A keynote panel at the annual conference of the Aharon Institute for Economic Policy at Reichman University, which dealt with reducing the cost of living as a lever for increasing welfare, revealed a deep gap between actual policy and the ability to lower prices for the public.
The panel was moderated by Michal Halperin, who previously served as the competition supervisor, and was attended by Shai Babad, CEO of Strauss and former CEO of the Ministry of Finance; Asael Tzur, Coordinator of Economics and Agriculture in the Budget Division of the Ministry of Finance; Amit Ze'ev, CEO and owner of SPAR Israel; and Yoel Bris, Head of the Regulatory Authority in the Prime Minister's Office.
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Food Law: Good intentions, opposite results
The discussion opened with a reexamination of the Food Law, which was enacted following the Kedmi Committee. Amit Ze'ev presented a harsh critique: "On the level of facts - food has not decreased. The test of the result: a total failure.".
According to him, the transparency mechanism intended to encourage competition actually created the opposite result: "Part of the law says that every supermarket must report its prices every fifteen minutes. In practice, this has created price coordination that is unparalleled in any industry of tens of thousands of products. Rami Levy says he wants to be the cheapest, so he raises prices by the shekel. There is a horse race that raises prices under the auspices of the law. The intention was great, but in practice it is shocking.".
Shai Babad joined the criticism: "Things are judged by the outcome. If food costs did not go down but rather increased, the law probably did not have the same effect.""
Kosher? Regulation that makes the basket more expensive
Asael Tzur from the Budget Division of the Ministry of Finance attacked the functioning of the kashrut system: "The rabbinical bodies in Israel work the worst in the government. The Chief Rabbinate sees itself as a gatekeeper of things that are not at all within its jurisdiction. This is a body that needs urgent renewal.".
Tzur emphasized that Matan Kahane's kashrut reform is already enshrined in law, but is not being implemented politically: "If one day a minister of religious services announces that he wants the reform to go into effect, he only has to wait six months. Hopefully it will come to fruition soon. Until then, I have no good news to tell.".
Amit Ze'ev illustrated the absurdity with a concrete example: "If I want to import a can of Coca-Cola that costs 45 agorot abroad, in Israel it costs 1.90 shekels. I asked: What is there only in Israel that is not found elsewhere? Israel is the only country in the world that takes every product and puts a price on it, even though it is on the shelf. 10,000 people get up every morning to code these prices. What a waste of time and human energy.""
Strauss CEO Shai Babad denied that the big food companies are benefiting from the situation: "There is nothing that we benefit from economically as a result of the kashrut issue. These things impose enormous costs on us that are passed on to the consumer.""
Reforms that are stalling: "Cross-party pressure groups""
Asael Tzur defined one of the main obstacles to implementing reforms: "There are very strong pressure groups in the State of Israel, which cross all parties: without any distinction between right, left and center, which in essence prevent processes that are clear to any reasonable person that must happen.""
According to him, the failure of the milk reform is not due to budgetary constraints: "The reform did not fail for budgetary reasons. We proposed paying farmers not only the quota price but an additional premium. We declared in the Knesset, everything is for the record.""
The discussion sharpened a clear conclusion: the solutions to reduce the cost of living are well-known but have difficulty moving from the policy stage to the implementation stage.
Shai Babad concluded: "The theory is very easy, but its application is much, much more difficult. The art is knowing how to turn theory into application in the right way. In my opinion, this is the gap where we fail time after time after time.""
Regulatory Authority: Existing solutions, implementation slow
Yoel Brice, who responded to the remarks, presented a government line focused on improving the quality of regulation and reducing barriers, and announced a concrete move that is nearing implementation: "We have solved a 25-year-old problem of importing processed meat. "Until today, it was not legal to import sausage into Israel. There will be a possibility of importing with easy guidelines and centralized processing. This should save 1.8 billion shekels in full implementation. This could be 101% of the price of meat and more.".
Brice emphasized that the main challenge is creating stable change over time: "So that change is precise, deep and stable and not one that is undone by a change of government and Knesset, as we have seen, the work is done very independently. The road is long and we are working on it.""
