Tamar Zandberg Minister of Environmental Protection: “On Sunday, together with Minister Karine Elharrar and Minister Orit Farkash-Hacohen, we will bring a precedent-setting NIS 3 billion government decision to promote innovation & climate change. This decision includes many of the removal of barriers proposed by the Israel Democracy Institute”
(Jerusalem, June 21, 2022) – " Even before this current crisis, Israel led the world in terms of number of cabinet ministers who are replaced. When ministers are replaced and governments fall, it’s almost impossible to make decisions. Especially not decisions that take long-term planning into account and demand persistence in their implementation. This is true of most of the foundational challenges facing the economy. The purpose of this conference is to tackle these foundational issues," said Yohanan Plesner, President of the Israel Democracy Institute, at the Eli Hurvitz Conference on Economy and Society, which was held today in Jerusalem. Plesner added, “at best, Israel will need to wait at least another half a year until a stable government is formed. A less positive outcome will be that we find ourselves sliding into a sixth, or even a seventh, election. This makes this conference so important. Our mission: to propose as many well-researched and implementable plans that will be available for the moment a government is formed. I want to emphasize an important point – there is no point in heading back to another election without reforming the electoral system. It is clear that in a very divided Israel, it is too easy to disperse the Knesset. The MKs sitting in the backbenches have too much power to destabilize the country. The practice of dispersing the parliament because of a failure to pass a budget exists only in Israel!”
Plesner added: “IDI has prepared a bill to reform the electoral system, and it can pass the Knesset in a short amount of time. The core of the proposal is to make and attempt to alter the date of the elections dependent on a two-thirds majority in the Knesset.”
The Eli Hurvitz Conference was opened by Isaac Herzog, President of the State of Israel, who welcomed the holding of the conference. “Eli Hurvitz, may he rest in peace, for whom the conference is named and whom I had the privilege to know well and love dearly, served as the chairman of the public commission that in 2008 published the Strategic Vision for Israel 2028. At that time, I was a member of government, serving as the Minister for Social Affairs and Social Services, and I will never forget Eli Hurvitz’s fascinating overview. Today, we are two-thirds of the way through the period that Eli and his colleagues defined for us, with regards to targets for GDP per capita alongside the GINI inequality coefficient. Since 2008, Israel’s per-capita GDP has risen by almost 50%, and we have climbed from 39th place in the world to 19th, just a short way from the 15th place that was defined as a strategic goal. Over the same period, inequality has been reduced somewhat, but remains high relative to the OECD average. Thus, we have done well at growing overall wealth in the country, but we must do a better job of sharing it out, so that all Israelis can enjoy the fruits of success.”
Avigdor Liberman, Minister of Finance: “We are heading in the right direction in terms of contending with the rising prices. But, to implement plans you must have at least two years of stability. The housing market doesn’t change in a month or two. Within a year we were able to halt the cost of housing and stability of prices, and if we would have continued for another year we would have succeeded in lowering costs. Beyond incentives and other initiatives that we have advanced, there is the question of supply and demand that we are working on.
This government passed many important bills and reforms. It is the most socially-minded government Israel has ever had. I’ve read many plans and recommendations for how to lower the cost of living, but there’s really only one way to deal with this issue, to increase the amount of available income. At the moment we don’t know how to deal with the market of goods – look what happened to coal, gas, oil, iron, and wheat – for which the government has little influence. So, the best way to deal with this is to lower the costs of labor. This is what we did with permits for foreign workers. We increased the stipends for soldiers by 50%, raised the stipends for pensioners by an average of 500 NIS, increased the grants for Holocaust survivors by 60%, signed agreements with a number of unions, provided tax credits for school-age children, and much more.”
