Public Management in Israel: Development, Structure, Functions and Reforms (Routledge Studies in Middle Eastern Politics)

Public Management in Israel

This book examines the machinery of government in Israel, and how public management will have to cope with the new challenges and pressures of the 21st century. As government services in Israel gradually give way to private sector management, the collective-oriented mission of government remains unfulfilled by the private sector or the non-profit organizations of civil society. Using data previously unpublished in English, this book provides a detailed analysis of public management in Israel. The author presents the task of the civil service, the legal foundation of public management, and the profile of civil servants. He also critically examines the unwieldy budget process, the prevalence (and absence) of regulation and the mechanisms of oversight, not all of them successful. This analysis is balanced by a detailed exposition of Israel’s politicaladministrative culture with its excessive centralization, secrecy, turf protection, and legacy of improvisation, with their cumulative impact on policymaking and administration. This comprehensive examination of public management in Israel will be of great interest both to students and scholars of business and management, government and politics, and to policymakers in the region. Itzhak Galnoor is Herbert Samuel Professor of Political Science at the Hebrew University of Jerusalem and Senior Fellow at the Van Leer Jerusalem Institute. He was Head of the Civil Service Commission from 1994–6 and served on the Executive Committee of the International Political Science Association. His research interests lie in the areas of Israeli politics and administration, comparative politics, and political humor. His new book, The Israeli Political System (with Dana Blander), will appear in 2011.

Routledge Studies in Middle Eastern Politics

1 Algeria in Transition Reforms and development prospects Ahmed Aghrout with Redha M. Bougherira 2 Palestinian Refugee Repatriation Global perspectives Edited by Michael Dumper 3 The International Politics of the Persian Gulf A cultural genealogy Arshin Adib-Moghaddam 4 Israeli Politics and the First Palestinian Intifada Political opportunities, framing processes and contentious politics Eitan Y. Alimi 5 Democratization in Morocco The political elite and struggles for power in the post-independence state Lise Storm 6 Secular and Islamic Politics in Turkey The making of the justice and development party Ümit Cizre

7 The United States and Iran Sanctions, wars and the policy of dual containment Sasan Fayazmanesh 8 Civil Society in Algeria The political functions of associational life Andrea Liverani 9 Jordanian–Israeli Relations The peacebuilding experience Mutayyam al O’ran 10 Kemalism in Turkish Politics The republican people’s party, secularism and nationalism Sinan Ciddi 11 Islamism, Democracy and Liberalism in Turkey The case of the AKP William Hale and Ergun Özbudun 12 Politics and Violence in Israel/Palestine Democracy versus military rule Lev Luis Grinberg 13 Intra-Jewish Conflict in Israel White jews, black jews Sami Shalom Chetrit

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23 Politics in Morocco Executive monarchy and enlightened authoritarianism Anouar Boukhars

16 Ethnic Politics in Israel The margins and the ashkenasi center As’ad Ghanem

24 The Second Palestinian Intifada Civil resistance Julie M. Norman

17 Islamists and Secularists in Egypt Opposition, conflict and cooperation Dina Shehata 18 Political Succession in the Arab World Constitutions, family loyalties and Islam Anthony Billingsley 19 Turkey’s Entente with Israel and Azerbaijan State identity and security in the middle east and Caucasus Alexander Murinson

25 Democracy in Turkey The impact of EU political conditionality Ali Resul Usul 26 Nationalism and Politics in Turkey Political Islam, Kemalism and the Turkish issue Edited by Marlies Casier and Joost Jongerden

20 Europe and Tunisia Democratization via association Brieg Powel and Larbi Sadiki

27 Democracy in the Arab World Explaining the deficit Edited by Samir Makdisi and Ibrahim Elbadawi

21 Turkish Politics and the Rise of the AKP Dilemmas of institutionalization and leadership strategy Arda Can Kumbaracibasi

28 Public Management in Israel Development, structure, functions and reforms Itzhak Galnoor

Public Management in Israel Development, structure, functions and reforms

Itzhak Galnoor

First published 2011 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2010. To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk. © 2011 Itzhak Galnoor All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Galnoor, Itzhak. Public management in Israel : development, structure, functions, and reforms / Itzhak Galnoor. p. cm. – (Routledge studies in Middle Eastern politics ; 28) Includes bibliographical references and index. 1. Administrative agencies–Israel–Management. 2. Executive departments–Israel–Management. 3. Civil service–Israel. 4. Civil service reform–Israel. I. Title. JQ1830.A58G355 2010 351.5694--dc22 2010007446 ISBN 0-203-84496-3 Master e-book ISBN

ISBN 978-0-415-56394-9 (hbk) ISBN 978-0-203-84496-0 (ebk)

To Bert Gross z”l teacher and friend

Contents

List of illustrations Preface Acknowledgements 1

Civil service: A comparative perspective

xii xiv xvi 1

Background 1 Politics and public management 3 Functions 4 Changes 8 Blurring the boundaries: public, business, and social sectors 10 2

The public sector in Israel broadly defined

13

Governmental institutions in the executive branch 13 Nongovernmental public management 19 Other significant public institutions 19 Local authorities 22 Size of the public and government sectors 23 3

The legal framework of the civil service

27

Inception of the civil service in Israel 27 The legality of public management 30 Laws pertinent to the civil service 31 The Civil Service Commission 34 Laws pertinent to the public sector in general 36 Additional laws setting norms of conduct 38 Administrative tribunals and administrative law courts 39 The Missing Basic Law: Civil Service 41 4

The functioning of the Israeli civil service What does the civil service do? 44 Patterns of behavior 45

43

x

Contents Sector boundaries 48 Service to the public 50

5

Regulation

55

Definitions, laws, and institutions 55 A comparative look 56 Regulation in Israel 58 Regulation and deregulation 60 6

Civil servants

61

In the ministries 61 A profile 63 Recruitment and promotion 64 Wages 66 Education and training 69 7

The senior echelons

72

Senior civil servants 72 Directors general 74 Who’s missing? 78 The question of representation 82 8

The budget process

83

Budgeting as a political tool 84 Principles of budgeting 85 The budgeting process in Israel 88 The Arrangements Law 90 The Budget Division of the Finance Ministry 91 Reforms required in the budgeting process 94 9

Oversight and control of the civil service

97

Political oversight and control 98 The State Comptroller 99 Judicial review 107 Internal control, scrutiny, and auditing 108 Public accountability 111 10 The culture of administration in Israel Political appointments 113 A public service ethic 128 Images and the public trust 142 Administrative culture in Israel 144

113

Contents 11 Public management reforms

xi 149

Privatization 150 Attempts to reform the civil service 158 Restructuring the civil service 159 The civil service 161 Civil society organizations 163 Local government 163 Laying the groundwork for reform 164 Notes Bibliography Index

166 174 186

List of illustrations

Figures 2.1 Civil service employees of government ministries and population growth in Israel, by decade 4.1 Satisfaction with public services and degree of trust in public institutions and public servants (2001–8) 6.1 Proportion of civil servants at the professional level (1960–2007) 8.1 Budget expenditures (2009, in rounded percentages) 8.2 Budget revenues (2009, in rounded percentages) 9.1 Number of complaints submitted to the Ombudsman (1980–2007) 10.1 Control of corruption in 67 countries (2007) 10.2 Corruption perception index in 67 countries (2007) 11.1 Number of government-owned corporations (1969–2007)

25 52 70 84 84 103 132 133 154

Tables 1.1 1.2 1.3 2.1 2.2 2.3 2.4 2.5 6.1 6.2 6.3 6.4 6.5 7.1 7.2

Schematic process of policymaking Main functions of the governmental civil service in Israel Public sector organizations in Israel Government corporations, subsidiaries, and mixed corporations (2007) Nongovernmental public management The local authorities (2006) Number of public sector employees broadly defined (2005) Size of population and civil service employees, by decade Number of employees in government ministries (2008) Number of employees in law enforcement agencies (1970–2007) Profile of civil servants (1975 and 2006) Monthly salary of selected civil service posts (1958, in Israeli Lira) Comprehensive remuneration of directors general compared with the lowest civil service wages, selected years Ethnic origin of directors general (1952–96) Selected data about directors general (1949–95)

4 5 6 18 20 22 24 25 62 63 64 66 69 74 75

List of illustrations xiii 7.3 8.1 9.1 10.1

Number of Arab citizens employed in government ministries Methods of taxation based on social objectives Complaints and justified complaints to the Ombudsman (2007–8) Year of recruitment and ideological identification: self-report by senior civil servants 10.2 Ranking of perceptions about the level of corruption in various institutions, Israel and 47 other democratic countries (2003)

81 85 103 117 136

Preface

This monograph is based on lectures given in the Department of Political Science at Hebrew University, and on articles written over the years about the civil service in democratic countries, the budgeting process, political appointments, affirmative action, reform, and related topics. Another source has been what I learned about politics and public management – and the ill-defined boundary between them – from my perspective as Civil Service Commissioner in Israel from 1994 to 1996 in the government of Yitzhak Rabin. My impressions from that period are recorded in a published journal (Galnoor, 2003c), and my insights have found their way, or so I hope, into this book. The chapter about ethical conduct and corruption in the administrative culture of Israel grew out of my work as Director of Ethics in Public Organizations, a position I hold in the Jerusalem Center for Ethics. This book is also an expanded by-product of a chapter in a comprehensive volume about the political system in Israel that I co-authored (Galnoor and Blander, 2011, forthcoming). My experience in the Civil Service Commission left its mark in that this book does not merely describe and detail, but includes specific recipes for change and improvement. My critiques and recommendations generally appear at the end of each chapter and in the summary chapter about reform, but they may have also found their way between the lines throughout the book. A few words about the structure and content of the book: I open with a discussion about terminology, so there will be clarity about commonly used terms such as public management, civil service, statutory authorities, and government corporations. The subject of this book is governmental public management, which will also be referred to as “civil service” in its broad meaning, not in the technical sense of employees of government ministries. Chapter one takes a comparative look at the civil service institutions and the changes that transpired with the changing status of the “state” as an institution. Chapter two maps the institutions in the public sector of Israel: governmental, nongovernmental, other large public institutions (the Jewish Agency, the Histadrut, religious institutions, institutions of higher learning, and the health funds), and the local authorities. It closes with a discussion of whether the public sector in Israel is unwieldy relative to the size of the population. The establishment of Israel’s civil service in 1948 and its legal framework, and the laws relevant to public management, are presented in chapter three. At the end

Preface xv I consider whether the civil service should be enshrined in Israel’s constitution (Basic Laws). Chapter four addresses a complex and unresearched subject: what does the civil service do? Some of its key behavior patterns are presented, such as centralization and secrecy, as well as the changing roles of the civil service. Also discussed here is the level of satisfaction with the service provided from the point of view of the citizens. Chapter five continues this discussion, but is separate in order to emphasize the singular importance of regulation and deregulation in the “skeletal state” that seems to be emerging in the twenty-first century. Research about regulation in Israel is still in its infancy, but several promising studies have already been produced. Chapters six and seven look at the collective profile of civil service employees. The picture is only partial because, despite great efforts, I could not find data that are reliable or cover the entire period. The discussion about senior posts, especially Directors General, is more detailed thanks to several studies conducted in recent years. At the end of these chapters, two problems are examined: the underrepresentation of women in senior positions, and the absence of Arabs in the civil service in general. Here the question of affirmative action is discussed. In chapter eight, I look separately at the budgeting process because of the key role it plays in the activity of the executive branch. The latter part of this chapter deals with the reforms required in government budgeting in Israel. The subject matter of chapter nine is oversight and accountability of the civil service: political oversight and control, judicial review, internal supervision and audits (such as the internal auditors), and public scrutiny via the media, nonprofit organizations and public discourse. Chapter ten, which examines the public management culture in Israel, is relatively long because of the subjects addressed: political appointments, corruption and ethical conduct, the image of the civil service, and public trust. The discussion in the final chapter looks at the changes in Israeli public management – reforms attempted and implemented, including privatization. This chapter offers recommendations in response to the question that opens this book about the need for thorough and comprehensive reform of public management in Israel. This book was originally published in Israel in 2007; in this shortened, English version I have made an effort to update the data as much as possible. With the exception of some explanations added for non-Israeli readers, the two versions are identical. I preferred to use the more current term “public management” instead of “public administration,” but the two are quite interchangeable.

Acknowledgements

It is my pleasure to thank those who generously contributed their wisdom and expertise to improving this book. Dr. Dana Blander read the entire manuscript and introduced significant improvements to the content and structure. Eliyahu Sapir and Asaf Sheratzki – both graduate students in the Political Science Department of Hebrew University – helped me write this book, and worked hard to gather and update the data. Some data still managed to elude us, despite our best efforts. I would like to thank colleagues who spent time reading all or part of the manuscript and made important contributions: Ron Dul, Alma Gadot-Perez, David Levi-Faur, Moshe Maor, Neta Sher-Hadar, and Yitzhak Zamir. Orna Yoeli edited the Hebrew manuscript and greatly improved its form and content. My dear friend Gila Svirsky translated the book into English and in doing so managed – yet again – to make it more precise and more readable. The writing, as always, took place at the Van Leer Jerusalem Institute. I am grateful to its past and present Directors, Shimshon Zelniker, and Gabriel Motzkin, and my good friends in the coffee room. Itzhak Galnoor Jerusalem, December 2009

1

Civil service A comparative perspective

History tells of rulers and their deeds, generally ignoring the human bureaucratic apparatus that facilitated this rule. Public bureaucracy existed well before the modern state, and was created to serve dynasties and rulers. Even then, the bureaucrats were professionals who primarily served the ruler, although they also saw themselves as servants of the kingdom and the community (Eisenstadt, 1965). Note, for example, the public bureaucracy in ancient Egypt from the third century BC – its ministers, scribes, and writers. No less professional were the Mandarin bureaucrats in Imperial China, selected by rigorous examinations, who paraded through the villages with servants carrying their writing desks, and proudly displaying their rank in the shape and color of their hat tassels. The history of public management testifies that the aims of rulers and kingdoms were linked to bureaucratic expertise. This expertise had once been focused primarily on three areas: technical services such as the registry of land or irrigation regulation; public services such as tax collection and courts; and above all the administration of war-related matters – financing the campaign, recruiting soldiers, and procuring military equipment (Finer, 1997: 59–72). The oldest and best developed public bureaucracy was military, and its influence remains evident to this day in organizational and management concepts and terminology such as hierarchy, chain of command, staff work, and the division of labor.

Background The modern civil service is directly related to the waning of feudalism and the rise of the European, autocratic nation-state. In the seventeenth century, Frederick William of Brandenburg (1640–88) established an efficient public administration in Prussia, which employed public servants selected on a competitive basis. In France, similar reforms took place under Napoleon in the early nineteenth century, designed to transform the royal service into a public service anchored in law. Thus the first professional, permanent civil service was established in these two states, composed of trained public officials who were instructed to act within the special framework of administrative law. In Britain, the Northcote–Trevelyan Report of 1854 catalyzed the development of a permanent, nonpolitical civil service based on entrance examinations, and an internal division into executive, administrative,

2 A comparative perspective and clerical classes. The first Civil Service Commission was established in Britain to administer and supervise the civil service (Chester, 1981). The federal civil service founded in the USA in 1883 was an effort to dismantle the previous “spoils” system, in which jobs were rewarded for loyalty by politicians who won elections (Carpenter, 2005). The federal civil service in the USA never carried the same authority, power, or status as the official bureaucracy that developed as a state institution in Europe. In modern democratic countries, the civil service is part of the executive branch of government. According to the rational ideal model designed by Max Weber (1864–1920) under the influence of the Prussian system, public bureaucracy should be a permanent institution with the following features: centralized authority; official modes of operation; a central supervisory body; periodic evaluations of its functions; rules regarding discipline, unions, and strikes; rules for maintaining political neutrality; and procedures for hiring, promotions, tenure, and remuneration (Weber, 1947: 329–58). Based on this approach, a professional ethic was established that required civil servants to observe special norms and rules of loyalty, impartiality, anonymity, and maintaining confidentiality about state secrets. In the twentieth century, the civil service and public administration as a whole grew rapidly in response to the expanded role of government, particularly the welfare state. This “bureaucratic state” drew criticism from both left and right: the right accused it of an uncontrolled expansion of tasks and proliferation of jobs and rules; while the left censured its conservatism and failure to reduce social gaps. Public dissatisfaction with the functioning of the state and public officials was one of the main reasons that the civil service began to contract in most western countries in the late twentieth century. We will return to this issue in later chapters in the context of regulation and privatization. It is easier to point to a dysfunctional political system in new states that lack a stable public bureaucracy responsible for conducting state affairs (see Fukuyama, 2004) than to pinpoint the “right” tasks that should be carried out by the civil service. Already in the 1960s, Joseph LaPalombara (1963: 4) defined public bureaucracy as the independent variable without which it would be difficult to engender social, economic, and political development. Furthermore, democratic systems differentiate between the politics of elected officials and the administrative, professional activity of appointed bureaucrats. The assumption is that to ensure continuity and the impartial provision of services, the senior echelon of the civil service should not be elected by the public, nor necessarily replaced upon a change of government. On the other hand, even undemocratic regimes are completely dependent on a bureaucracy – if only for maintaining a secret intelligence network – but in those cases it is run by entirely different systems of authority: the palace, the military headquarters, or the politburo, without the requisite separation. The most troubling failure to differentiate these two functions occurred in a developed country – Germany – where the public bureaucracy, including military leaders and judges, became an arm of the Nazi leadership. There is no guarantee that administrative expertise and the impartial loyalty of public servants do not become destructive tools in the hands of ruthless or, in other places, corrupt politicians.

