'Outrage' in Israel after Netanyahu and allies pass controversial budget

Spending plan could provide critics with a 'tangible issue to rally around', analyst says

Israeli Prime Minister Benjamin Netanyahu speaks at a parliamentary session on Tuesday. AFP

Israeli analysts have spoken of "outrage" over the country's divisive two-year budget passed by Prime Minister Benjamin Netanyahu's government on Wednesday.

Political analyst Simon Davies told The National that "outrage from opposition parties is wall-to-wall".

He said the controversial spending plan could provide "critics with another tangible issue to rally around".

The budget had drawn criticism even from within the government's own budget division for increasing funding to schools and seminaries serving the growing ultra-Orthodox Jewish communities, a series of steps it warned would encourage unemployment.

Mr Netanyahu said a "new day dawns" for Israel after mustering the coalition's 64-to-56 majority for a speedy Knesset ratification.

Pollster Dahlia Scheindlin told The National the process of passing the budget was "vintage Netanyahu".

She said Mr Netanyahu conveyed himself as solving a "potential political crisis to the public with all manner of coalition dissent, which was mostly ritualistic".

In the days leading up to voting on the budget, a number of far-right parties threatened to leave the coalition over allocations.

By "magically working it all out for the unanimous vote", Mr Netanyahu tried to "portray himself as the only true leader of the country", she said.

The budget earmarks 484 billion shekels ($131 billion) for this year and 514 billion shekels for the next.

Asked if the judicial reforms were now back on the agenda, Mr Netanyahu said: "Certainly. But we are trying to reach understandings (in the compromise talks). I hope we will succeed in that."

He also pledged to tackle inflation, an economic headache that had been compounded by investor flight and dampened growth prospects linked to the domestic furore over the reforms.

While the budget could buy Mr Netanyahu some quiet inside his coalition of ultra-Orthodox and ultranationalist parties, the most hardline in Israel's history, it was expected to deepen the divisions in Israel.

Critics have accused Mr Netanyahu of increasing spending on his ultra-Orthodox allies for religious programmes that have little benefit for the economy and broader society.

Ms Scheindlin said after the deeply controversial legal overhaul, Wednesday's spending package was "a different look from the sheer chaotic incompetence of the [government's] first five months, but the big test is what happens now – the judicial reform is still festering and there's still no solution".

Economist David Rosenberg told The National a short-term problem is that the budget is "based on overly optimistic forecasts for economic growth and tax revenues".

"The result is a big risk that the budget deficit will become wider than the government is expecting," he added.

"Because these schools do not teach a core curriculum that includes science, maths and English, even ultra-Orthodox men who do want to work will have a difficult time trying to find lucrative employment," he said.

"Israel is a high-tech economy and the demand for unskilled, uneducated labour is very low."

Controversial funds

The budget has been criticised for allocating almost $4bn in discretionary funds, much of it for ultra-Orthodox and pro-settler parties.

There are increases in controversial stipends for ultra-Orthodox men to study full time in religious seminaries instead of working or serving in the military, which is compulsory for most secular males.

The funds also include tens of millions of dollars for hardline pro-settler parties to promote pet projects through the ministries they control.

Israeli Finance Minister Bezalel Smotrich, a settler leader, has said he hopes to double the population of West Bank settlers in the coming years.

Israel's far-right National Security Minister Itamar Ben-Gvir praised the budget's allocation of more than $2 billion, which he said paved the way for a proposal of his to establish a national guard.

Opposition anger

Opposition leader Yair Lapid said the budget makes "no attempt to fight the cost of living – just endless extortion".

On Monday, the Bank of Israel raised interest rates to 4.75 per cent, an increase of 0.25 per cent and the 10th consecutive rise in little more than a year.

Israel's Central Bureau of Statistics has said inflation over the past year stands at 5 per cent.

The government’s composition and agenda have deeply divided the country.

On Tuesday, several thousand flag-waving Israelis protested outside the parliament building against the budget.

It followed months of sustained mass protest against a series of government proposals to overhaul the country's judicial system while Mr Netanyahu is on trial for corruption.

Mr Lapid added that the budget is "a breach of contract with Israel's citizens, which all of us – and our children and children's children – will yet pay for".

But Ms Scheindlin said Israel "saw a fairly limited presence of protesters and I think [the budget] can't compete with the judicial reform as a mobilising factor unifying the opposition".

Proponents say the legal measures are needed to rein in an overzealous Supreme Court, but critics say the plan would destroy the country’s system of checks and balances and compromise Israeli democracy. - Additional reporting by agencies