Prof. Amir Yaron, Governor of the Bank of Israel - In his speech, the Governor addressed the macroeconomic state of Israel’s economy, focusing on the hi-tech sector and comparing the sector’s structure in Israel at the beginning of the 2000s with its structure today. He also spoke about inflationary developments in Israel and internationally and emphasized that “while the inflationary environment in Israel is considerably lower than its equivalents around the world, this is a global process, stemming partly from supply factors and continued disruption to supply chains, but also partly due to local inflationary processes, in response to which monetary policy is more effective. High inflation harms certainty and economic activity, and harms more vulnerable population groups disproportionately. The Monetary Commission at the Bank of Israel is determined to apply policy that will return inflation to its target levels.”
The Governor also related to the economic aspect of the recent political developments: “As I have said many times in the past, the economy loves stability. At the same time, Israel has an institutional system which, as we have seen in the past, has been able to facilitate proper functioning of the economy during election campaigns. Israel’s economy has demonstrated an impressive ability to grow and thrive even in conditions of uncertainty, whether political or otherwise, and as always, it is important to continue to act with fiscal responsibility.
“I hope that the passing of the state budget will not be delayed much beyond the end of the year. This is the most important economic task of any government, and it is of great importance for continuing with economic reforms that are vital for driving growth and increasing the standard of living. At the Bank of Israel, we will continue to pursue an independent economic policy that will support stability of prices alongside economic growth and will encourage competition and financial innovation.”
The Chair of the Knesset Economic Affairs Committee MK Michael Biton took part in the Israel Democracy Institute’s Eli Hurvitz Conference on Economy and Society and addressed a session on expanding the approach to innovation as an engine for growth and for reducing productivity gaps with regard to traditional industries: “Will people not produce food, bicycles, fruit and vegetables, in the next 50 years? Everyone’s going to be in hi-tech and innovation? People who work in hi-tech also want to eat in good restaurants. So, these sectors, of food, and metalworking, will remain. And we can bring human capital [to them], but who decided that a welder is someone without high-school matriculation?”
“Today, welders earn upwards of NIS 15,000 a month. You can bring innovation into the old world, and the public’s need for the world of leisure and the world of services has grown, and thus innovation can be created in all these sectors. The food companies in Israel have record profits, the cosmetics companies have record profits. These need to be seen as areas for development.
“Today is not a good day to talk about agriculture, because the farmers are being described as tycoons, but it’s important to analyze what the problems that exist in agriculture. From a positive perspective, we are fighting for a broad consensual agreement, and we’ve lost a year’s work. The dialogue was not so good; I was able to mediate a lot in the egg-laying sector in the committee on the agreements. We will still eat eggs, eggs will stay with us, no one wants to eat powdered egg. And we have structured an agreement that has everything, and that shows that dialogue exists.
“Hi-tech accounts for 10% of the labor market in Israel, a world-leading figure, and 17% of GDP. But it has only 6% of the labor market in the Negev, and 4% in the north. Hi-tech has not reached the periphery. This is a disgrace—for Israel, for the hi-tech sector, and for the institutions that deal with this issue.
“But there is also the other side, grassroots entrepreneurs, 7.5 million dollars in grants, in donations, not from the government. In Hod Hasharon, 40% [of high-school students graduate with] subjects suited to hi-tech; in the periphery, only 15%. But they are waiting for employment. And they will set it up, like in Yeruham, Mitzpe Ramon, Arad, and Beer Sheva. It’s possible to bring hi-tech and inclusive growth, and to bring this good news to the periphery as well.”
MK Biton also spoke about the expected dissolution of the Knesset and the coming elections: “Elections put a brake on progressing the country forward. They have been forced on us. Blue and White wants there to be a budget, it’s almost a lost cause, but we will do our best now and in the future.”
“Prime Minister Bennett decided to step down from his role. There are few leaders in Israel with the personal greatness to pass on the baton and say, ‘You continue the work, I’ve done my part.’ And he will be remembered as someone who contributed a wonderful year to the security of Israel, he and Benny Gantz also. If we’re talking about innovation, then this is innovation in politics.”