A comparative perspective 3

Politics and public management Much has been written about the difference between politics and public administration/management: some focus on the legal and institutional aspects, and others look at the differences in functions and responsibilities (Nadel and Rourke, 1975: 373–446). Research has moved from one extreme to the other, so it will be helpful to start with the obvious: in a democratic system, it is the elected officials – the politicians and not anyone else – who are accountable to the public for public goods and collective missions. To carry out these missions – safeguarding the state borders, preventing epidemics, controlling traffic, etc. – executors are required, and these are the civil servants. Why don’t the elected officials execute these tasks on their own? This might be possible in a small organization, but not one the size of a state or local authority, not to mention that the elected officials do not necessarily have the needed skills. In short, there is a division of labor with a need for experts and public managers. This need has grown as the functions of the modern state expanded and became increasingly complex and professional. The first attempt to create a theoretical basis for distinguishing between politics and management is attributed to Woodrow Wilson (1887: 197–222), a professor of political science who became US president, in his effort to develop a “practical science” of administration that would be based on a clear division between policymaking (by the political echelon) and execution (by the administrative echelon). More recent approaches suggest that this distinction is not so clear cut on either theoretical or practical grounds (Galnoor, 2001). Accordingly, after having clarified my position that politics and public administration are not the same, one can look at both the differences and the overlap between them. First, in democratic systems, the legitimacy of the political system and its management arm is rooted in the efforts to achieve common goals. Second, there is also “politics” within public management in the conventional sense – bureaucrats in public offices have interests and engage in power struggles (Galnoor, 2003a). Third, political and management processes are different because politicians are elected while civil servants are appointed to their posts. Therefore, fourth, beyond the overlapping zone, power struggles in the political realm are more external and directed primarily at mobilizing support, while power struggles in the management realm are primarily intra-organizational. Table 1.1 summarizes the overlapping areas in the process of policymaking. Politicians and civil servants participate in all stages of the policymaking process. Table 1.1 suggests that the making and execution of policies are ongoing processes that require cooperation among politicians, the civil service, and sometimes outside parties as well. In terms of responsibility, however, the proportions differ: decision making and the mobilization of support are first and foremost the jobs of the politicians. Although civil servants can place issues on the public agenda, contribute to the shaping of policy, and even participate actively in mobilizing support before implementation, their fundamental responsibility is to implement the policies that have been decided. In practice, there is also overlap in the opposite direction: involvement of the political echelon in execution. This overlap is

4 A comparative perspective Table 1.1 Schematic process of policymaking

Draw attention to an issue Analyze strategies and formulate alternatives Provide professional support and formulate policy Make policy decisions Mobilize support for implementing the policy Introduce changes during implementation Ensure public monitoring, oversight, and control

Politicians

Civil servants

✓ – – ✓ ✓ – ✓

✓ ✓ ✓ – ✓ ✓ –

familiar to anyone with experience in public management, and there is practical justification for it: all policy has a political–ideological element and a managerial– technical element, with a fine and imprecise line between them. A partnership is desirable and even necessary for shaping policy and taking responsibility for its execution. For example, alternative security policies can be formulated by the military (though not exclusively), while responsibility for executing the policy must be shared by the Defense Minister and Chief of Staff. Nevertheless, the processes remain fundamentally different because the power of the public bureaucracy lies in its expertise. Reforms in several western countries – referred to as New Public Management – advocate narrowing the role of the political minister and transferring responsibility for services to separate administrative units called “executive agencies” (on the “post-bureaucratic paradigm” see, for example, Barzelay, 1992: 118; Kabolian, 1998; Kettl, 2000; Barzelay, 2001; Maor, 2003; McLaughlin et al., 2003; Groot and Budding, 2007). Thus the classic distinction between politics and management seems to have returned by the back door in the attempt to create an institutional partition within the civil service between the ministry responsible for policy and the executing agencies responsible for providing the services. One of the problems, which we will address later, particularly in the context of political appointments, is the trickling down of political norms of behavior into public management. Political maneuvering, for example, which is legitimate, and even manipulation (when done lawfully, of course) in relations among politicians, could be destructive in relations among directors general of government ministries, because they undermine the trust and professional basis for cooperation between them. Another question is this: does the weakening of the political system necessarily lead to a weakening of the management system…or perhaps to the opposite?

Functions What do civil servants do? The menu varies: in some countries, schoolteachers are civil servants; in other countries, services for the elderly, sick, and disabled

A comparative perspective 5 are provided by government ministries. In Israel, public servants are in charge of silver iodide cloud seeding to increase rainfall, while also discharging their traditional duties of tax collection, policing, and administering the courts. It can be said, in general, that the civil service fulfills all the functions that a particular society decided would be undesirable or impossible to place in the hands of other bodies – commercial, social, communal, or familial. The list of state functions that the civil service fulfills can change as issue areas enter or leave the list. One clear example of a task added in recent years is environmental protection: most countries have decided it is undesirable and even dangerous to leave this important matter to private bodies. Communications services – post, telephone, and television – are examples of issue areas dropped from the list in most, but not all, countries. The civil service, as part of the political system, also fulfills more intangible functions, such as providing legitimacy to the institution of the state, and filtering requests and demands that come from below – individuals, groups, and organizations in society.1 In addition, the civil service in democratic countries also serves as a bi-directional channel of political communication between society and its elected leaders (Galnoor, 1982: 190–3). Table 1.2 presents the main administrative functions of the civil service, followed by examples of the bodies responsible for them in Israel. Table 1.2 Main functions of the governmental civil service in Israel Function

Examples

Participate in public policymaking and take responsibility for its implementation

• Proposals made by the military and their execution when approved by the government • Policies recommended to the Foreign Minister regarding a specific country, and implemented by the ambassador when approved • Drafting a bill to mandate the wearing of seat belts in vehicles, approval by the Transportation Minister, and enforcement by the police • Issue of passports • Assistance in immigrant absorption • Determination of intercity road routes • Provision of social security payments to accident victims, the elderly, reserve-duty soldiers • Drug control • Air transport control • Enforcement of business regulations • Price setting of water and electricity • Regulation of political party funding • Approval of municipal bylaws • Registration of businesses

Provide services to individuals, groups and organizations

Regulate tasks performed by others to protect the public interest and safeguard individual rights

6 A comparative perspective Distinguishing public management from other sectors Public management, unlike business management, is imbued with a public mission and its raison d’être is the collective good. In this book I deal primarily with public management bodies that are part of the executive branch, that is, subject to the authority of the ministers, and we refer to them as the “civil service” in the general sense.2 Public bodies in the nongovernmental sector are also discussed. A broad spectrum of organizations could fall into the category of public management depending on the criteria, as well as the various legal definitions.3 To simplify, the definitions proposed below are political–administrative and based on accountability – to whom the organization is accountable.4 1

2 3

Public sector organizations. These are headed by public figures and accountable to the voters as a matter of principle. They fall into three groups: governmental public management (the civil service); nongovernmental public management; and public management in local authorities (Table 1.3). Private (business) sector organizations. These are headed by private managers who are accountable to the owners or shareholders. They are not discussed in this book. Third sector (social) organizations. Sometimes referred to as nonprofits or nongovernmental organizations (NGOs), these are headed by organizational leaders (often the founders) or executive directors, and are accountable to the board of directors or membership, and indirectly to the public. These are discussed only occasionally in this book.

Table 1.3 Public sector organizations in Israel Governmental public management (civil service) Governmental ministries and subsidiary units Statutory authorities Government corporations Nongovernmental public managementa Office of the President State Comptroller Knesset Administration Bank of Israel Public management in local authoritiesb Departments Municipal corporations Notes a This category sometimes includes the “national institutions” – the Jewish Agency, World Zionist Organization, Jewish National Fund, Keren Hayesod/United Israel Appeal and its affiliates – as well as the institutions of higher learning, health funds, and religious institutions. These do not appear in this table because the responsibility for their activity does not fall on elected public officials or their appointees. b In addition, there are municipal nonprofits as well as associations formed by several local authorities for purposes of sharing services.

A comparative perspective 7 The categories in Table 1.3 allow us to focus on governmental public management organizations (the civil service) in the executive branch, and to distinguish these from the nongovernmental public management organizations that are not part of the executive branch (including the Bank of Israel, which is sui generis). This also applies to the local authorities, which are not part of the state’s executive branch. This division does not resolve the borderline cases that are not easily categorized. Where does the Histadrut Labor Federation belong, which had once been much more than a labor union, controlling public, business, and social bodies? The Jewish Agency, too, participated in or controlled other bodies. And where do the nonprofits belong that were founded by government ministries or local authorities? How about the courts, subject to the ministerial authority of the Justice Minister, but belonging to the judicial, not the executive, branch – while the judges themselves remain independent? How should we view the local authority – as a separate entity within the public sector, or an offshoot of the central government? Here the accountability criterion is helpful: the local authority entities are accountable to local leaders elected directly by the voters, and hence are not part of the central government civil service. The multiplicity of exceptions does not invalidate the guiding principle: organizations in the public sector have public tasks for which elected officials are responsible, and these officials are accountable to the voters. This principle also obtains for profit-oriented, government-owned corporations that operate in the market. These differ, though, from business and third-sector social organizations (except for some borderline cases), which are not accountable to elected political leaders. As noted, this book primarily looks at governmental public management – the civil service in its broad meaning, for which government ministers have ministerial responsibility. In chapter two, I apply an even broader definition to analyze the scope of the public sector, including large public institutions. Hence the questions raised here concern the role of the civil service in Israel’s political system, and what changes, if any, have taken place in its structure and functioning. The civil service is, above all, a state institution, and in this sense it is even more “state” than the elected institutions, as it has greater permanence and continuity. But this gives rise to several questions: Is the weakening of the state in Israel also evident in the civil service? Has its relationship with the political echelon changed? At its inception in Israel, the civil service was part and parcel of the political-party structure, and therefore I try to gauge whether it has emerged as sufficiently independent to meet the separate challenge, or has remained highly political. Is the Israeli civil service – a key institution in the political system – capable of making an autonomous, professional contribution to better policymaking and to providing quality services to the public? Organizational frameworks Governmental public management in Israel falls into three legal frameworks. Government Ministries. These include the government ministries themselves – Finance, Defense, Welfare, and others – as well as their semi-autonomous

8 A comparative perspective subsidiary units, such as the Central Bureau of Statistics, the Atomic Energy Commission, General Security Services, and the Department for Rehabilitation in the Ministry of Defense. In 2009 there were 24 government ministries that housed 25 subsidiary units, not including the 22 government hospitals.5 Authorities. This has different names in different countries. In Britain, some are called executive agencies; in the USA, commissions and authorities. In Israel, these are public bodies anchored in law and known as “statutory authorities.” They include the Israel Airports Authority, National Parks Protection Authority, Israel Broadcasting Authority, Yad Vashem: Holocaust Martyrs’ and Heroes’ Remembrance Authority, Ben-Gurion Heritage Institute, the Poultry Council, and the Israel Anti-Drug Authority. In 2009 there were 52 such authorities. Government-owned corporations. These areas of activity vary according to the individual country’s definition of what constitutes a “natural monopoly” or vital public interest, such as the defense industry. These corporations bear various names and operate in many countries, primarily with regard to natural resources such as water and electricity, development, and infrastructure. In Israel, such corporations and their subsidiaries are established by the government and operate, for example, in industry and trade, transportation and communication, energy, oil exploration, security, agriculture, construction, housing and development, and tourism. In 2009 there were 95 government corporations in Israel. In all countries, the civil service functions (Table 1.2) and the organizations established to implement them together define the scope and complexity of governmental public management. For example, health services in Israel are regarded as primarily a public commodity, and the organizations responsible for providing them are the Ministry of Health, government hospitals, the health funds (which are not-for-profits), and to a lesser – but growing – extent, private, commercial health providers. As was the case in many European countries, the deep involvement of Israel’s civil service in the three functions of government (policymaking, service provision, and regulation) have created over the years a ramified organizational structure that includes variations of the frameworks presented above. In the USA, on the other hand, the federal government’s emphasis on regulation led to relatively more units engaged in the task of regulation only, at the expense of other functions. This began to change in the late twentieth century.

Changes Governmental public management has undergone far-reaching changes in many democratic countries since the 1980s. As an institution of the state, it is directly affected by changes in the functioning of the state and the new division of labor between the state and the two other sectors – private and social. If the state indeed becomes skeletal, the civil service will follow suit and become less involved in the many arenas in which it had previously engaged. These changes are related to globalization, but also to diminishing public trust in political institutions. The gap is

A comparative perspective 9 striking here between new, impoverished countries, which need strong institutions and a well functioning civil service to extricate themselves from their plight, and veteran, wealthy states now engaged in shrinking the public sector and reducing its functions (Peters, 1996: 205–20). Supranational bureaucracies already exist in international organizations, the European Union, multinational agencies, and regional projects. However, the global economic crisis, which started in 2007, may yet reverse or change this trend. These developments began to alter perceptions about the applicability of the Weberian model to the civil service. First, it is almost impossible to maintain a monopoly of official information, hence the confidentiality laws and perceptions about the anonymity of civil servants have changed (Galnoor, 1989a). Second, the informal networks that link the civil service and interest groups – described in the USA by Charles Merriam (1944) even before World War II – have grown steadily and become an even more ramified system of media channels, nonprofits, subsidies, and professional lobbying. Third, pressure grows constantly for the civil service to become more representative of the population, especially at the senior levels, both as a principle toward which public management must strive, and also to avoid discrimination (Esman, 1999). Accordingly, several countries have instituted affirmative action for recruiting and promoting public employees who belong to groups that were previously excluded. Fourth, demands that the civil service be directly accountable to the public led to greater transparency and the creation of institutions such as the ombudsman and commissions of inquiry, as well as increased judicial scrutiny of public management institutions. These changes altered the traditional traits of the civil service in western democratic countries. No longer is it necessarily a permanent, lifelong job, and now outsiders – with increasing emphasis on management skills – are often recruited for senior positions. In many countries, privatization policies have reduced the size of the civil service, transplanting fields such as communication and even prisons into the private sector; nonprofits now handle some of the welfare services (see chapter 11). At the same time, regulatory functions have grown tighter, especially by entities external to the civil service (as we shall see in chapter five). Under the influence of business administration, the trend has grown to separate policymaking from service provision. This has contributed to a marked improvement in public services, though the effect is positive only in fields where services are tangible, rather than in areas such as education or welfare. Transplanting business models to the civil service without paying close attention to the differences can undermine the responsibility borne by the state and its arm – the civil service – toward pursuing common goals. An example of this is the “private police force” employed by wealthy neighborhoods in many cities of the world. Furthermore, the heightened politicization of policymaking in government ministries – in which professional civil servants are increasingly scarce – leads to the distorted allocation of resources, the control of regulatory bodies by interest groups, and harm to the democratic value of equality.

10 A comparative perspective

Blurring the boundaries: public, business, and social sectors Earlier, we defined three sectors according to the accountability test: the public accountability of elected officials and their emissaries; the private accountability of business owners; and the social accountability to the collective of nonprofit heads. This classification is imperfect, though, as exemplified by the overlapping legal status of organizations in the various sectors. This division also makes it difficult to classify unique organizations such as foundations, universities, unions, and government nonprofits engaged in welfare activity. Indeed, a large portion of the literature on this subject is devoted to taxonomy – repeated efforts to come up with the perfect system of classification (Salomon and Anheier, 1998). Unlike the scientific classification of plants and animals, based on structural similarities, origin, and the like, the taxonomy of organizational phenomena – which are, after all, artificial products of human activity – is conditioned by specific needs. My proposed classification, based on the accountability criterion, is intended to demonstrate that public and private sector organizations are distinct and separate for certain purposes; to suggest the unique development of public management and state civil servants in Europe; and to emphasize the rise of thirdsector organizations as an expression of civil society, complementary to, and sometimes even a substitute for, government services. In the era of the strong European state, the public sector was distinctive for its scope and power, as well as the requirement that civil servants demonstrate special responsibility in their conduct. Were the public and private sectors completely separate at the time? In some states, such as France and Germany, they were largely distinct, while in others, such as England and the USA, the separation was imperfect because of the intrinsic and powerful position of the private sector. Vincent Wright (2000) asserts that absolute separation did not exist anywhere, especially with expansion of the executive branch in the first half of the twentieth century. The blurring of the divide between the sectors appeared even then: the provision of some public services through private bodies (e.g. state subsidized loans via banks); the common funding of some projects; cooperation with interest groups; the mobility of employees (primarily from the public to the private sector); and government regulation of private business. However, the government was, to a great extent, directly involved in the economy, and this was justified ideologically in many countries. In states defined as capitalist, state involvement was rationalized as necessary for addressing “market failures” in cases such as the following: • • •

public goods (e.g. clean air), in which consumption is collective, therefore they cannot be marketed individually; services and products with externalities that are not incorporated in their price (e.g. the pollution of rivers); or services or products that could be defined as “natural monopolies” – gas or telephone services, irrigation, or military industries – because of the economy of scale, the impossibility of real competition, security considerations, etc.

