Daily Israel Report

Post-War Budget Threatens Coalition

A revamped 2007 budget proposal threatens to wreck the coalition Kadima-Labor government, formed with the promise to fulfill elections vows on social spending.
By Tzvi Ben Gedalyahu
First Publish: 9/4/2006, 12:34 PM / Last Update: 9/4/2006, 12:12 PM

Both Labor and the Pensioners parties are threatening to leave the Kadima-led coalition if the proposed budget is not revised.

Finance Minister Avraham Hirchson has stated that the revised proposal will cut back money for elderly, handicapped and students. Other cutbacks include postponing an increase in the minimum wage, a principle on which party chairman Peretz based a major part of the coalition agreement.

Labor MK Shelly Yechimovitch charged, “Kadima wants us out of the government. There is no other explanation for this plan.” MK Ophir Pines-Paz told Army Radio, "The 2007 budget holds within it the potential for a severe coalition crisis."

The Pensioners party had joined on condition that the budget would include money for retirees. They, too, have threatened to bolt the coalition if the cuts are made at the expense of pensioners.

Sephardic religious party Shas also warned it will not save the coalition if the budget cuts back child support allowances.

Hirchson is to present the budget Monday afternoon. The Labor party is to discuss the budget on Friday, and according to a report on Voice of Israel government radio, Defense Minister and Labor party chairman Amir Peretz may lead a campaign to oppose it.

However, the aftermath of the war against Hizbullah terrorists has left Peretz little choice but to demand billions of dollars more for defense while insisting the money cannot come at the expense of social spending. Peretz accepted the position of Defense Minister after being refused his first choice, the Finance portfolio.

Education Minister Prof. Yuli Tamir, also from Labor, has asked the Finance Minister to cancel planned increases in university tuitions. Students warned Monday they will strike if the budget includes tuition increases.

From Kadima, Interior Minister Ronnie Bar-On said on Sunday that the costs of the war should fall on the rich and poor alike.