Israel's lawmakers pass first state budget in 3 years

Unprecedented political gridlock has kept politicians from coming to a cohesive budget in the past

A general view of a plenum session and vote on the state budget at the Knesset (Israeli parliament) in Jerusalem on November 3. AFP

Israel’s government passed a new budget on Friday for the first time in years, overcoming a major hurdle that could have unseated the fragile coalition.

Legislators voted 59 to 56 in favour of the 2022 financial package, after marathon parliamentary sessions that saw hundreds of separate votes.

Failure to pass the budget by November 14 would have prompted the collapse of the government, plunging Israel into its fifth elections in three years.

"We've put Israel back on track," Prime Minister Naftali Bennett said on Twitter.

The vote on next year’s plan followed politicians approving the 2021 budget on Thursday morning, after working apace throughout the night.

The right-wing premier heads the broadest coalition in the country’s history, which for the first time includes an Arab party.

The budget votes were a key test for the coalition, which took office in June and holds the narrowest possible majority in the 120-seat parliament.

“It’s huge for the government, because it provides them with the stability they need,” said Udi Sommer, a political science professor at Tel Aviv University.

Opposition leader Benjamin Netanyahu proved unsuccessful in his efforts to convince legislators to rebel and vote against the budget.

Israel’s longest-serving leader, Mr Netanyahu was ousted from power following inconclusive elections in March. Those polls were sparked by his government’s failure to pass a budget last December.

The country’s recent political turmoil meant leaders have been modelling the nation’s finances on a budget passed in 2018. In addition, they have approved emergency funding to respond to crises such as the coronavirus pandemic.

Zvi Eckstein, head of the Aaron Institute for Economic Policy at Reichman University, noted such an approach has restricted vital investment in the country.

“You are basically limited in initiating long-term and even short-term new programmes,” he said, such as infrastructure projects.

“The government’s ability to have new programmes, they have to relate legally to an emergency aspect,” he added.

Passing next year’s budget paves the way for investment in public transport initiatives, such as a long-awaited metro for the Tel Aviv area.

When the cabinet approved the budget in August, Finance Minister Avigdor Lieberman pledged “economic growth and administrative stability”.

“We have invested vast sums in infrastructures, transportation and real estate and we have passed significant reforms that will lower barriers and reduce the bureaucracy,” he said.

The financial programme also earmarks funds for the Arab community, which makes up 20 per cent of the population and has for decades suffered lower socioeconomic status than the Jewish majority.

Passing the budget could also go beyond new investments, according to Prof Sommer, and help heal the rift between politicians and their weary voters.

“The faith and the trust of Israeli citizens in their system is likely to increase,” he said. “But it’s going to take a while, because building trust takes time.”