A comparative perspective 11 Other reasons – ideological, political, and regional – have also been used to justify government intervention in the economy, which contributed to mixing the public and private sectors. Suffice it to say that the steering functions of the government necessitate alliances, a division of labor, and exchange of resources among the sectors – the partners – that are required for common activity in any society. Thus, rather than defining the citizen as the “subject” of the government, and rejecting the assumption that public policy is executed solely by official public authorities, in practice pursuit of the public good is complex and draws upon organizational activity in all three sectors. As with the economy, this conglomerate operates in many areas and has no clear legal standing. Bertram Gross (1964) suggested calling it “the central guidance cluster” – a title that indicates both the complexity of its components and the limitations of its power. These observations do not contradict the fact that separation of the sectors was deeply ingrained and assiduously reserved for the core governance roles of the state – what has been called in France les services publics – such as monopoly over the military (Wright, 2000). The change in the western world began in the 1970s, and was defined thus in an article published in 1980, before the age of ideological privatization: “To an ever increasing degree, governments at all levels are vesting responsibility for the performance of important government activities in ‘quasi-private’ organizations outside the traditional government framework” (Musolf and Seidman, 1980: 124). These changes were rooted in the internal dynamics of western societies, which became more focused on the individual, group identity, commercial firms, local governance, and civil society. The new pluralism challenged the institution of the state as the paramount association of any society. This threat took a toll on the standing of the nation-state as an exclusive association in the society. The oil crisis in the 1970s and globalization made up the chrysalis from which the changed state began to emerge, even in continental Europe, where the state had sometimes been considered a kind of organic entity.6 This changed role of the state affected the public sector directly, weakening it relative to the other two sectors (Holligan, 2003; Sheffer, 2004). This can readily be seen in Israel by the decreasing proportion of the public sector in the GNP: from 78 per cent in the 1970s to 56 per cent in 1997 (Zeira, 2004). Differences between countries aside, what was the nature of these changes? First, on the ideological level, the monopoly of the state was now being challenged in all arenas. Second, institutionally, “quangos” – quasi-NGOs – and independent organizations were created to carry out state functions (in Israel, government ministries and local authorities even created nonprofit organizations) (“Quangos in Politics,” 2001: 12631–4). Third, in the realm of state budgets, funds were transferred to private bodies and nonprofits to provide services on a contractual basis, for example, chronic care that the state must provide by law (Israeli Center for Third Sector Research, 2003). In addition, extra-budgetary public authorities and government corporations were created. Fourth, the number of civil service employees was reduced, and their geographical spread limited, as

12 A comparative perspective efforts were made to introduce “business methods” into the government. Later I will return to some of these issues in the context of privatization. Blurring the boundaries of the sectors begat new and creative combinations. Some of these were instrumental and a product of the changed role of the state – improved services to the citizens, the introduction of management methods by the delegation of authority, or ensuring the rights of groups by strengthening thirdsector organizations. Other changes were ideological and rooted in neoconservative views that advocate strengthening the business sector, not just by economic means, but also by incentives, weakened unions, bringing private interest groups into the ministries, reducing transfer payments to the disadvantaged, etc. This process led to structural changes in the public sector, reducing its ability to cope with new problems or ensure the complex regulation required over the business sector. Furthermore, undermining the authority and prestige of the civil service – when the only goal had been to reduce its size – also undercut the foundation on which it had previously rested: loyalty, honesty, integrity, impartiality, and objectivity (UK Cabinet Office, 2006). It has not yet been demonstrated that the privatization of public bodies has enhanced ethical conduct; indeed, some would say the opposite: Corruption increased because of the creation of hybrid institutions with unclear accountability. Since transparency declined in the services provided by private bodies (e.g. privatized prisons), the public continues, justifiably, to view the government as responsible, while the government has not been successful in overseeing the private bodies (Wright, 2000). The issue of accountability opens the door to substantive questions that go to the heart of democracy. I make note of these in closing, but do not deal with them in this book: • • • • • • • •

In the age of blurred boundaries, can the public continue to demand accountability from its elected officials? Indeed, can it depend on them? Will parliamentary oversight of the governmental civil service (such as the budget) become a sham? Is it desirable and possible to redefine the boundaries of the public sector, or should this be left to public–private–social “market” forces? Can the state continue to maintain its monopoly over the use of force and the legitimacy of that monopoly? Can the state, on behalf of society, manage to persuade the private sector that efficiency alone is not a value when it promotes, for example, inequality? Will the twilight zone between the sectors give way to the domination of private interests (business or political) over public power? Is it possible in this new era to formulate a common ethical code among all the public servants within and outside the civil service? Will the global economic crisis of 2008–09 influence dominant economic assumptions about the role of the state and its public management, and the associated issues of privatization and regulation?

Let me conclude this chapter by stating that if politics is the art of the possible, public management makes politics possible.

2

The public sector in Israel broadly defined

Based on the classification proposed in chapter one (Table 1.3), the civil service is only one part of the public sector as broadly defined. In this chapter, I look more closely at the various institutions: those in the governmental executive branch (government ministries, statutory authorities, and government corporations); those that are nongovernmental (such as the Knesset Administration); public institutions that are distinctive to Israel (such as the national health funds); and the local authorities. Finally, I discuss whether the public sector in Israel is large relative to the size of the population.

Governmental institutions in the executive branch Government ministries Government ministries are the frameworks in which government policies are made and services provided to the citizens of the state. Each ministry is headed by a minister, who is accountable to the Knesset. The ministries are quite dissimilar from one another in terms of the nature of their tasks, the scope of their responsibilities, and the arenas of their activity. The task of the Office of the Prime Minister is to coordinate the activities of the entire executive branch. Then there are several super-ministries: Defense, Finance, Foreign Affairs, Justice, Interior, and National Infrastructure. The Ministries of Education, Industry, Trade and Labor, Welfare, and Agriculture are generally responsible for services to specific segments of the population, while the Ministries of Tourism, Health, Immigrant Absorption, and Environment more closely resemble headquarters for coordinating policy that will be implemented by other bodies.1 When Israel was established in 1948, the Provisional Government had 16–17 ministries. The government that took office in Israel following the 2009 election had a record 24 ministries, four of which were new. The number of ministers (30, of whom three hold no portfolio) is the highest in the history of Israel. Despite this numerical growth, the organizational frameworks formed early in the history of the state have remained strikingly stable. The following ministries have not changed: Prime Minister, Defense, Foreign Affairs, Finance, Justice, Education (Culture and Sports), Interior, Agriculture (and Rural Development), Transportation, Health,

14

The public sector

Industry and Trade, Welfare, Labor, and Police (Public Security). On the other hand, several ministries have been eliminated over the years, while many new ministries have been established: Housing (1961), Tourism (1964), Immigrant Absorption (1969), Energy and Infrastructure (1977), Science and Development (Science and Art, Science and Technology) (1981), Environment (1988), National Infrastructure (1996), and the Development of the Negev and the Galilee (2003). Between 1949 and 2009, the number of ministries ranged from 16 to 24, and the number of ministers, from 12 to 30. However, fluctuation in the number of government ministries obscures what is stable: The executive branch in Israel has operated for over 60 years through some 15 permanent ministries. After such an extended period, it can be said that this configuration seems to reflect political and administrative needs that are hard to alter, and that in practice it should suffice, with periodic adjustments for new needs. Some of these new needs have led to the creation of new ministries (Environment, Science, and Tourism) and occasionally the elimination of others. On the other hand, most of the changes and additions, including ministerial mergers and splits, were designed to meet coalition needs and lacked substantive justification. The current Basic Law: The Government (Article 31, a–d) does not constrain the government in this respect, and allows it to merge, divide, eliminate ministries altogether, or establish new ministries – with Knesset approval, and to transfer areas of activity from one ministry toanother without Knesset approval. The debate about the “correct” number of ministries (as opposed to the “correct” number of ministers) misses the point. Felsenthal (1974) and Shani (1974) noted that a change in the number of ministries on its own does not make a difference, so long as it is not accompanied by significant changes in management and organizational capability. The problems that emerged and persist since the early days of the state are not about the number of ministries, but about the absence of a well formed conceptualization of the civil service and its subordination to partisan interests. In discussing reforms in the final chapter of this book, I note that the civil service in Israel can be based on the 15 permanent ministries, with requisite adjustments. Subsidiary units Subsidiary units within the government ministries are partially independent. They include Educational Television in the Education Ministry, the Courts Administration in the Justice Ministry, the Meteorological Service in the Transportation Ministry, and the Central Bureau of Statistics in the Office of the Prime Minister. In 2009, there were 26 subsidiary units and an additional 22 government hospitals. The autonomy of these units is reflected in how the head is appointed, his or her status, the existence of a separate budget, and the authority to hire professional staff such as a legal advisor, comptroller, human resources director, etc. There is no clear or uniform definition of the status or functions of a subsidiary unit.

The public sector 15 Statutory authorities The term “statutory authority” is not defined by law. This body bears a variety of names: public corporation, law-mandated corporation, statutory corporation, council, and others. We will use the most common: an authority or a statutory authority. According to Israel’s Council for Public Corporations (2003: 9), an authority is “a separate legal entity established by law or legislation that mandates the discharge of public functions and determines substantive and procedural arrangements.” Most authorities come into being through a specific law creating them, and are intended to serve functions that are inappropriate for government ministries, or that decision makers do not want to impose on the ministries for a variety of reasons. Although an authority is a separate legal entity and operates independently, it is still accountable to its minister, and the minister is responsible for implementation of the law that established the authority and defined its responsibilities. It is the minister who generally appoints the CEO and board members of the authority,2 and also approves the budget, which is separate from the ministry’s budget (Zamir, 1996: 387–94). The board, composed of representatives of the public, is responsible for policymaking. An authority is not intended to be a profit-making enterprise, and its success is measured by discharge of the public mandate for which it was established. Authority employees are not considered civil servants, narrowly defined, are not included in the Civil Service Commission reports, and generally are not accountable to the Council for Public Corporations, with the exception of certain matters such as disciplinary issues. The reason for establishing an authority may be the desire to underscore its function as distinct from government ministries (e.g. the Council for Higher Education3), or the desire to endow the authority with independent management, budget, and personnel (e.g. the Israel Airports Authority, the National Insurance Institute, and the Israel Securities Authority). Some authorities were founded for reasons that may have made sense at the time, but their existence outside a government ministry may now be hard to justify; or it may be hard to understand why they were not set up as subsidiary units within the ministries. Examples of this are the Israel Institute for Occupational Safety and Hygiene, the Israel Anti-Drug Authority, and the production councils of various fields of agriculture There are also authorities whose presence in the executive branch is questionable, such as the Israel Broadcasting Authority, Magen David Adom in Israel (the Israeli Red Cross), and the Employment Service. In 2008 there were 51 statutory authorities (Israel, Ministry of Finance, 2008). It is difficult to say why some were established by a separate law (Israel, Council for Public Corporations, 2003: 28–34). Approximately 15 of these authorities were created in order to operate independently with respect to economic matters, or to engage in oversight and regulation, such as the Bank of Israel, the Council for Regulation of Sports Gambling, and the Standards Institution of Israel. Approximately 10 authorities operate in the fields of science, education, and culture – where independence is justified – such as the Israel Academy of Sciences and Humanities and the Antiquities Authority. Nine authorities deal with agriculture,

16

The public sector

such as the Poultry Council. Five authorities are memorial institutes for leaders such as David Ben-Gurion, Yitzhak Ben-Zvi, and Menachem Begin. Government corporations4 Article 23 of the Government Corporations Law (1975) provides the following definitions. 1

2

3

Government corporation. A corporation in which more than half the voting power of its general membership, or the right to appoint more than half its board of directors, is entrusted to the state or to the state jointly with a government corporation or a government subsidiary corporation. Government subsidiary corporation. A corporation in which more than half the voting power of its general membership, or the right to appoint more than half its board of directors, is entrusted to a government corporation or to a government subsidiary corporation or to a government corporation jointly with a government subsidiary corporation. Mixed corporation. A corporation that is not a government corporation and in which half or less of the voting power, or the right to appoint half or fewer of the board of directors, is entrusted to the state.

Government corporations are included here as public management institutions because their establishment as corporations is justified not for business ends, but rather the intent to serve the general public interest, which cannot otherwise be achieved. The rationale for creating a government corporation in an area that could have remained in the business sector varies with each country, and is the source of ideological dispute regarding state intervention in economic matters. What follows are the principal reasons that apply to Israel. First, the provision of “public goods” may not be suitable for the free market because their price cannot fully reflect the social costs and/or benefits (Katz, 1997: 121; Zamir, 1998: 47). Security and environment are two examples that often come to mind, as citizens “consume” these only collectively and therefore their provision is entrusted to the government. This can be accomplished by a government corporation (such as the security industry) or by regulation (the Ministry of the Environment). In other cases, a product may be private, but if it is not profitable, or if the public interest takes precedence, it may be entrusted to a government corporation, for example, the Coins and Medals Corporation or the Ayalon Highway Company. Second, government corporations may be established to carry out activities that fall under the definition of development. Government corporations have been established in new states, in states having socialist governments, or in states with special needs – for economic development, investment in poor regions, construction of infrastructure for transport and energy, or construction of large plants. The rationale is that private capital would be insufficient for these enterprises, or that it would be undesirable to place them in private hands (Aharoni, 1991: 87–91, 143–84). Examples of such Israeli government corporations are the Dead

The public sector 17 Sea Works, Zim Shipping Services, and TAHAL for water resources planning and management (all of which were privatized). Recent examples include the Mekorot National Water Co., Rafael Advanced Defense Systems Ltd, and various corporations for regional development. Third, government corporations may be created to provide services or products that are “natural monopolies”, that is, when the ratio between consumption and the cost of supply is not profitable except under conditions of monopoly, because the market is relatively small and production costs high. This affects primarily areas such as water, electricity, energy, railway tracks, roads, and other infrastructure. In Israel, most of these resources are provided directly by government ministries, and some by government corporations such as the Israel Electric Company (since 1923), Mekorot National Water Co. (since 1937), Ayalon Highway (since 1970), and Israel Natural Gas Lines Ltd (since 2003). Fourth, government corporations are sometimes established in commercial fields declared vital for reasons of security, economics, or social needs – fields in which the government believes that public interest dictates control by the state. Examples are agricultural development, water resources management, industrial growth, and development of the Negev region. Every government corporation is accountable to a minister or ministers who have direct influence over appointment of the CEO and board of directors. In 1975, the Government Corporations Authority was founded, whose primary mandate by law is to advise the government about issues related to government corporations, monitor their activities and the attainment of their goals, receive ongoing reports, and attend to all matters of common interest. In 2007, there were 95 government corporations and subsidiary corporations in Israel, which – according to the classification of the Government Corporations Authority – fall into the 10 activity areas that appear in Table 2.1. As with statutory authorities, there is a range of reasons for establishing a government corporation, but the Government Corporations Law mentions none. Regarding the guidelines for operating government corporations, the law stipulates: A government corporation shall operate according to the business principles by which a nongovernment corporation ordinarily functions, unless the government, with the approval of the committee, has set other operating principles; this provision shall not apply to a government corporation for which the founding documents prohibit the distribution of profits. (Article 4a) The “operating principles” cited in this law do not convey the rationale for creating government corporations; a corporation established for reasons of security, after all, can operate according to business principles, security principles, or both. Scrutiny of the list of government corporations that existed in the past and those operating in 2007 reveals a broad spectrum from which no clear criteria emerge for the creation of government corporations. One can find historical corporations

Table 2.1 Government corporations, subsidiaries, and mixed corporations (2007) Activity area

Number of Thereof: Examples corporations noncommercial corporations

Security

6

1

Construction, housing, and development

9

6

Energy and oil exploration

5

1

Agriculture

7

4

Electricity and water

6

2

Continuing education funds

12

12

Transportation and communication

16

4

Tourism

8

7

Industry and trade

8

3

Other services

18

16

Total

95

56

Israel Aerospace Industries, Israel Military Industries, Rafael Advanced Defense Systems Amidar National Housing, Halamish Housing & Urban Renewal, Prazot Jerusalem Housing, Shikmona, Arim Urban Development, Carta Development for Central Jerusalem Oil Refineries, Petroleum & Energy Infrastructures, Oil Products Pipeline, Israel Natural Gas Lines, Geophysical Institute of Israel Israel Bank of Agriculture, Mikveh Israel Agricultural School, Insurance Fund for Natural Damage Israel Electric Co., Mekorot National Water Co., National Coal Supply Corp., Israel Oceanographic & Limnological Research Funds for academics, engineers, technicians, lawyers, civil servants, pharmacists Israel Railways, Haifa Port, Ashdod Port, Eilat Port, Ayalon Highway, Trans-Israel Highway, Marine Education Co., Marine Education & Training Authority Israel Government Tourist Corp., Central Hospitality Training School, Development Corporations: Eilat Coast, Dead Sea Coast, Sodom and Arad Region, Old Acre Israel Wine Institute, Israel Consumer Council, Life Science Research Israel, Rotem Industries Environmental Services Co., Israel Community Centers Assoc., Sde Boker Midrasha, Habima Building Co., Coins & Medals Corp.

