amendment)
- 25 May 2010 · Second reading · הסתייגותהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto9 for · 71 againstVote on a reservation (amendment)
- 25 May 2010 · Second reading · הסתייגותהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto26 for · 49 againstVote on a reservation (amendment)
- 25 May 2010 · Second reading · הסתייגותהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto31 for · 50 againstVote on a reservation (amendment)
- 25 May 2010 · Second reading · הסתייגותהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto15 for · 64 againstVote on a reservation (amendment)
- 25 May 2010 · Second reading · הסתייגותהצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto9 for · 70 againstVote on a reservation (amendment)
- 25 May 2010 · Second reading · קריאה שנייההצעת חוק הפחתת הגירעון והגבלת ההוצאה התקציבית (תיקון מס' 11), התש"ע-2010Bill on Deficit Reduction and Limitation of Budget Expenditure (Amendment No. 11), 2010auto48 for · 32 againstVote on sections of the bill