Bennett and Lapid's Economic Promises Face Scrutiny Over Past Performance
Translated & summarized from Now 14 by baba
The "Together" party, led by Naftali Bennett and Yair Lapid, is promising significant economic reforms, including lower food and housing prices. However, past similar initiatives under their previous government have yielded mixed results, with some reforms failing to lower consumer costs and others potentially increasing prices in the open market. Concerns are also raised about the substantial cost of proposed benefits for reservists and the unclear funding sources for these ambitious plans.
The story in 6 lines · by baba
- Bennett and Lapid's "Together" party promises 30% lower food and housing prices.
- Past reforms under Bennett and Lapid saw limited success in lowering consumer costs.
- Increased agricultural imports did not always lead to lower prices for consumers.
- Housing subsidies may have driven up prices in the open market previously.
- Proposed benefits for reservists could cost billions annually, with unclear funding.
- Critics question the feasibility of achieving promised price reductions.
The "Together" party, led by former Prime Ministers Naftali Bennett and Yair Lapid, is campaigning on promises of significant economic reforms, including a 30% reduction in food and consumer goods prices and up to a 30% decrease in housing costs, alongside benefits for reservists. However, reports from the Bank of Israel and the State Comptroller raise questions about the feasibility and cost of similar past initiatives.
The party's platform aims to lower living costs by dismantling monopolies, limiting exclusive importers, opening the market to imports, and curbing the power of large retailers and suppliers. While acknowledging the problem of market concentration, the article notes that a 30% price reduction is ambitious, as local operating costs like VAT, transportation, and utilities contribute significantly to product prices. Past attempts, such as Bennett's "cornflake reform" as Minister of Economy, aimed at easing parallel imports of dry food, did not result in widespread consumer price reductions and sometimes added new regulatory burdens.
Regarding agriculture, the Bennett-Lapid government reduced tariffs on certain fruits, vegetables, and agricultural products to encourage imports and lower prices. While imports did increase in some sectors, a Ministry of Agriculture study found that consumer prices for fruits and vegetables rose between 2021 and 2023, even with increased imports. Exceptions like pineapples saw significant price drops, illustrating that market opening's success varies by product and market structure.
On housing, the party promises to lower prices by releasing land and streamlining planning, while also offering a housing voucher of up to 1 million shekels for active reservists. This echoes Yair Lapid's past "zero VAT" initiative for first-time homebuyers, which reportedly led to delayed transactions. Bank of Israel research on "Price for the Tenant" and "Target Price" programs indicated discounts for eligible buyers but also price increases in the free market in areas with high subsidized housing. The article questions how the new plan will prevent reservists from benefiting while non-eligible buyers face higher costs.
The "Servicemembers Law" is highlighted as the most expensive commitment, with estimated annual costs of around 7 billion shekels for daycare, after-school programs, and academic studies, plus additional benefits. The housing voucher component could potentially reach 30 billion shekels annually if 30,000 reservists utilize the full benefit. Bennett claims that expanding Haredi employment and service, alongside eliminating benefits for non-servicemembers, could free up over 100 billion shekels, but the article distinguishes between potential future product loss and liquid state funds. The core question remains the funding source for the entire package of benefits, especially given that only three benefits are estimated at 7 billion shekels per year.