Source: Israel, Government Corporations Authority, Report of Government Corporations for 2007, Report No. 47. [Online http://www.gca.gov.il/GCA/HomePage/UpperNevigationBar/CompaniesStatement (accessed 12 February 2010)] (in Hebrew).

The public sector 19 established soon after the founding of Israel to address immigrant absorption, development, or security issues, as well as noncommercial corporations established because of party or coalition considerations. According to Table 2.1, 56 of the companies are defined as “noncommercial” and operate primarily in the fields of culture, industry and trade, continuing education funds, and other services. The privatization policies of the 1980s were focused primarily on commercial government corporations. These were either sold on the private market, converted into mixed corporations, or had the government’s role in them narrowed in other ways. As we shall see at the beginning of chapter eleven, privatization in Israel reduced government corporations and subsidiary corporations by over a third – dropping from more than 150 in the late 1960s to fewer than 100 in 2007. Since 1980, only 13 new government corporations were established in industry and trade, water and electricity, services and tourism. Government corporations differ from each other in the number of employees, scope of activity, capital, revenues, and export activity. In early 2008, the total number of employees was 63,376. The six security-related government corporations employed a total of about 25,000 workers, while 18 companies in the fields of culture, art, and other services employed a total of about 5000 workers. By definition, government corporations are part of the executive branch, but they also show significant differences in the issues they address: Some are clearly part of the public sector, but others could be grouped in the business or even nonprofit sectors. These distinctions call for a clear conceptualization of the boundaries of the role of the state.

Nongovernmental public management In Table 1.3, we noted the existence of several public bodies that are not part of the government civil service. To complete the picture, we discuss them briefly here (Table 2.2). These are not part of the executive branch; their employees are not civil servants in the narrow sense of the term; and the responsibility for their activity falls on the organization heads, not the government or its ministers.5 In keeping with the principle of the separation of powers, government control over the budgets of the Office of the President, the Knesset, and the State Comptroller would harm their independence vis-à-vis the executive branch. Similarly, the Bank of Israel, like central banks in other democratic states, must be autonomous, conducting its activity independently of other authorities. Nevertheless, the total budget of the Bank should have to receive approval from the Knesset Finance Committee, as do the other three bodies.6

Other significant public institutions Separate from, but close to, governmental public management are several institutions not under direct ministerial responsibility and having different legal status, but which are important in the context of the public sector, so we mention them briefly.

20

The public sector

Table 2.2 Nongovernmental public management Unit

Responsible authority

Legal source

Annual budget 2009

Office of the President

President of the State

Basic Law: President of the State

Knesset Administration

Speaker of the Knesset

Basic Law: The Knesset

Office of the State Comptroller Bank of Israel

State Comptroller

Basic Law: The State Comptroller Bank of Israel Law

NIS 38 million, approved by the Knesset Finance Committee NIS 455 million, approved by a special committee with representatives from the Finance Committee and Knesset Committee NIS 220 million, approved by the Finance Committee NIS 633 million, approved by the Bank Governor

Governor of the Bank of Israel

Number of employees (2009) 40

525

545

684

Sources: Israel, Ministry of Finance (May 2009) State Budget Proposal for 2009–10. [Online http://www.mof.gov.il/BudgetSite/EconomicPlan/Lists/20092010/Attachments/2/012009-2010. pdf (accessed 15 January 2010)] (in Hebrew). Israel, Bank of Israel (1 January 2009) Press Release: Bank Work Plan and Budget – 2009. [Online http://www.bankisrael.gov.il/press/heb/090112/090112h. htm (accessed 15 January 2010)] (in Hebrew). Israel, Bank of Israel (May 2009) Annual Report 2008, Officer Responsible for Compliance with the Freedom of Information Law. [Online http://www. bankisrael.gov.il/deptdata/dover/hofesh08.pdf (accessed 15 January 2010)] (in Hebrew).

The “national institutions” This is the general name given to the Jewish Agency, the World Zionist Organization, the Jewish National Fund, and Keren Hayesod/United Israel Appeal. These were the main governing bodies of the Jewish community in the pre-state period. They are not Israeli state institutions and not part of the public sector in Israel, but are present and active in Israel in various public arenas, often functioning in place of government ministries in some fields. Examples are the Jewish Agency’s “absorption centers” for new immigrants; the World Zionist Organization’s involvement in funding settlements in the territories occupied since 1967; and the Jewish National Fund’s control of much of the land in Israel and projects for development, forestation, and settlement. In addition, these institutions were in partnership with government corporations such as the Mekorot National Water Co. and others. It should be noted that these public bodies, defined as belonging to “the Jewish people,” do not provide services in a universal and equitable manner to all citizens of Israel, but only to the Jewish population, thereby discriminating against the others (on the national institutions see Galnoor, 1982: 69–71; Sharkansky, 1987: 10; Katz, 1997: 139).

The public sector 21 The Histadrut (General Federation of Labor) The Histadrut General Federation of Labor, founded in 1920, is essentially a voluntary body that is not part of, or accountable to, the state government. However, during the years when the Labor Party dominated the government, the Histadrut could have been classified as a major institution in the public sector because of the special roles it assumed in Israeli society, and also because it was not just a union, but a complex conglomerate of social services and business enterprises that comprised a significant segment of public activity in Israel. Hevrat HaOvdim (literally “society of workers”) was the holding company of all the Histadrut economic enterprises, such as Koor Industries (a diversified conglomerate), Tnuva (agricultural products), and Bank Hapoalim. Histadrut membership included the kibbutzim (with the exception of those in the religious kibbutz movement), 80 per cent of the moshavim (agricultural communities), and cooperatives such as Egged bus lines and the General Health Fund. In the 1960s, Histadrut-affiliated companies contributed some 20 per cent of the GDP in Israel and employed 23.5 per cent of the labor force (Barkai, 1964: 25, 35). Over time, however, the status and influence of the Histadrut gradually waned; since the 1990s, it lost control of the health fund, Hevrat HaOvdim was dismantled, the economic companies were sold, the unviable companies were shut down, and membership declined. The Histadrut became primarily a labor union, which can now be classified as a voluntary body in civil society (on the early changes see Grinberg, 1993). Religious institutions in Israel Most countries, including Israel, would place religious institutions of all kinds in the third sector, because they represent patterns of civil, voluntary participation and communal activity (Salomon and Anheier, 1998; Gidron et al., 2004). In Israel, however, state and religion are not separated, and religious institutions are practically part of the state, or are heavily supported by it. Religious institutions comprise 26 per cent of the total number of social organizations active in 1998 (Gidron et al., 2004). This includes synagogues, mosques, churches, mikvehs (Jewish ritual baths), funeral parlors, religious cultural and research institutes, etc. To these can be added charitable trusts and ultra-Orthodox educational institutions such as yeshivas, kollelim (schools for the religious education of men), and talmudei torah (religious, after-school classes). The Ministry of Religious Affairs, temporarily disbanded in 2001, was established primarily for purposes of funding these institutions, and is responsible for a large portion of their maintenance. There are no aggregate data on the religious institutions, therefore they are not included in Table 2.4. Institutions of higher education and health funds The common denominator of these institutions is not merely that they are not-forprofit, but that in many senses they are part of the quasi-governmental public

22

The public sector

sector. In many countries, these organizations are considered part of the third sector, while in other countries they are entirely private bodies. In Israel, the institutions of higher education (Galnoor, 2009: 542–4) and health funds exist and operate by virtue of specific legislation, and thereby resemble statutory authorities.7 Furthermore, the lion’s share of the university and college budgets comes from the state coffers, and this is also true of the four health funds, which are financed by the health tax – a compulsory tax collected by the state. Thus, in Israel, both higher education and health services are considered part of the state’s obligation to its citizens.8 Although their operation is under the general responsibility of the Minister of Education and the Minister of Health, actual supervision is carried out through independent institutions: the Council for Higher Education and the Health Council.

Local authorities The local authorities are not part of the state executive branch, but are separate and autonomous elected governments. Local authorities are part of the public sector, broadly defined by virtue of being institutions of local governance. While many countries have regional governance institutions, such as counties or provinces, no structures exist in Israel between the local authorities and the central government. In this sense, the local authorities provide the only democratic forum for Israelis at the local level. Some cities also have neighborhood self-governance bodies, which are dependent on the willingness of the local authority to delegate authority and the level of participation of the residents. Local authorities in Israel, particularly in small towns, are not financially selfsufficient, and allocations from the state budget constitute a significant part of their income (Table 2.3). In 2008, Israel had 252 local authorities composed of 77 cities, 122 local councils (smaller municipalities), and 53 regional councils (comprising several local communities). Unlike government ministries and corporations, no statutory body exists to ensure cooperation and coordination among the local authorities. The Union of Local Authorities in Israel was established in 1938 as a nonprofit association to promote issues common to these bodies, but it has no power or legal status vis-à-vis any of the authorities. This is also the case Table 2.3 The local authorities (2006) Type of authority Cities Local councils Regional councils Total

Number of authorities

Total income, in NIS millions

State budget contribution, in NIS millions

Proportion received from state budget

72 125 54 251

32,936 5,895 5,819 44,650

8,169 2,576 2,215 12,960

25% 44% 38% –

Does not include authorities that were consolidated and then redivided. Source: Israel, Central Bureau of Statistics and Ministry of the Interior (2008) The Local Authorities in Israel 2006, Publication 1315, Jerusalem (in Hebrew).

The public sector 23 for voluntary associations such as the Forum of Mayors of Major Cities, and the Committee of Mayors of Arab Local Authorities. According to the Municipalities Ordinance and the Local Councils Ordinance (which originated in the British Mandatory era), the Minister of the Interior has the authority to establish local authorities. Through the district governors, the Minister is also responsible for the supervision, bylaws, elections, budget, and administration. The local authorities are subordinate to the Ministry of the Interior (or to the Ministry of Finance for budgetary matters), with all that this implies in terms of the centralization of authority, and lack of recognition of the independence of the local authority. In 2005, some 107,200 Israelis were employed by the local authorities, a number that gives no indication of the scope or quality of the services provided, nor does it reflect the huge gaps between local authorities. Since the 1980s, the number of those employed by the local authorities has decreased by about a third as a result of the ongoing financial crisis in most local authorities. Local authorities were included in this discussion for purposes of delineating the boundaries of the public sector.

Size of the public and government sectors The foregoing provides a survey of the public sector in Israel in its broadest sense, which includes – in addition to the governmental institutions of the executive branch – the nongovernmental institutions in the political system, other large public institutions, and the local authorities. These are the approximate “borders” of public management in Israel, and we can now summarize the findings. Table 2.4 maps the scope and aggregate weight of the public sector in Israel broadly defined, but does not presume to establish whether or not it is oversized (Ofer, 1986; Katz, 1997: 145). These data reflect the situation post-2000. As we shall see later in this book, the components of the public sector have shrunk since the 1980s, primarily because the core civil service has contracted and some of its tasks have been eliminated. At the same time, some services are now provided jointly with bodies in both the private and the third sectors, thus even the label “public sector” is less explicit than it had been in the past. As evident in Table 2.4, nearly half a million civilians were employed in Israel’s public sector most broadly defined (the figures are all for 2005 to create a uniform base): this includes many employees not generally regarded as “civil servants” – police officers, prison guards, teachers, judges in secular and religious courts, and staff at institutions for higher learning and health funds. The total number of public sector employees in Israel that year was approximately 2.1 million. This means that public sector employees broadly defined comprise roughly one-quarter of the wage-earners in the labor force, and approximately one-fifth of the general work force – a low figure, considering the widespread belief that the public sector employs over half the wage-earners in Israel.9 The reason for this mistaken belief is that third sector organizations are incorrectly included in the definition of the public sector, because most of the funding for these organizations in Israel comes from public sources. This fact, however, does not place third sector organizations into the public – and certainly not governmental – sector as defined

24

The public sector

Table 2.4 Number of public sector employees broadly defined (2005) Governmental public managementa

Government ministries and 59,327 subsidiary units Temporary and special contract 1,200 employees Subcontracted employees 12,384 Statutory authorities 19,262 Government corporations 66,187 Teachers 126,538 Police and prison employees 33,048 Total 317,946

Nongovernmental public management

Office of the President Knesset Administration State Comptroller Bank of Israel Judges in religious and secular courts Total

Large public institutions

Local authorities

Higher education institutions (all staff) Health funds Total Total

Total employees in the public sector broadly defined

53 593 555 760 636 2,597 19,623 42,500 62,123 107,200 489,866

Source: Central Bureau of Statistics for employees of local authorities, police, prisons, and judges in secular and religious courts; Ministry of Education for teachers; Finance Ministry, Director of Wages and Labor Agreements for employees of statutory authorities; Government Corporations Authority for employees of government corporations; Bank of Israel employee data provided by the spokesperson; Office of the President employee data provided by the Director; Knesset employee data provided by the Office of the Knesset Director; State Comptroller employee data taken from the website http:// www.mevaker.gov.il/serve/site/docs/din2006.doc (accessed 15 July 2006). Employee data for institutions of higher learning (universities and colleges) appear in the Council of Higher Education’s report by its Planning and Budgeting Committee, No. 31/32, October 2006, pp. 123, 133; employee data for health funds (including hospitals in the General Health Fund) were provided by the Director General of the Ministry of Health. Note a Based on data from the Civil Service Commission.

above, as they are volunteer social organizations in terms of accountability and activity. Business organizations, too, may receive public funding, but this does not make them governmental or public. Moreover, the lion’s share of government support is given to the large institutions that we labeled “quasi-governmental” – schools of higher education, health funds, and religious organizations. The public sector in Israel is big, but comparable in size with that of European countries such as Ireland, Italy, Belgium, Germany, and France (Gidron et al., 2004). Its size is determined primarily by public expenditure on security, immigrant absorption, and – until recently – relatively well developed social services.

The public sector 25 Table 2.5 Size of population and civil service employees, by decade Year

Population (1000s)

Civil service employees*

Relative to previous decade (%)

Citizens per civil servant

1950 1960 1970 1980 1990 2000 2005

1,174 2,089 2,930 3,836 4,560 6,209 6,870

22,885 38,691 53,938 66,631 54,517 57,447 60,527

– 170 140 125 80 105 105 (5 years)

51 54 54 58 84 108 113

Source: Israel, Central Bureau of Statistics, Statistical Abstract of Israel for 1951, 1961, 1971, 1981, 1991, 2001, and 2006. Note * Narrowly defined, including temporary and special contract employees.

178 170 136

140 131

140

119 111

125 105

105

105 101

80 1960

1970

1980

Population growth (%)

1990

2000

2005

2007

Civil service growth (%)

Figure 2.1 Civil service employees of government ministries and population growth in Israel, by decade. Source: Table 2.5; for data on 2007, see Israel, Civil Service Commission, Report 2009.

There are no reliable data for changes in the number of public sector employees over the years, therefore we make do with what has been said above. Let us now focus on the government ministries, the changes over time, and whether the number of employees in the Israeli civil service is large relative to the size of the population. According to Table 2.5, the number of civil servants in government ministries grew consistently in absolute numbers until the 1980s, decreased significantly in the 1990s, and resumed growth in the 2000s. However, in 2007 the number of employees was about 10 per cent lower than in 1980. To these data must be added the changes in the relationship between the number of civil service employees and the increased size of the population, presented in the last column of Table 2.5 and Figure 2.1. As can be seen in Figure 2.1, the size of the civil service remained roughly commensurate with population growth in the first 30 years of the state, especially

26

The public sector

in the 1960s, because of the new needs related to development and immigrant absorption. After 1967, the civil service grew markedly with formation of the Civil Administration in the Occupied Territories (which had 500 employees in the early 1990s) and the increased security needs after this war. This trend reversed in the 1980s, and until 2000 the civil service lagged behind population growth, for reasons cited earlier – privatization policies and the elimination of units from government ministries (but not from governmental public management) with their transformation into authorities and government corporations. Since the founding of Israel, the number of civil servants per capita in the country has decreased by a factor of 2.2: in 2005, there was one civil servant – in the narrow definition – for every 113 inhabitants. Some praise this change on the grounds that the decrease reflects greater efficiency, while others view it as damage to the scope and quality of services to the citizen. To repeat, the numbers can be deceptive because of the internal changes in the composition of the executive branch: some employees of government ministries were moved to authorities or government corporations (Bezeq, MALAM, postal service, railway, etc.). Another problem with the data is the increased employment of nonpermanent civil servants through contractors. Although these numbers diminished following legislation to secure their salaries, approximately 17 per cent of civil service workers in 2005 were still employed via contractors, some on a part-time basis – a total of 12,384 employees. Nevertheless, Table 2.5 reveals the overall picture: government ministries accountable to ministers have diminished in size significantly over the years. As noted, there is no way to gauge what is needed or appropriate in this regard, as it depends on citizens’ expectations of the state and its services, as well as the level of taxation and the scope of resources available. Nevertheless, a reduced civil service does not, in and of itself, reflect greater efficiency. The previously offered services may have disappeared or moved elsewhere, perhaps to less efficient bodies: some of the welfare services in Israel, for example, were transferred to private organizations or nonprofits. It is also virtually impossible to establish whether the number of civil servants in Israel is large relative to the size of the population in comparison with other democratic countries. Every country has its own definition of civil servants – do they include teachers or judges, for example? – not to mention various government strata, and the different ways of dividing tasks between central government and district and local authorities. The scope of services also differs from country to country. Health services in Israel, for example, are in the public realm, hence almost 50 per cent of those who worked for government ministries in 2005 were employed by the Ministry of Health and governmental hospitals. This phenomenon does not exist in the same way in other countries. The difficulty in comparing the size of the civil service in Israel with those in other countries also derives from the many changes that have taken place in dividing tasks among the governmental, private, and social sectors. Instead of counting heads, we should be looking at the activities of the civil service and the quality of the services it renders to the society it serves.