Also participating in the same session was Dr. Ron Malka, Director-General of the Ministry of Economy and Industry, who spoke about expanding the approach to innovation to include more traditional sectors. “It is right to look at expanding innovation. The economies that focused on and invested in innovation are those that have performed better. The huge gaps between Israel and other countries can be explained by investment in innovation and its application. This is a huge but worthwhile investment, and as to the question of whether we should intervene in this area, then the answer is yes. We need to proactively intervene in order to implement greater innovation in all our production processes and services.
“At the Ministry of Economy, we decided to adopt a proactive stance and to map traditional industry, to assess according to various parameters which industries could gain more from innovation, and we knock on their doors and give them advice in order to drive innovation. This is the reason we decided to grow the Israel Innovation Institute by tens of millions of shekels.”
Daphna Aviram-Nitzan, director of the Center for Governance and the Economy at the Israel Democracy Institute: “Climate entrepreneurs have done well and are finding opportunities abroad, but the State of Israel is missing out on the opportunity to be the global spearhead in climate entrepreneurship.”
Minister of Environmental Protection Tamar Zandberg at the Eli Hurvitz Conference: “Climate issues have been criminally neglected under previous governments. This government has done more in this area than was accomplished since the state was founded. Addressing the climate crisis was defined as a focus issue for the Prime Minister’s Office, not just an issue for the Ministry of Environmental Protection.”
Zandberg added: “In our camp and in Meretz we will go to the hustings, and we also need to refresh and reboot. The premise is that we have to work together, we need to hone our collaboration, lose old habits, silence the noise machine. But this is really only the beginning, and I have no doubt that from here we will continue on a more precise path.”
Minister of Energy Karine Elharrar: “As long as we are here, we carry on working, until we are told to leave. Yesterday—after a truly significant year of action and reforms, certainly in the fields of energy, the economy, industry, and social affairs, of significant achievements, including in foreign policy—the Prime Minister and the Alternate Prime Minister announced these changes, and it broke my heart. Because we were only getting started, because we have many plans, many of which my friend just described.”
Minister Elharrar devoted most of her address to climate and energy issues. “The climate crisis used to be something debated in very small circles. Today, there is no government discussion at which the climate aspect is not spoken about, and this is one of the challenges I had as minister of energy. Today, it is clear to everyone that the ultimate goal is clean energy. There are difficulties and crises along the way, such as the energy crisis felt by us all, but the goal remains the same. When I began at the Ministry, I found that people were talking about renewable energies, but there was no department dedicated to it. The entire issue of renewably energies was being handled by the Electricity Authority, but that’s not enough. So, the first thing we did was to establish a division that would deal with what everyone was talking about, so that we would meet our targets.
“Entrepreneurs in the field of energy deal with unimaginable difficulties. I heard the stories, and I held my head in my hands. How could it be that one ministry demands a certain thing, and another demands something else? And I thought that you’d have to be mad to produce green energies in Israel. At the Ministry, we decided that you shouldn’t have to go mad, we need to help them.
“In a situation in which there are no sizable venture capital funds in the field of energy, and there really are hardly any, then the government needs to put its hand in its pocket and be generous.”
Avi Hasson, CEO of Start-Up Nation Central, at the Eli Hurvitz Conference: “We are far behind, and we are not enjoying the fruits of hi-tech here in Israel. The hi-tech industry cannot flourish over time if it is not situated within an innovative economy and society.”
The Eli Hurvitz Conference on Economy and Society—formerly the Caesarea Economic Policy Planning Forum—is widely recognized as Israel's most influential economic conference. For 29 years, the Conference has served as a crossroads where public discourse and professional knowledge in economics and society meet, with the aim of improving the decision-making processes in the administration and improving the quality of Israel's social and economic policy for the benefit of the entire public. This year, the conference will address strengthening innovation in Israel both as a source for reducing disparities and as a catalyst for climate entrepreneurship; the challenges of the Israeli labor market; the goals of the education system and the effectiveness in which it implements them, as well as in the future of science in Israel.
A series of team-led research and policy recommendations on issues closely related to the conference sessions will be presented during the conference on June 21-22, at the Orient Hotel in Jerusalem and online on IDI's website.