Israeli judicial reform will return after passing of budget, Netanyahu says

The judicial reform will make its return now that the national 2023-2024 budget has passed, Prime Minister Benjamin Netanyahu said on Wednesday morning to reporters after exiting the Knesset plenum.

"This is the dawn of a new day. A good day for Israel's citizens. The judicial reform will return, and the coalition will be here for four years," the prime minister said.

Opposition leader and Yesh Atid chairman, MK Yair Lapid, responded, "The coup d'etat will not pass because we are done being Netanyahu's pushovers. We were not surprised by his words because we have no trust in him. The president must demand from Netanyahu an immediate, public and clear clarification of his dangerous comment," Lapid said.

 National Unity chairman MK Benny Gantz responded soon after, "I understand that Netanyahu is once again drunk on power, after passing a budget that will blow up in all of our faces. I remind Netanyahu that stupidity is to repeat the same actions and expect different outcomes. If the coup d'etat returns to the table – we will rock the country and stop it," Gantz said.

Later on Wednesday, Netanyahu said in a video statement that the government would continue its attempts to arrive at as broad an agreement as possible.

"I believe that with goodwill and real desire, agreements are possible that will serve all of the citizens of Israel," the prime minister said.

The national budget for 2023-2024 passed its second and third readings in the Knesset early on Wednesday morning, after an overnight voting session on the approximately 530 sections of the budget itself and reservations filed by the opposition. The final vote with 64 votes in support and 56 votes in opposition.

The 2023 national budget is NIS 484 billion, and the 2024 budget is NIS 514 billion.

Voting began at 9:30 p.m. on Tuesday night and ended at approximately 6:30 a.m. on Wednesday morning. The voting came after a marathon Knesset plenum debate that began on Monday morning at 9:00 a.m. and lasted all day Monday and throughout the day on Tuesday.

Just before the voting began on Tuesday evening, the marathon debate concluded with speeches by Finance Minister Bezalel Smotrich, Prime Minister Benjamin Netanyahu, opposition leader MK Yair Lapid and Knesset Finance Committee chairman MK Moshe Gafni.

The prime minister and opposition leader depicted two starkly different pictures of the budget.

Netanyahu praised the budget. He argued that its very passing spoke to the stability of his coalition, which he said would live out its four full years. He accused the opposition of hypocrisy, arguing that the opposition criticized him for not passing a budget between 2018-2021, but now that a budget was passing, all they could do was "cry and whine".

The prime minister listed as some of the budget's achievements higher subsidies for daycare centers; a sharp increase in the National Security Ministry budget that will enable the Israel Police to expand significantly; increased funding for academic degrees for discharged IDF soldiers; a NIS seven billion increase in the Health Ministry budget during 2023-2024; and more.

Netanyahu also addressed criticism over the unprecedented NIS 13.6 billion in coalition funding included in the budget, which includes approximately NIS 3.7 billion for private or semi-private haredi (ultra-orthodox) schools and religious academies (yeshivot) that do not teach core secular subjects, as well as other programs such as food coupons and municipal tax cuts that disincentivize haredi men from joining the workforce.

According to the prime minister, 20 years ago, as finance minister, he initiated drastic and difficult cuts in government subsidies for haredi families. However, that decision was made when the subsidies made up approximately 1.15% of the nation's GDP. Today, the subsidies reach 0.3%, and therefore the long-term implications of incentivizing haredi men not to work are not as damaging as they were in the past.

Yair Lapid: Netanyahu is disconnected from reality

Opposition leader Lapid spoke after Netanyahu and accused the prime minister of being "disconnected from reality." According to Lapid, some of what Netanyahu claimed was in the budget actually did not appear there – neither free education for children aged 0-3, nor a NIS 9 billion increase in the national security ministry budget, nor significant programs to slash the high costs of living.

Either the prime minister did not know what the budget included, or he did know and was intentionally misleading the public so as to maintain his grip on power, Lapid charged. The opposition leader quoted from forecasts by top finance ministry officials over the long-term damage of not preparing a "generation" of haredi boys for the workforce. He also pointed out that the NIS 13.6 billion in coalition funds, which are intended to finance political agreements, were higher than the entire budget for public hospitals (NIS 12.4 billion), or for higher education (NIS 12.6 billion).

"Our children will be the first generation that will be poorer than its parents, because more and more people will not work and will not receive tools for the workplace, will not study mathematics, English and computers, and will not be able to support themselves, so someone will need to support them," Lapid said.

Smotrich and Gantz also presented starkly different pictures of the budget during their speeches during the debate. While Smotrich claimed that the budget was "growth-oriented" and included numerous sections to fight the high cost of living, Gantz argued that these arguments would not hold up to reality.

"Reality blew up in your faces in the judicial overhaul – and it will blow up in your faces on the budget issue as well," Gantz said, adding that the coalition was "turning Israel's economy into a hostage of coalition necessities."

How did Israel's coalition overcome the challenges against the budget?

The budget bills passed after Netanyahu and Smotrich succeeded on Monday evening to overcome last-minute challenges by three coalition partners - Agudat Yisrael, Otzma Yedhuit and Noam.

Both Agudat Yisrael, the Hassidic faction within United Torah Judaism (UTJ) and Otzma Yehudit were promised NIS 250 million in coalition funding, which they will receive soon after the budget passes.

The funding for Agudat Yisrael will cover the aggregate raise for yeshiva students' stipends for January-May 2023. It will come out of the NIS 1.6 billion already promised to UTJ for yeshivot. Any deficits at the end of the fiscal year will be covered by surplus in the party's coalition funds, which are funds that the government grants in order to budget political agreements made during the negotiations over the government's formation.

The funding for Otzma Yehudit, which will go to the Development of the Negev and Galilee and National Resilience Ministry headed by party member, MK Yizhak Wasserlauf, which will also be funded at year's end by budget surplus.

Noam's MK Avi Maoz will present the government with a detailed plan to form a "Jewish National Identity Authority", which Maoz demanded in exchange for his support of the budget.

A number of politicians and civil organizations argued on Monday that the new agreements between the Likud and Agudat Yisrael and Otzma Yehudit were illegal since the law requires that all government spending laid out in the national budget must have a clear source – and future "surplus funds" do not qualify as such.

Finance Ministry legal advisor Asi Messing wrote in a legal opinion on the agreements on Tuesday that in order to ensure the legality of the agreement, the government should wait until October, when the government will be better equipped to assign a clear budgetary source for both agreements.

However, the bottom line was that there was no legal impediment for the agreements to go through.