3

The legal framework of the civil service

In this chapter, I look briefly at Israel’s civil service at its inception, discuss the importance of the law to its functioning, and outline the specific laws in Israel that are relevant for the civil service and public management in general. This chapter also looks at the Civil Service Commission, the Administrative Law Courts, and the new Administrative Tribunals. In closing, I ask whether the civil service should be anchored in Israel’s evolving constitution – the Basic Laws.

Inception of the civil service in Israel On 17 May 1948, three days after Israel had declared its independence, government offices opened their doors to the public. This moment was preceded by intensive planning, primarily by the Situation Committee, which had begun in October 1947 to draw up guidelines for the governance institutions of the state-to-be. The committee was composed of political representatives of the national institutions and experts divided into subcommittees that carried out preparatory work in designated areas. A national survey was conducted, for example, to create a database of the labor force in various professions (Kfir and Reuveny, 1998a: 32–7; Fein, 2005: 21–46). The importance attributed by political leaders to this preparatory work is reflected in the protocols of the Mapai party, which passed the following resolution: The apparatus of the Jewish state shall be composed of (a) government employees, with the exception of those disqualified on public or moral grounds; and (b) employees of the Jewish Agency and the National Committee whose roles in these institutions shall be transferred to the state. (Avizohar and Bareli, 1989: 376) The Mandate Government for Palestine (Eretz Israel) had been staffed by approximately 500 senior British officials, while Jewish and Arab civil servants, working primarily as professional experts, served in middle or lower level positions. Altogether in 1945, approximately 20,000 full-time and 10,000 part-time employees served this system; among the full-time employees, 69 per cent were Arab and 25 per cent Jewish (Reuveny, 1974: 24–5; 1993: 236). Of all the Jews employed by the Mandate Government and British army, only 1724 had joined

28

The legal framework

the Israeli civil service by March 1949, so their influence there was not decisive. Hence the sources of Israeli government management should be sought in the pre-state Jewish institutions in Palestine and the Zionist movement. Indeed, some 40 per cent of Israel’s civil service in 1949 had previously been employed by the Jewish Agency, the National Committee, the Haganah (the precursor to the Israeli army), the Histadrut Labor Federation, political parties, or other public entities. Despite the best efforts of the nonpolitical experts in the Situation Committee to create the infrastructure for a professional civil service,1 most senior positions were handed out to party loyalists, thus the character of the civil service was set at its inception: It was party-oriented and operated in accordance with pre-state political modes of operation. A proper infrastructure for a civil service administrative culture was not established at that time. For example, after election to the Constituent Assembly (which later became the First Knesset), one of the senior Mapai members noted in alarm at a closed meeting, “The state apparatus is moving quickly to distance itself from the party – based on a philosophy of nonpartisan governance” (Fein, 2005: 171). Already in February 1948, the Mapam party created a “Department for Personnel”, one task being to place party members in newly created government jobs (Shapira, 1985: 20, 35). To which Ze’ev Sherf, overseeing creation of the new state mechanism, responded, “We never imagined that party interests would override state considerations, but they did” (Sherf, 1959: 113). Another formative element in the shaping of the civil service was collective bargaining, which culminated in a collective work agreement signed between the government and the Histadrut in January 1949. Thus representatives of the workers and the Histadrut became involved in the recruitment, promotion, and dismissal of civil service employees (Reuveny, 1998: 107–8).2 An attempt was also made to ensure the ethical behavior of state employees. British officials of the Mandate Government in Palestine were considered corrupt in matters of licensing, construction, and government funds (Reuveny, 1993: 225); hence a decision was made to screen Jews who had served in the Mandate Government before accepting them into the Israeli civil service. There was also another reason: to test their national – and probably also party – loyalty. Thus several hundred officials were disqualified on the grounds that they were reportedly greedy or not loyal to the national cause (Bondi, 1990: 415–16; Kfir and Reuveny, 1998c: 83). At the same time, efforts were launched to create a professional civil service. To that end, a Staff Department was created in the Prime Minister’s Office, which changed its name in 1954 to the Civil Service Commission. This was initially headed by the Cabinet Secretary, and its mandate was to define the tasks and responsibilities of the government’s administrative units, to increase efficiency, to publish administrative regulations for state employees, to approve appointments at all levels (with the exception of positions on which the government decides), and to prepare examinations for hiring and promoting civil service personnel (Kraines, 1961: 206–10). The next milestone was enactment of the Civil Service (Appointments) Law in 1959, bolstered that year by passage of a law to limit political party activity, which

The legal framework

29

prohibited party involvement for those holding civil service positions at the four senior grades (more about these laws below). Nonetheless, it is clear in retrospect that the civil service from its inception was not one uniform structure, but rather was divided up among the ministries, each loyal to the parties of their ministers and the appointed directors general.3 The civil service, assembled in haste, was not unified and consistent, or analogous to the British model that it sought to emulate. In comparison with other new states, however, Israel enjoyed a salient advantage. Thanks to the pre-existing institutions of the state-in-the-making, the government ministries were not created ex nihilo. Moreover, the preparations of the Situation Committee and others contributed directly to the relatively good functioning of the ministries during the critical first period of the state. The difficulties that marked its early days stemmed not only from the labor pains of its birth or the absence of management expertise, but from the lack of a distinctive administrative approach, as opposed to a political one, concerning how a civil service should function.4 The political system of the new state absorbed a large part of the pre-state bureaucracy, while the opposite possibility, familiar from other new states – the bureaucrats taking control of the politicians – did not occur. Civil authority over the military forces was also ensured. Israeli public service grew into an existing political–bureaucratic network, and in most areas became inseparable from it. The bureaucracy neither threatened the political system nor became a source of political unrest. Despite its significant power and the inevitable friction with the political echelons, conflicts between them did not become a dominant pattern in Israeli politics (Galnoor, 1982: 195–99).5 On the contrary, senior officials in government ministries became full partners in establishing the political system. The rules of the game were shaped during the infancy of state-building. Even when control of a specific area remained vested in the Histadrut, the Jewish Agency, or another nongovernmental body, the relevant governmental bureaucracy participated in – or at least was privy to – the implementation. The existence of a disciplined public bureaucracy lifted a heavy burden from the political leaders, who could rely on senior civil servants to entrust sensitive issues to the correct, party-loyal official. Moreover, they did not need the politicians to spell out for them what to do, because they maintained direct contact with the party organizations in their fields. In the first two decades of the state, Israeli bureaucracy did not generally conform to the theoretical models about the relationship between the bureaucracy and political authority (Fainsod, 1963: 235). On the one hand, it was not a military bureaucracy; it did not belong entirely to one party; and it was not a “ruling bureaucracy” that holds sway in the state. On the other hand, it was also not a “professional bureaucracy” in the management sense, that is, subordinate to the political echelon and disengaged from partisan politics. Thus a mixed model emerged in Israel of civil service that began gradually to assume an ascriptive character with an emphasis on recruitment and promotion based on individual merit and greater management–professional independence. The bureaucracy also took on more of a service orientation, though it retained more than enough inefficiency to ensure the “human freedom” that ensues from bureaucratic disorder, noted by Thompson (1973).

30

The legal framework

In retrospect, it can be said that the pre-state tradition of hiring and promoting civil servants on a partisan basis did not serve the new management and professional needs of the young state well. In the 1960s and 1970s, the level of professionalism of the civil service gradually improved, but as we shall see later in the discussion of political appointments, regression began under the national unity government (1984–90). Ever since, issues of the status and professionalism of the civil service have not been resolved. The State Comptroller’s Report for 2005 notes, for example, that the screening and examinations for which the Civil Service Commission is responsible barely achieve their goal, and are not immune from external pressure.

The legality of public management The civil service is not mentioned in Israel’s Basic Laws. Many European countries, on the other hand, have anchored in law the existence, standing, and functions of the governmental civil service in an effort to ensure that the administrative operations of the executive branch are removed from the direct intervention of the parliament.6 A clear example is Article 311 of the Constitution of India, which protects civil servants from arbitrariness in demotion, removal, or dismissal (Jalan, 2005: 132–4). This is sweeping protection of the independence of civil servants and absolute separation between the political and administrative echelons – separation that does not exist in this form even in Britain. Different approaches prevail in other countries. The constitution of the USA, for example, does not deal with the federal bureaucracy, assuming that it would be limited in scope and function. The principle of “the legality of administration” also applies in Israel, meaning that the executive branch and its emissary – the civil service – must act solely and exclusively within the framework of the powers prescribed by law [Basic Law: The Government (2001), Article 32]. One should distinguish here between the government, which draws its general authority to govern from the confidence of the legislators; and the civil service, which is the policy execution arm of the elected government. The governmental legal prerogative of “residual power” means that it is authorized to perform in the name of the state any act that is not legally incumbent upon another authority. This also enables the civil service to embark on new fields of activity. It is commonly believed that executive branch office-holders in democratic governments should not hold unlimited power for the exercise of their authority or discretion. From this evolves the need for judicial review, carried out in Israel by the Supreme Court acting as the High Court of Justice and by the District Courts. This balance is critical because of the quasi-constitutional authority of the executive branch to pass ordinances, that is, to translate the law into practical and detailed regulations, which are the primary legal guidelines encountered by citizens. This authority is necessary for the executive branch to discharge its duty; the limitations on this authority are necessary to prevent the violation of civil rights or the abuse of power. This is why the elected authority, not the government or civil service appointees, is responsible for legislation – to ensure parliamentary

The legal framework

31

accountability to the public. This principle underlies the emergence of administrative law, which regulates the exercise of power of all authorities – the government, local authorities, and public institutions – and oversight in the use of this power (Bracha, 1996; Zamir, 1996, 1998). Administrative law establishes the legality of public administration and circumscribes the power of government over the citizens. Nevertheless, it must be emphasized that the administrative behavior of the executive branch is not limited to the laws that set the parameters for governmental activity. For example, the law cannot – and should not – determine the range of discretionary behavior of an official or police officer; also, the law cannot outline the desired decision making process in every government unit. So long as the activity is performed within the boundaries of the law and according to the general criteria of integrity, equality, transparency, and the like, government units have a broad range of discretion. What follows is a description of the legal infrastructure in Israel in two overlapping circles: the civil service and the public sector at large. This is followed by a discussion of the Administrative Tribunals and Administrative Law Courts, and the chapter ends with the question of whether there is a need for a Basic Law: Civil Service.

Laws pertinent to the civil service Administrative Procedures Amendment (Decisions and Reasoning) (1958) The first law relevant to management enacted by the Israeli legislature did not deal with lofty issues, or even the civil service itself, but with safeguarding civil rights and relations between the citizen and public bureaucracy. This law established several important principles. First, an administrative authority must act in accordance with its powers as defined by law; if it exceeds these powers without due cause, the court can force it to comply. Second, public servants must respond to a citizen’s query within 45 days. Third, if a citizen’s request is denied, civil servants are obliged to state reasons for the refusal, and inform citizens of their right to appeal and how to do so. In the Knesset deliberation about this bill, Dov Yosef, then Minister of Justice, stated, “We want to educate the official to take responsibility. He must understand that he is the one who determines and decides, and therefore he must weigh matters out of a deep sense of responsibility” (Israel, Knesset, 1958–59, 25: 303). Note that this law was passed in response to a recommendation by the State Comptroller (1954/55 Report), and following a ruling by the High Court of Justice that administrative decisions for which no reasons are given are invalid (Aharonson, 1969).7 Civil Service (Appointments) Law (1959) This law lays the foundation for the existence of Israel’s civil service. Even though the law was amended 14 times, only one substantive change was made.8 In the early 1950s, attempts had been made to enact a general civil service law for purposes of ensuring its professionalism and independence of political parties, but

32

The legal framework

these efforts failed, primarily because of opposition from the Histadrut (Reuveny, 1998: 88–9). The 1959 law did stipulate an important matter – the hiring and promotion of civil service employees by public tender and impartial examinations. The use of tenders was intended to serve as a bridge between civil rights and the needs of the civil service based on two principles: ensuring equal opportunity for potential candidates, and selection of the best candidate – “the most qualified among the qualified” in the language of the law. The law establishes the size and structure of the civil service through posts – a listing of positions and their grades in every ministry. It also establishes that the government will appoint a Civil Service Commissioner and a Civil Service Committee – a body whose functions and powers were not defined, but which would serve as a kind of board of trustees to the Commission for setting personnel policies for the civil service. The law does not define the rights or duties of civil servants, other than the obligation of confidentiality, and in retrospect these lacunae have become more problematic over time. The law stipulates that the director general of every ministry be appointed by the government based on the minister’s proposed nominee. This exemption from a tender was designed to allow ministers to appoint directors general who share their ideology and would help implement policies to which the ministers had committed to the voters. The law does not prescribe a partisan character to these appointments, but once the exemption was granted, the appointments system from the pre- and early-state period became a reality in which most directors general were loyal first and foremost to the minister and his or her party or faction, not necessarily to the civil service. The law also allows the government to create another list of positions for which a tender is not required. This list grew and grew over the years – for more about political appointments, see chapter ten. Subsequently, with institution of the internal tender – positions for which ministry employees had priority and often no competition – the number of positions open to external candidates, especially in the top tier, decreased significantly. Civil Service (Curtailment of Partisan Activity and Fundraising) Law (1959) In 1959, when the Civil Service (Appointments) Law was enacted, the need to distance senior civil servants from identification with a political party became clear. In an amendment to the Basic Law: The Knesset, Article 7 states that senior civil servants, military officers, judges, and rabbis cannot stand for election to the Knesset. In other words, they must resign in time if they wish to present their candidacy for election. In the Civil Service (Curtailment of Partisan Activity and Fundraising) Law, the incumbents of the four highest civil service grades are prohibited from actively participating in party activity, election campaigns, or fundraising for a party. In later amendments to this law, they are also prohibited from membership in any body that selects party candidates for the Knesset, the municipal authorities, or other public office. Enforcement of this law became difficult when many parties instituted a system of primary elections. The lack of cooperation by the parties necessitated personal monitoring of senior civil servants to prevent their participation in the elective bodies of their parties.

The legal framework

33

Additional laws set the rights and obligations of civil servants, and these are listed chronologically below, with a brief description of each. Civil Service (Discipline) Law (1963) This law applies a range of disciplinary sanctions to civil servants, in addition to civil law.9 Among the prohibitions are conduct unbecoming a civil servant, or that could harm the good name of the civil service; unfair behavior in the discharge of duties; and concealing or submitting false information to obtain a civil service appointment. For such offenses, civil servants are adjudicated in a special Disciplinary Court under the authority of the Civil Service Commissioner. The penal authority of this court – its “disciplinary actions” – ranges from a warning, reprimand, or severe reprimand written into the employee’s personal file, to garnishing one’s salary, transfer to another post, dismissal, or permanent barring from civil service employment. A verdict handed down by the Disciplinary Court can be appealed to the Supreme Court. The disciplinary laws are, first and foremost, efforts to deter and to ensure public trust in the civil service. In various court decisions, the judges established the principle at the heart of what is required of civil servants: “A public official is a trustee of the public. He does not act for himself, but on behalf of the public interest” (HCJ 669/86 Rubin v. Berger et al., 41, 1, 749, 840). This law, with approximately 80 articles, has frequently been amended, but it is hard to gauge the extent to which disciplinary procedures contribute to the proper conduct, ethical behavior, and honesty of civil servants. In the years 1991–97, an average of 111 complaints were filed annually; in 1998–2001, an average of 220 were filed annually; and in 2005–08 an average of 991 annually (Israel, Civil Service Commission, 2009: 50). These numbers suggest an increasing number of disciplinary offenders among civil servants, including teachers. But the number of complaints do not reveal much. In 2008, for example, 108 cases actually ended in convictions by the Disciplinary Court. A committee appointed by the Ministers of Justice and Finance noted that there is “a critical lack of motivation to cope with violations of disciplinary norms” in the civil service, whether because of a lack of will to deal with the problems or the ineffectiveness of the disciplinary procedure (Israel, 1998: 15). Civil Service (Pensions) Law (1970) This law fills 143 pages including amendments and regulations issued periodically. Its objective is to establish entitlement to a pension for employees (and their survivors) of the civil service, public corporations, and the education system. The right to a pension is set by the Civil Service Commission, and payments are handled by the Pension Administration of the Finance Ministry. This law is a prime example of the convoluted and complex procedures in the civil service, and typical of the remuneration and pension policies that have evolved over the years in a patchwork fashion. The law is not user-friendly to the employee, who is completely dependent upon arbitrary decisions that are difficult to appeal. Rather

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than have one’s rights protected by one’s place of work, employees are sometimes forced to hire private consultants to ensure realization of their rights. Civil Service Regulations (Personnel Code) The Personnel Code is a heavy tome of directives for managing the civil service (Israel, Civil Service Commission, 2004).10 It covers a variety of subjects: • • • •

legal provisions and secondary (subordinate) legislation on the subject of the civil service and other public bodies; collective agreements between the state and the organizations representing state employees (about wages, work hours, dismissals, etc.); directives and procedures set by the government, the Civil Service Commission, and the Ministries of Finance and Justice (about service to the public, procedures for correspondence and filing, and the like); directives concerning the rights and obligations of employees set by the various authorities (limitations on holding a second job, temporary appointments, per diem pay, etc.).

This unwieldy collection dates back to the British Mandate period and the early days of the state, when labor relations in the civil service were regulated by arrangements made in collective bargaining agreements with the Histadrut. Some employment arrangements reached during that period remain in force to this day. Rulings by the High Court of Justice that dealt with the legal status of the Personnel Code stated that while these were internal bylaws, they have the character of a contract between a state employee and the state as employer (Nurieli v. State of Israel, Administrative Petition 373/67, PD 11). Implementation and enforcement of the Personnel Code are entrusted to the Civil Service Commission. The Personnel Code is also a binding framework in some bodies outside the civil service, such as Knesset employees, employees of the Office of the President, and employees of some statutory authorities.

The Civil Service Commission According to the Civil Service (Appointments) Law (1959), the Civil Service Commission is headed by the Civil Service Commissioner, appointed by the government. Today, the Civil Service Commission is an autonomous subsidiary unit in the Ministry of Finance. In 1996–2003, it was part of the Prime Minister’s Office. Among its functions are approval of the organizational structure of government ministries and the division of authority among them; approval of positions and appointments; criteria for promotion, career frameworks, training, and education of civil servants; supervision of tenders and examinations; and streamlining and improving services to the citizen. The Commission is in charge of enforcing the laws cited above and the general public service laws that will be presented below, such as constraints on the acceptance of gifts.

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This law also establishes the Civil Service Committee, composed of the Civil Service Commissioner as chair, five directors general of government ministries, and five public figures. The government appoints the members of this committee. As noted, the Civil Service Committee is responsible for the general policies of the civil service such as approving structural changes in government ministries, cutbacks in personnel and dismissals, exemptions from tenders, approval of the list of public figures in the tender committees, changes in the wage tables, setting of grades (levels), extensions of service, and more. The Civil Service Commission underwent many changes since its establishment in 1950 as part of the Office of the Prime Minister, as in the British model. In 1961, it was transferred to the Finance Ministry and thus its secondary status was established – as representing mainly the interests of the state as employer. As a result, it was primarily in charge of enforcement, rather than planning and policymaking of governmental human resources. Over time, responsibility for wage policies in the public sector was removed from the Commission and given to the Director of Wages, which became a separate department in the Finance Ministry. Thus an artificial distinction was created between management and compensation. The Commission turned into the arm that supervises civil service employees, particularly with respect to changes in positions and grades, and deals less and less with personnel management. The actual control over government ministries, approving new positions, and employee wages is in the hands of other Finance Ministry departments – the Budget Division, Accountant General, and Director of Wages. To date, all efforts to introduce comprehensive reform into the civil service and the Civil Service Commission have come to naught (Galnoor et al., 1998; Kfir and Reuveny, 1998a: 295–315). The role of the Civil Service Commissioner was based on the British model, with some modifications, and therefore is considered nonpartisan, although it is “political” by virtue of the fact that the Commissioner is appointed by the government and not via public tender. The Commissioner is administratively subordinate to the minister, but the law grants the Commissioner independent powers, particularly regarding appointments, discipline, establishing positions, and pensions. Until the mid-1970s, Commissioners were drawn from the civil service or the Histadrut, but as was the custom then, and because of the great sensitivity of the office with respect to jobs, Commissioners were generally close to the party in power or one of its leaders. The first clearly nonpartisan, external Commissioner was appointed in 1977, but afterwards there was one clearly party appointment in 1983. The nonpartisan essence of the office was put to the test in 1996 when the government, headed by Benjamin Netanyahu, fired the Civil Service Commissioner, inter alia to prevent him from standing in the way of appointing its own people to senior civil service posts. The Movement for Quality Government and the Commissioner himself petitioned the High Court of Justice against the government decision. In its ruling, the court recognized the professional independence of the Commissioner and asserted that changes in government after an election are not a cause for firing the incumbent or other senior civil servants, with the exception of those few offices defined as “positions of trust” (HCJ 4446/96, Movement for Quality Government and Prof. Itzhak Galnoor v. Government of Israel, Prime

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Minister Benjamin Netanyahu et al., 1996). An extensive discussion of political appointments appears in chapter 10.

Laws pertinent to the public sector in general Some of the laws mentioned above, such as the Civil Service Pension Law and the Personnel Code, have also been applied to public bodies that are not part of the civil service, but the laws below were intended from the outset to regulate the public sector in general. Basic Law: The State Economy Enacted in 1975, this Basic Law creates a constitutional framework mandating that the executive branch remain within the budget approved by the legislature with regard to both income and expenditure. It establishes principles for managing public funds in a democratic state, the most important of which is that only the parliament is authorized to impose taxes and approve the government plan as reflected in the annual Budget Law.11 The law also stipulates that printing currency and minting coins are a state monopoly. An amendment from 1992 asserts that the government will also table a multiyear budgetary plan, and the Knesset authorized a two-year budget for the first time for 2009–10. Principles of the Budget Law (1985) This law establishes the structure of the budget, its application to all state public bodies, the setting of a “personnel ceiling” in the civil service, and also – as amended in 1998 – the revoking of “designated funding,” that is, politically motivated government funding for specific public bodies, and replacing it with explicit budget lines determined by objective criteria. This was an attempt (only partially successful) to prevent the funding of religious, ideological, and other institutions that were linked to political parties. The Budget Law and the Arrangements Law We will return to the budget process later in this book. The state budget is a unique law because it usually applies for one year only, and determines both the parameters of operation of the ministries and also the extent of state involvement in society and the economy. The Budget Law of Israel for fiscal year 2009 totaled NIS (New Israeli Shekel) 317 billion. The budget pie – total expenditures and their allocation to various areas – reflects the priorities of a government in office. The so-called “Arrangements Law” was first enacted in 1985 during a major economic crisis. It was an emergency law that allowed the government to take drastic measures to end inflation and stabilize the economy. In many countries, it is common to append auxiliary legislation to the Budget Law for purposes of imposing new taxes or providing the government with legal authorization for new

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economic initiatives. In Israel, however, the Arrangements Law has turned into a “bypass law,” allowing for the hasty dispatch of existing laws while approving the budget, or for fundamental changes in governance or economic, social, or cultural affairs. The law encompasses many legislative matters that are not related to each other, and only tenuously related to the budget, if at all. Despite harsh criticism of this legal but unconstitutional tool, it is still in effect (Nachmias and Klein, 1999; Ben Bassat and Dahan, 2006: 71–86). For a fuller discussion of the Arrangements Law, including examples of the issues it covers, see chapter eight. Mandatory Tender Law (1992) This law mandates a public tender as the basis for a contractual relationship between the state (or any government corporation) and private vendors. The purpose of the law is to ensure equal opportunities to win a public tender and create competition among candidates, which could reduce expenses. Since this law was enacted, many complaints have arisen about the convoluted process of contracting with private vendors. Some also claim that a mandatory tender makes it harder to act quickly for urgent matters and is onerous on small government units that cannot finance the costs of a tender and the screening of candidates. From a broad perspective, the mandatory tender regulates a previously chaotic field of government operations and has clearly enhanced accessibility for all who want to submit bids. Cumulative experience also suggests that this law reduced the number of shady, corrupt, and “fixed” tenders. Nevertheless, entrusting the Accountant General of the Finance Ministry with the supervision of all tenders overly complicates the process and does not prevent corruption. Internal Audit Law (1992) Public oversight of all sorts exists in other countries, too, of course. The USA has internal auditing, which examines accounting practices, and a management audit, which examines effectiveness, but the Israeli concept of an internal audit does not exist in this form in the civil service of other countries (Friedberg, 1995: 26). The innovation of the Internal Audit Law is its stipulation that every public body must conduct an internal audit by its own internal auditor. The objective of an internal audit is “an independent evaluation within the organization, as a service to the organization” (Friedberg, 1995: 26). The law defines the general role of the internal auditor and relies on the broad definition in the State Comptroller Law: ensuring adherence to the law, proper management practices, ethical conduct, cost-consciousness, and efficiency. Thus the internal auditors of public bodies in Israel are not limited to financial and management audits or to post mortems of failures, but are authorized to examine all organizational activity, including the decision making process (Mizrahi, 1995a: 73; 1995b: 439–69). Already in 1959, Israeli government ministries had internal audit units, and in 1960 the Institute for Internal Auditors was established, whose members include internal auditors of nonpublic organizations. The need for legislation was based on

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State Comptroller reports that revealed failings in the functioning of the internal audit units within the government ministries because, among other reasons, of the unclear status of the internal auditor in the ministry. Therefore this law lists the skills required of an internal auditor, defines his or her authority and reporting procedures, and offers protection from harassment and vindictiveness within the organization. Based on cumulative experience, the law was amended in 1995 to mandate that the board of the public body must review the findings of the internal auditor’s report. Because this is an internal organizational audit, the law does not require that these findings be made public, with the exception of any findings about criminal conduct, which must be reported. The logic of the confidentiality is that an internal audit, as opposed to an external audit, is intended to improve the unit, not censure it. The probability that an audit will lead to correction of the problem is enhanced if it is perceived as a friendly process. Nevertheless, when a director general ignores the findings, or threatens to dismiss the internal auditor, the advantage of confidentiality recedes. Another limitation is that the law removes the issues of finance and accounting from the mandate of the internal ministry auditors and transfers them to the internal auditor in the Accountant General division of the Finance Ministry. Since this law was passed, internal audit units have been established and internal auditors appointed to all public entities, but their contribution is still a subject of controversy. The impact of the internal auditors is not significant in many government ministries, government corporations, and local authorities, while evidence accumulates of increased public corruption in Israel. As a result, proposals have been made to formulate binding rules about ethical conduct, legislate additional protection for the independence of internal auditors, and equip them with more tools such as authorization to publish the findings (Israel, Civil Service Commission, 1994).

Additional laws setting norms of conduct Public Service (Restrictions after Retirement) Law (1969) The first law in this category of setting norms of conduct was cited above – the Administrative Procedures Amendment (1958), which lays the foundation for the activity of all administrative authorities and the principle of proper service to citizens. A decade later, the Public Service Law was enacted, which mandates a “cooling-off” period for senior employees in the civil service and public institutions listed in an addendum. This law restricts their hiring by specific organization for a year after they leave their public job in order to prevent abuse of their position in the civil service. The limitations include several prohibitions – being hired by or receiving benefits from companies dealt with by that civil servant; representing any matter that the civil servant had handled; and making representations to anyone who had been subordinate to that civil servant. Certain restrictions are also placed on security personnel who left the Israel Defense Forces or the Israel Police. A committee headed by a District Court judge was created by this law to grant exemptions in exceptional cases.

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Public Service (Gifts) Law (1979) This is the third law in this cluster, imposing an absolute prohibition on public servants from accepting gifts, services, or other benefits without payment: “If a public servant is given a gift by virtue of the fact that he is a public servant…and the public servant did not refuse to accept the gift and did not immediately return it to the giver, that gift shall revert to state property.” This prohibition on accepting any form of gift applies to every public servant defined in the law broadly as “having a state office or function,” that is, employees of the state and local authorities as well as elected officials. The law sets a high standard against the temptation to abuse one’s position – by giving or receiving. The Gifts Law in and of itself only hints at the principles of proper conduct, and the maximum penalty is a fine of three times the value of the gift. It is hard to say whether this law was a successful deterrent because no known cases exist of legal proceedings for this offense, as opposed to its better known accomplices – bribery and favors.12 Encouragement of Ethical Conduct in Public Service Law (1992) An amendment to the State Comptroller Law (1981) gives the Comptroller authority to reinstate an employee if he or she was dismissed as a result of discovering and alerting others about corruption. However, it is often hard to prove a link between whistle-blowing and harm to the employee, especially because a counterclaim can be made that the employee from the outset issued the warning to prevent his or her dismissal. The 1992 law seeks to compensate public servants who file justified complaints about poor ethical standards at their place of work – they are awarded a Certificate of Esteem from the President. The nonprofit organization Oggen: The Association for Ethics and the Eradication of Corruption, founded in 1989, also works to protect whistle-blowers who expose corruption at their workplace. In early 2002, Oggen successfully lobbied for an amendment to the Workers’ Protection Act that places the burden of proof on the employer in a claim against an employee.

Administrative tribunals and administrative law courts Administrative tribunals in Israel are modeled after the parallel British system (Britain, Government, 1957; Tribunals and Inquiries Act, 1958). These are separate frameworks established since the founding of Israel to regulate relationships between public authorities and citizens. The term “frameworks” embraces dozens of judicial or quasi-judicial entities that specialize in a specific area. These frameworks are also referred to as courts, appeals committees, petition committees, oversight committees, supervisory judicial authority, and the like. Three qualities distinguish these tribunals from the regular courts: the tribunals almost always operate intra-organizationally, only one specific issue is addressed, and the proceedings are abbreviated.

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What do these tribunals deliberate? A citizen asked to pay a property tax has the right, according to the Property Tax Law, to have the specific amount adjudicated in a Petitions Committee. Someone who feels harmed by a decision of the local welfare office is entitled to have this decision revisited by an Appeals Committee established by the Ministry of Welfare in accordance with the Welfare Services Law (1958). There are also special forums – the Land Registry Supervisor is authorized by the Land Law (1969) to rule in conflicts between condominium owners concerning their property borders. This would also be an administrative tribunal, even though the conflict is not between the citizen and a governing authority. Administrative tribunals are established by law, ordinance, or administrative decision. In 1971, research was conducted among 202 quasi-judicial authorities, of which 97 were defined as administrative tribunals in the following areas: elections, construction and development, agriculture, taxation, discipline, labor, patents, property, business registration and regulation, rehabilitation, pension, welfare, and other (Zamir, 1971: 2–3; 152–70). In 2006, over 100 administrative tribunal forums were operating in Israel, distinct from each other with respect to the source of their authority, types of issues, degree of separation from the regular role of public servants, forms of appeal, etc. Decisions made by administrative tribunals can generally be appealed in court, and if no appeal procedure is specified in the law, decisions can be appealed to the High Court of Justice. The following are examples of administrative tribunals in the past and present (the law or ordinance establishing them appears in parentheses): • • • • • • •

Appeals Committee on Income Tax Assessments (Income Tax Ordinance); National Insurance Tribunal (National Insurance Law); Appeals Committee for Taxicab Registration (Transportation Ordinance); Appeals Committee on Job Placement (Employment Service Law); Disciplinary Court in the Civil Service Commission (Civil Service (Discipline) Law); Appeals Committee (Disabled Victims of Nazi Persecution Law); Uniform Contracts Tribunal (Uniform Contracts Law).

These tribunals have wide-ranging powers and they review administrative decisions in depth, thanks to their expertise in the subject matter and first-hand knowledge. Nevertheless, it could be argued that the very existence of so many quasi-judicial bodies and the lack of central supervision over their operation may be conducive to problems. When flaws are found, they usually concern the proceedings – because the deliberations in these bodies are internal and fail to safeguard the rights of those filing an appeal – and the fact that they are not allocated sufficient resources from the government offices and other bodies within which they operate. The multiplicity of administrative tribunals and lack of uniformity in their operation led to enactment of the Administrative Tribunals Law (1992), which specifies general rules about how tribunals are established, their authority, how tribunal members are appointed, basic court procedures, the right of appeal, and

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other matters (Zamir, 1999: 90). Although there is a need for this law, it brings the administrative tribunals closer to the procedures of a regular court, thereby losing some flexibility. To counter this, the law allows the administrative tribunal not to be bound by evidentiary laws and instead to function “however appears best to achieve justice”. Another major limitation is that the law applies only to 16 types of existing administrative tribunal, but not to others, such as the City Tax Appeals Committees, that are attached to local authorities. The solution proposed in the law for these problems was to set up a Council for Administrative Tribunals, which sought to create a common reference framework for addressing basic problems that arise during the activity of the administrative tribunals. Although many years have passed since enactment of this law, the Council has not yet left its mark on the field (Zamir, 1999: 162). In this context, one should also mention that the Administrative Affairs Courts Law (2000) transferred to the District Courts – in session as Administrative Law Courts – much of the burden that had fallen on the High Court of Justice, which had previously handled administrative matters as the court of first and last instance. Administrative Law Courts also handle appeals of decisions by administrative tribunals. Since their inception, the Administrative Law Courts now handle many cases that had for years been sent to the High Court of Justice. Being in the District Courts increases their accessibility and shortens the proceedings, as a result of which the number of petitions has increased.

The Missing Basic Law: Civil Service Many laws were enacted to regulate the public sector in Israel. From the list above, a strong infrastructure appears to exist for realizing the meta-principle of the rule of law in administrative matters, with which we opened this chapter. However, from experience gathered since the founding of Israel, the picture that emerges is quite different: in Israel, rather than public management being regulated by law, the laws are a reflection of the incoherence of public management. The laws do not reflect a clear and consistent concept about the nature and desirable patterns of public management. Instead, they present the broad range of problems that have arisen over the years for which ad hoc legislation has sought solutions. This is particularly striking with regard to the laws dealing with the civil service: important subjects were addressed in separate legislation without giving thought to the system as a whole. Among the range of problems that resulted, we can mention the internal conflicts in responsibility between the Civil Service Commission and Finance Ministry divisions, or the wage structure in public organizations – a chaotic field that requires consistent legislation. At the beginning of the discussion about the legal infrastructure, several countries that felt the need to enshrine the civil service in law were mentioned. In my view, Israel also needs a Basic Law: Civil Service that will have a dual mission. First, to establish the civil service constitutionally within the executive branch of government and also stipulate the following fundamental principles: the obligation to operate in accordance with the law; the obligation of loyalty to the public; the

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obligation of service in an egalitarian and impartial manner; the rights of citizens to transparency, a hearing, and appeal; a transparent system for hiring and promotion of employees; and disciplinary jurisdiction. Second, the Basic Law: Civil Service would be a framework law, like the Basic Law: State Comptroller, the principles of which would form the basis for reformulating existing laws in this area and addressing issues that are missing, such as the status of the Personnel Code. In closing, without overstating the impact of legislation on improving public services in Israel, legal harmony and coherence must be created among the existing laws, and the roles and authority of the various institutions must be clearly redefined.13

4

The functioning of the Israeli civil service

In his visit to America in 1831, Alexis de Tocqueville wrote, “Nothing is more striking to a European traveler in the United States than the absence of what we term the government, or the Administration” (de Tocqueville, 2003: 53). At its founding, the USA lacked a central mechanism for governmental administration, unlike Europe, where public administration preceded the political institutions of the modern states. In this sense, Israel more closely resembles European states, and this was the basis for the work of the Situation Committee, formed in 1947 to establish the system of governance and adapt the pre-state institutions to the needs of the future state. Under the influence of the European model, Israel’s civil service also became an inalienable part of the institution of state, and was even perceived as such, as opposed to the American model. Because the USA is often viewed in Israel as a role model, the importance of this point will become clear when we examine elsewhere the issues of political appointments, judicial review, and the reforms necessary in Israel’s public management system. Since its inception, the Israeli civil service has undergone significant changes in the parameters discussed below. These changes have emerged from two profound transformations in Israel. First, much of Israeli society has joined the developed nations with a high standard of living, hence demands on the government and ministries have grown. Second, the state and its institutions have weakened. The political–bureaucratic system that dominated the state in the early years and penetrated all social spheres gradually surrendered its monopoly to new institutions and social, economic, and political groups. As a result, the public bureaucracy has also changed, both as a socioeconomic presence and in its maintenance functions – ensuring the stability and continuity of the political and social order (Galnoor, 1982: 209–14). In this chapter, I cannot address all the broad issues noted above, hence the focus is on several salient patterns of behavior in the Israeli civil service: centralization, improvisation, territoriality, and secretiveness. We then define the changing boundaries of the civil service, and close with a discussion of the level of customer-orientation of the service, particularly from the point of view of the citizens.

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What does the civil service do? In its early years, the Israeli civil service dealt with almost every task, not unlike other new states whose social and economic institutions are evolving, but even more so in light of the special development challenges faced by Israel. In the years 1948–2006, for example, Israel’s public bureaucracy brought some three million new immigrants and took an active role in absorbing them; it built an army, constructed new towns, developed and managed water resources, promoted industry, provided services to an ever-growing population – and the list continues. And while coping with all this, the public bureaucracy also helped the political leaders in their policymaking tasks. These are the tasks of a state-in-the-making, and changes in the role of the civil service over the years were a reflection primarily of its inability to do everything on its own. A prime example was the reduced intensity in handling the immigration and absorption of new immigrants. At first this task fell to the government ministries, the Jewish Agency, and the Histadrut. In the 1990s, the public coffers still bore the cost of absorbing the wave of immigrants from the former Communist bloc and Ethiopia,1 but in practice it was handled by nongovernment economic and social bodies as well as the local authorities. In the twenty-first century, the Israeli civil service is still over-burdened. A glance at the State Budget Law reveals that it contains over 8000 provisions (not including the defense budget) that deal with a vast range of issues, in addition to the classic tasks of the state – defense, law, and taxation. The defense budget, in particular, constituted some 17 per cent of the government’s expenditure in fiscal years 2004–06. Compared with most other democratic states, government in Israel is deeply involved in all aspects of life. Have there been changes in the scope of activity of the governmental civil service in Israel? State expenditure constituted some 30 per cent of GDP in the 1960s, reaching a high of approximately 80 per cent after the Yom Kippur War in 1973, and decreasing to about 50 per cent after 2000. Another change took place in the institutional division of labor. In the 1950s, public activity was divided among the government, the Histadrut, and the Jewish Agency; these three partners comprised some 50 per cent of the national product (Barkai, 1964: 25). The role of the Histadrut and the Jewish Agency gradually contracted, and in the 2000s they were no longer a significant factor in the array of services provided by public management in Israel. In general, one can say that since the 1980s, the development trend in Israel has taken the same direction as in western democratic countries – reduced involvement of the state in the economy at the expense of public welfare services. The primary roles of the governmental civil service in these countries are to extend professional assistance to policymakers; provide vital services to citizens; and regulate fields such as communications, energy, and air travel. In all these countries, the question remains open about the status and role of the civil service in relation to the democratic framework at a time when the state seems to be waning (Silberman, 1993).

Functioning 45

Patterns of behavior Yehezkel Dror, in an article from the 1960s, notes the great social import of public administration and its pioneering character, accompanied at the same time by an ambiguous social status stemming from the anti-establishment traditions of the Jewish communities in the Diaspora and the heavy demands on the state of Israel (Dror, 1964: 3–10). Dror also discusses the concentration of power in the hands of public officials and the effect of this on citizens, the complex relationship with the political echelon, and the use of favoritism in antithesis to ascriptive criteria. Some of these characteristics remain, but much has changed since then. In the following survey, I focus on some of the characteristics that have, over time, become “Israeli patterns of behavior” in the civil service. Centralization Centralization – already mentioned in several contexts – derives not just from the fact that Israel is a small country, but also from the lack of separation between central government and citizen. This is also the place to note the weakness of local authorities in Israel: even local services such as education, employment, and welfare are controlled by the headquarters in Jerusalem. Centralization also means control over resources and a failure to understand local needs. Even in recent years, the view prevails in ministries that they cannot rely on their own regional offices. Interestingly, a survey carried out in the 1970s found that the public was aware of the great power vested in the central civil service, but members of the bureaucracy themselves failed to see it (Nachmias and Rosenbloom, 1978: 113). Centralization also appears in the relationship between the “strong” ministries – Defense, Finance, and Justice – and the other ministries. The government’s privatization policies, which included transferring functions out of the civil service, failed to decentralize power within the governmental system. Additional aspects of centralization are discussed in chapter five. Improvisation The rapid pace of events in Israel, due to both internal and external factors, forces government ministries to respond quickly. The security tensions that grip Israel affect not just the government units directly involved, but also state budget priorities, which may change because of an unexpected outbreak of fighting. Such emergencies may lead, for example, to tax assessors called upon to estimate property damage, the health system faced with an onslaught of casualties, and other consequences relevant for government ministries. These constraints play a key role in fostering a characteristically Israeli pattern of activity – an ethos of pragmatism, which has been part of the decision making process in Israel since its founding. At the heart of this pragmatism is the belief that there is no point in planning, or even preparation, because the unexpected will undermine any hope of realizing those plans. “Putting out fires”

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Functioning

is therefore the operating principle, and even this is not carefully planned in advance (Gross, 1966). A byproduct of this pragmatism is reliance on improvisation by Israeli managers, both public and private. This means essentially providing immediate answers to unexpected situations under conditions of uncertainty. Improvising, meaning “an extemporaneous action undertaken to cope with a problem or seize an opportunity” (Sharkansky and Zalmanovitch, 2000: 321), has positive aspects, of course. Yet improvisation becomes a burden when applied not just under the pressure of circumstances, but as a general principle of the management culture, rooted in the fervent belief that decisions mean muddling through. The partner of improvisation, and perhaps the common denominator of the entire phenomenon, was referred to in Israel as “actionism” during the 1971–72 investigation of the Netivei Neft oil company affair by a government commission of inquiry (see more about this in chapter ten, in the context of ethical conduct) (Israel, 1972; Galnoor, 1973a: 3–11). Actionism has become a pervasive worldview in Israeli political– administrative culture, reflected in its opposition to planning, to the extent that improvisation becomes a substitute for thinking. The merit of actionism is its emphasis on getting things done and achieving results. Its drawback – which generally overshadows its merit – is a willingness to take shortcuts and to view the law and ethics as obstacles to be circumvented. When actionism and improvisation meld into a worldview, the need sometimes to adapt decisions to changing realities is taken to excess, and immediate results become the goal. Improvisation suits only a small number of problems faced by managers: problems that require decision making under conditions of extreme uncertainty. In most cases, improvisation is not needed, and only camouflages an unwillingness to think before acting. The actionism pattern of action was and is a regular obstacle, though not the only one, blocking better processes of policymaking and decision making in Israel. Meanwhile, the general decline in performance skills of the public sector in Israel – as revealed, for example, during the Second Lebanon War in 2006 – has turned actionism into an empty slogan. Organizational territoriality Organizations are task-oriented with regard to goals, but they also develop survival instincts and a desire for a positive image. This is familiar in public and private settings, and was researched as “turf issues” (Wilson, 1989: 179–95). Organizational territoriality has positive aspects: devotion to the mission, representation of views that do not exist in other organizations, diverse approaches to problem-solving, and diversification of resources and information. Its primary drawback is narrow-mindedness – a serious flaw, especially in public organizations like government ministries that do not operate in a competitive market and that, despite their monopoly of a particular area, must cooperate with other ministries to accomplish common public missions. The federative structure of Israel’s government ministries was already established in 1948. And the internal advancement tracks of employees within ministries, to

Functioning 47 be discussed later, raised the barriers even higher and made it particularly difficult to create coordinated policy for crosscutting issues such as immigrant absorption, regional development, or integrated policies on housing (Ministry of Housing) and employment (Ministry of Labor). David Dery (1997) documented some efforts to create coordinated inter-ministerial mechanisms – a body to reduce road accidents or an authority to prevent drug abuse – and the events that transpired in the Negev Development Plan in the 1980s following Israel’s evacuation of the Sinai. Dery’s analysis reveals that inter-organizational coordination was not achieved, while quarreling often increased. In this context, the decrease in the power of coordinating mechanisms such as the political parties, the Histadrut, and the Jewish Agency harmed the ability of the entire Israeli political system to coordinate, as no replacement was found for them in the government’s bureaucratic channels (Galnoor, 1996). Organizational territoriality exists in every human system, but the situation in the Israeli public sector is rather extreme, as we note in chapter seven when we describe the hiring and promotion processes for senior civil servants, which do not include parallel positions across the ministries. The result is that they develop a narrow view and inter-organizational rivalry beyond what is usual in other systems. The Office of the Prime Minister in Israel is not structured to coordinate policy. The other potential “coordination bodies” – the Finance Ministry (for budgets, accounting, and wages), the Civil Service Commission (for appointments, posts, and promotions), and the Justice Ministry (for law enforcement) are oversight bodies that do not usually address the content of the decisions. They are not capable of overcoming their own organizational territoriality, let alone contributing to moderating it among government ministries or between the central government and local authorities. The division of the civil service into “turfs” splits policymaking into components that are hard to bring together, even through meetings, coordinating committees, steering committees, monitoring teams, joint forums, and an institution invented for this purpose – the project manager. Secretiveness According to Israel’s Penal Code (1957), civil service employees must maintain state secrets and are prohibited from conveying information they learned ex officio to any unauthorized individual (Galnoor, 1973b; Galnoor, 1975). Stiff regulations were appended to the Personnel Code that set disciplinary measures for anyone breaching this confidentiality. A culture of secrecy had already existed in the pre-state period, and this legacy was passed on to the civil service; this culture is still manifest in attempts to control the flow of information to the public, the exercise of censorship, control over state-published materials, the desire to reign in the media, and other measures. In addition, and linked to territoriality discussed above, there is compartmentalization of secrets between government ministries and sometimes between units within the same ministry. We should also mention “spin,” the partner of secrecy – the government’s use of information and disinformation to promote its goals.

48

Functioning

The formal culture of secretiveness in Israel’s civil service is stronger than in western democracies such as Sweden, Denmark, and the Netherlands, and is similar to that of Britain, from which Israel inherited its strict secrecy laws (for a comparative analysis, see Galnoor, 1977b). Nonetheless, one trait unique to Israel is the political–administrative culture of circumvention, even on sensitive matters such as foreign affairs and security: “The veil of secrecy remains, but many know how to circumvent it” (Galnoor, 1973b: 395). And who are the circumventers? In the past, those privy to the secrets were members of political parties who had access to political and administrative channels. Now they are primarily the business elites – people in the “right” social and economic circles. Informal ties take precedence over the culture of secretiveness and the strict laws mandating it; as a result, people close to those in power, including senior officials, do have access to information.2 Another interesting result of this partial openness is that the civil service is gradually, and against its will, becoming more accessible and transparent. Efforts to anchor in law the principle of transparency failed for a long time, and Israel, together with Britain, was among the last democratic countries formally to enact the principle of the public’s “right to know” (Galnoor, 1989a). Israel’s Freedom of Information Law was passed only in 1998, and its implementation is still far from satisfactory. Since its founding, the civil service has seen relatively few changes in the main patterns of behavior, even though its relative size and power have diminished. Transformations in society and the economy have stripped the civil service of its pioneering role in advancing national missions and reduced its involvement in the life of the citizen, while some areas formerly under its control have since been relinquished to other bodies. Nevertheless, the civil service has remained centralized, an incorrigible improviser, a spurner of planning, and an underinvestor in preparatory staff work (Israel, State Comptroller Report, 2003: 104–7). Government ministries in Israel tend towards organizational rivalry and secretiveness, which undermine the hope of formulating inter-ministerial policy and improving services to the citizen. These structural problems demand a comprehensive reform, which we shall examine in the final chapter of this book.

Sector boundaries With regard to the areas addressed by the public sector in Israel, these continue to intermingle, a phenomenon related to institutional changes in the nature of the state that have appeared in many western democratic countries. Historically, socialist governments would nationalize the means of production, establish economic enterprises, and maintain a presence in the business sector in diverse ways. In Israel in the 1960s, the government and Histadrut together comprised almost 50 per cent of the national product and employed some 40 per cent of the labor force. The government was also involved in the private sector by conferring grants, tax exemptions, guarantees, export incentives, and more. It also took part in encouraging private initiatives and establishing business enterprises (Levi-Faur, 2001). Civil society at the time had almost no independent or self-sustaining organizations, and

Functioning 49 it could be said that the sector boundaries between the government, society, and the private economy were non-existent. Forty years later, we find sector overlap of a completely different nature in Israel. First, the scope of state tasks continues to narrow, as does its economic and social involvement. The traditional welfare state contracted in Israel, as in some other western countries. Second, Israel’s third sector – social, voluntary, nonbusiness – increased markedly since the 1980s and has replaced government services in many fields, such as assistance to the poor, care for vulnerable populations, and health services. Social organizations are often called upon to fill the gap during crisis periods or when a natural disaster occurs, and they are on the ground before – and often in place of – the public bureaucracy. This could be seen, for example, during Hurricane Katrina in the USA. At the time of Israel’s Second Lebanon War in 2006, the civilian social organizations hastened to support Israelis under shelling in the north, thereby also exposing the helplessness of the government ministries, the home front command, and some local authorities (SHATIL, 2007). Third, in the early years of the 2000s, the marketplace rules, both ideologically and practically. This can be seen in privatization, the outsourcing of services to private or volunteer organizations, and controversial solutions concerning regulation. As we shall see later in the discussion of privatization, areas that had once been viewed as within the purview of the state, such as road construction and prison management, are now being offloaded to private hands. As noted, the traditional division between sectors – governmental (public), social, and private – no longer reflects the evolving reality, and therefore it is hard to delineate the bounds of the public sector. Another question relates to the inclusiveness of the civil service and the degree to which services are provided to particular population groups. In the early years of the state, the public bureaucracy and the parties in power were closely coordinated. A complex division of labor emerged, in which the advantage of the bureaucracy was its control of the system that penetrated diverse social groups, filled nonbureaucratic roles (such as affirmative action to disadvantaged groups), preserved law and order, and epitomized the authority of the state. At the same time, the civil service also defined itself as an entrepreneur of economic and social development, through control over a good part of the national resources (Horowitz, 1964: 171–8; Dror, 1971). The patterns of bureaucratic involvement with disadvantaged groups were determined by political arrangements and government policies. Ultra-Orthodox groups, for example, were outside the realm of influence of the bureaucracy: agreements were reached between political leaders and carried out by government clerks – transferring funds to the ultra-Orthodox educational system, yeshivas, charities, etc. Arrangements with religious Zionist groups were more intricate because they extended to local authorities, membership in the Histadrut health funds, and the autonomy of their state-religious school system. None of these arrangements left much room for the discretion of civil servants or for the application of universal criteria.

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On the other hand, the influence of governmental bureaucracy on Arab citizens of Israel was absolute until 1966, because of the martial law to which they were subject by the security apparatus, and thereafter the control over them via the General Security Services and the Advisor for Arab Affairs in the Office of the Prime Minister. Local Arab and Druze leaders were co-opted by the parties in power through military and civilian officials, and the votes of their communities were solicited during elections (Cohen, 2010). Using similar methods, but for entirely different goals, the public bureaucracy (including the Jewish Agency and the Histadrut) left its mark on new immigrants – from political co-optation of their communal and religious leaders to deep involvement in the processes of absorption and the manipulation of national symbols.

Service to the public Toward the end of the twentieth century, the perceived role of the public sector underwent a profound change in western countries. This new “service revolution” in Britain was called “value for money,” and in the USA was referred to as “customer-driven government.” The common denominator everywhere was the definition of citizens as “clients” and the demand for improved services from public organizations, comparable with those given by businesses. In their widely read book Reinventing Government, Osborne and Gaebler (1993: 166) entitle the chapter that deals with services to the public, “Customer-Driven Government: Meeting the Needs of the Customer, Not the Bureaucracy.” They quote the Chief of Police of Madison, Wisconsin, who said, “Quality is determined only by customers,” adding, “Most public organizations don’t even know who their customers are.” This approach is part of the consumerist culture in the west, which deeply affected public sector reforms in countries such as Britain, New Zealand, Australia, the USA, and Canada (Potter, 1994).3 Government ministries in Israel, like other public bodies – the Jewish Agency, health funds, and local authorities – were not known for their high level of services to the citizen, as evidenced by the joke culture surrounding them (Kishon, 1952, 1953; Galnoor and Lukes, 1985: 108–13). In the early years of the state, the paucity of public services sometimes bound citizens to frameworks of the state and the parties. A tradition of inconsideration for the needs of those requiring services continued for many years. The Kubersky Commission, created to conduct a comprehensive review of the civil service, wrote extensively about this in its recommendations in 1989.4 In examining the level of services to the public, two related aspects must be considered: • •

The content – Is the service itself satisfactory? Are the roads well built and safe? Is the quality of the drinking water satisfactory? Do citizens know their tax rights? The attitude – Are citizens perceived as clients of the government ministries? Is the response time fast and is the service polite? Are services accessible to the public?

Functioning 51 The quality of services has not been adequately researched in Israel; we have only random satisfaction surveys that deal primarily with the perceived quality of the service among its clients. Such data are problematic because Israeli citizens have a negative image of public bureaucracy from the outset. Furthermore, sometimes it is those who actually obtain their rights who may be offended by the service or believe they deserve more. In any event, the prevailing subjective belief is that service provision to citizens is not on the same level in Israel as in other democracies. Note that this is not necessarily a matter of image alone. Public bureaucracy in Israel was once involved in almost all aspects of life, and it had access to every citizen through the numerous regulations and need for licenses. As a result, dependence on government ministries was great, although, as noted, the power of the bureaucracy was experienced differently among diverse groups. Furthermore, the services provided by government ministries and public organizations were virtual monopolies – from small things like car inspections handled by the Ministry of Transportation to important matters like public housing eligibility. In the first survey of its kind, carried out in November 1949 by the Israel Institute for Applied Social Research (now the Guttman Institute), mixed attitudes were found toward government officials in the recently established apparatus: a third of those surveyed had a positive attitude, a third had a negative attitude, and a third had not yet formed an opinion. Those with a negative attitude were primarily new immigrants, the young, Tel Aviv residents, and kibbutz members (Israel Institute of Applied Social Research, 1949). This golden era did not last long, however. In surveys conducted in 2001–08 (Vigoda-Gadot and Mizrahi, 2008), citizens’ level of satisfaction with public services was found to be mediocre, similar to the level of trust in public institutions and public servants. In the eight years of this survey, the few changes in public attitudes were in the negative direction. Recently, however, the government has made a major effort to provide services directly through special sites on the internet. The data in Figure 4.1 reflect public perceptions, but paradoxically, even government employees share these views. Dery (1999: 102) describes an intriguing attempt to “cut through the red tape.” In 1989, the “100 Projects Law” was approved – to expedite creation of 100 factories for stimulating growth and creating jobs. Under the initiative of then Finance Minister Shimon Peres, a “CEO Bus” was to travel from project to project, cutting through red tape and enabling the decision makers inside the bus to make immediate decisions. Dery asks, “If the red tape was so bad, why cut through it only temporarily and partially?” Needless to say, the bus took off, but the initiative went nowhere. Let us turn now to the scope of services provided to various groups in Israeli society, and their quality. In the first decades after the founding of Israel, some groups had independent organizations and political bargaining power, which enabled them to mobilize funds and other resources for providing services directly to their members. These groups included – with major differences between them – the ultra-Orthodox, the kibbutz movements, private

52 3.2

Functioning 3.16 3.1

3.1 3

2.98

2.97

2.95 2.82

2.9

3.07

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2.82

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2.72

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3

2.75 2.7 2.65

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2.55 2001

2002

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2004

2005

Average satisfaction

2006

2007

2008

Trust in public servants

Range: From 1=Very unsatisfied to 5=Very satisfied Figure 4.1 Satisfaction with public services and degree of trust in public institutions and public servants (2001–8). Source: Vigoda-Gadot and Mizrahi (2008): 11, 23.

entrepreneurs, and industrialists. Although these services were provided by the government bureaucracy, the members of these groups accessed them through their own organizations recognized by the government. Other groups, however – new immigrants, Arab citizens, and residents of development towns – had to access these services directly from the public bureaucracy, and these services were inferior to those received by the established groups. We already noted that the situation creates a dependence of service recipients upon service providers. To the list of privileged recipients must be added groups that enjoyed services which, by definition, are intended not for the population at large, but for specific sectors served by the Ministries of Agriculture, Industry, Trade and Labor, Religious Affairs, etc. In this respect, the change was dramatic in the 1980s when growing demand led to the introduction of universal criteria regarding, for example, child allowances or the opening of post offices in remote locations (Doron and Kramer, 1991: 38–9). The general level of services in Israel improved over the years – first in the business sector and then in the public sector – especially because of the higher standard of living and increased demand for high quality services in both content and client care. Some examples include: • • • •

transfer of motor vehicle inspections from the Ministry of Transportation to private vehicle service centers (in the 1960s); institution of “full service” bank tellers (in the 1970s); removal of telephone services from the Ministry of Posts and elimination of the waiting period for a phone line, previously as long as two years (in 1984); shortening the wait to a few days for receipt of an identity card, passport, and similar documents in the Ministry of the Interior (in the 1990s);

Functioning 53 • •

electronic filing of forms for some government services (since 2000); an “accessible government” public service website (2008).

Consumer awareness with a rights-based approach, rather than relying on charity or personal connections, began to grow in Israel. The pattern of citizens’ participation by direct contact with people in power – politicians or bureaucrats – has always been well developed in Israel for solving personal problems. This would be carried out via establishment channels (parties, unions, immigrant associations, etc.) and usually done discreetly. This pattern was very convenient both for those on the receiving end, who had access, and for the officials giving the service, because the discreetness of these requests prevented exposure while enhancing the officials’ power (Galnoor, 1982: 336–7). But from the perspective of the citizenry at large, the absence of universal, transparent criteria creates a paternalistic, dependence relationship. Relationships of this sort with service providers are based on personal ties, common ethnic origin, army buddy connections, or other factors that enable the client to overcome his or her anonymity. But the path is short from patron relations to political favors to actual bribery. In the 1980s, the issue of developing universal criteria underwent a change with the appearance of independent organizations concerned with citizens’ rights, and investigative journalism casting light on violations of those rights. Today one can find an official address for filing complaints in most government ministries. In 1971, the State Comptroller was assigned the additional task of Ombudsman. In 2008, the Office of Ombudsman received 9749 complaints (62 per cent more than in 2003) – quite a large number relative to the size of the adult population in Israel. Government bodies about which the public most frequently complained in 2007 were the National Insurance Institute, Israel Police, the court system, Ministry of Justice, Ministry of Finance, Ministry of the Interior, and Ministry of Education (Israel, State Ombudsman, 2008). In the years 2002–06, the investigation of 72 per cent of these complaints was completed within a year, on average; 34 per cent of the complaints were deemed justified. Following a justified complaint, the Ombudsman reports to the ministries any general failings beyond the harm to a particular individual. Even though this office receives many complaints, it is considered relatively effective because of the fear among public bodies of ending up on the desk of the State Comptroller. As part of its effort to reform the civil service in 1994–96, Israel’s Civil Service Commission instituted a Quality Service Charter in all government ministries and their constituent units. This Charter, influenced by the British “citizens’ charter,” contains indicators of quality service such as how to get in touch with the authority, clients’ rights, the length of time until receipt of a reply, and the right of appeal. Publication of the Charter was meant to be the first step towards integrating the quality service concept in the daily affairs of the ministries, including incentives and sanctions. The method to assess improvement in service quality was ongoing customer satisfaction feedback. The goal was to internalize the conviction that citizens are legitimate clients of government ministries and have the right to equal and high-quality service.

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To conclude, the reform of quality service in Israel’s public sector must begin with two interrelated measures that are not hard to institute. The first is greater transparency in all public services to enable citizens to know their rights; the second is shifting the burden of responsibility for realizing these rights from the citizen to the service provider. This means that, for instance, the tax authorities, National Insurance, or public employers are obligated to inform citizens about their services and the payments they are due by law, but that have not yet been collected for whatever reason. The computerization of services allows this to become a practical possibility (Peled, 2001b).

5

Regulation

Regulation has its proponents and opponents. The opponents of regulation associate regulation, incorrectly, with bureaucratic red tape, and point out the inflexibility, convoluted procedures, control, and endless demand for permits. But the dilemma is that we, as citizens, want the state to do just that: protect us from building violations, prevent safety and traffic hazards, preserve the environment, reduce harm to animals, and so forth. The issue of regulation and deregulation is complex, and some believe that a “regulatory state” is about to replace the “dirigiste state” that preceded it in Europe. Regulation will thus supersede state ownership of organizations, and rather than having government intervene in planning and implementation, it will focus on oversight and control (Majone, 1994). The general subject of regulation exceeds the goals of this book. In this chapter I provide definitions, present the legal and institutional infrastructure, engage in some comparative analysis, and focus on a description of state regulation in Israel at the dawn of the third millennium, with its tension between regulation and deregulation. Additional aspects are discussed in chapter eleven in the context of Israel’s privatization policies.

Definitions, laws, and institutions The civil service deals with regulation. This term refers primarily to the oversight of business organizations by the state executive authority, but it also applies internally to oversight within the public sector. Regulation refers to laws and rules that are binding on the conduct of organizations and individuals, and the regulator is responsible for formulating and enforcing these rules. A broader definition of regulation emphasizes the social–political role: focused and continuing supervision by a public body over socially significant activities (Selznick, 1985: 363–7). By this definition, regulation is more than law enforcement, and its concern is the attainment of social goals, including the proper functioning of the economy. Legislation is the main way to establish a regulatory mechanism and formulate rules for regulating a specific field, such as the following Israeli laws: the Accountants Law; the Patents Law; the Securities Law; the Agriculture Control Authority Law; and the Bezeq (Satellite Television) Law.

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These laws suggest several key motivations for regulation: licensing professionals in a sensitive field, safeguarding the individual’s property rights, ensuring the proper functioning of the financial market, preventing epidemics, and supervising the use of a collective good – space. Other important motivations seek to cope with what is called “market failures,” such as the absence of competition, the marketing of dangerous products, the lack of transparency to consumers, and environmental pollution. The list could also include common social motivations such as regulating the public labor force by the use of affirmative action, supervising the use of drugs, and control over the use of public resources such as the coastline. We examine here only regulation that is the responsibility of governmental public bodies: those in the Ministry of the Interior charged with supervising the local authorities; Health Ministry inspectors who check for water pollution in the National Water Carrier, run by the Mekorot government corporation; and Ministry of Environment employees who protect the beaches, sometimes from other government ministries. The Supervisor of Banks in the Finance Ministry is a classic regulator, and so are the Israel Antitrust Authority, the Registrar of Nonprofits, and the Second Authority for Radio and Television, created by a special law to oversee commercial broadcast channels. These are examples of some of the diverse types and methods of regulation examined under various headings in a rich literature about public and business management.1 This literature falls into two categories, based on the questions asked. In the first group, the most common question is not whether regulation is necessary, but to what extent, and how. And in the second group, the questions focus on deregulation (Kelman, 1981; Barzelay, 1992; Behn, 2000; Sparrow, 2000; Skrzycky, 2003; Levi-Faur, 2006).

A comparative look The original reason for the rise of regulatory agencies in the USA was the desire to use federal authority to prevent political corruption and the formation of large monopolies. Among these regulatory authorities were the Interstate Commerce Commission, founded way back in 1887; the Food and Drug Administration (FDA), founded in 1906; the Federal Communication Commission (FCC), founded in 1933; and the Equal Employment Opportunity Commission, founded in 1964. The scope of federal regulation in the USA is vast: The FDA, for example, founded a century ago, employed some 10,000 people in 2006. The US approach is based on the assumption that regulation seeks to correct market failures and that this intervention is necessary to allow for proper functioning of the economy. To some extent, regulation in the USA served to replace the nationalization policies of European countries (Majone, 1994: 81). In the USA, regulatory agencies are established by law, intended solely for purposes of regulation, and are not an integral part of the executive branch headed by the President. The structure was also designed to ensure independence, at least from the executive branch: These regulatory agencies are usually headed by a committee, not an individual; the President appoints members with Senate approval, but they are not

Regulation 57 necessarily drawn from the President’s party; and the agencies are accountable to Congress, which also sets their budget. In the USA – heartland of regulatory agencies – one can now find many sectors that have been deregulated – in industry, agriculture, energy, telecommunications, and transportation. On the other hand, regulation has increased there for health, safety, and environmental protection. The extensive corruption revealed in the Enron Corporation2 led to increased regulation in the USA over the management, accounting, and shares of private corporations. Following the terrorist events of 11 September 2001, regulation was also stepped up in areas defined as relevant for homeland security, such as money transfers and entry visas. Other areas are in the experimental stage, such as regulating the internet. The crisis of 2009 led many to believe that deregulation had been premature, not only in the financial and banking sectors, but in the economy in general. This in turn opened up a whole new discussion regarding the limitations of the market failures paradigm of regulation. One could argue that certain areas of human activity – say, tax collection and prisons management – should not enter the economic market in the first place, and should be handled by government regardless of market failure issues. In Europe, Britain in particular, a different approach prevailed: regulation was entrusted almost entirely to the civil service. Even when special regulatory agencies were established, they were integrated into government ministries for which the ministers were responsible. In Britain, only a few laws are earmarked specifically for regulation; consequently the British are not as prone to seek redress from the courts, and regulators have a wide range of discretion in this as in other governance areas. The advantage of the British system over an adversarial approach – one that seeks to enforce laws via inspectors and sanctions – is a pragmatic, unofficial process based on cooperation between regulators and those regulated, and one that defines regulation as a way to develop the rules of conduct for supervised entities. This approach can be found in other European states as well (Wilson, 1989: 295–314). Its shortcoming is the danger that loopholes may become permanent, especially those that favor powerful private players over the public interest. Following stepped-up privatization in Britain, new bodies were created such as the Civil Aviation Authority, the Equal Opportunities Commission (now part of the Equality and Human Rights Commission), and the Office of Electricity Regulation (now part of the Office of Gas and Electricity Markets). The reduction of the public sector was accompanied by the proliferation of regulations and the establishment of special agencies such as the Director General of Regulation, which is in charge of regulating regulation itself in the executive agencies of the civil service; and the Competition Commission for mediating and resolving disputes (Bishop et al., 1995; Boyer and Saillard, 2002). Another development was super-state regulation, like that of the European Union, for example, to ensure competition, consumer rights, and environmental protection (Vogel, 2003). Regardless of the type or scope of regulation, all democratic states grapple with a key issue: to whom are the regulators accountable? The independence of the

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regulatory agencies means that the public has no way of monitoring their activity through elected officials. On the one hand, the “capture theory” literature indicates the existence of a co-opted regulator, and documents the emergence of symbiotic relations between the inspectors and the inspected, gradually blurring the boundaries between them and harming the public interest for which the regulatory mechanism was created or the public body was privatized. On the other hand, some testify that regulation is more successful when it is not coerced, but conducted by signals, suggestion, dialogue, and a joint learning process of the inspectors and inspected (Carpenter, 2004). The dilemma surrounding accountability arises regularly in democratic systems, also in the context of judicial review in the courts or ministerial responsibility for the activities of the executive agencies. The transition of the state from direct responsibility to regulation and oversight will require new definitions of political accountability and even of the separation of powers. We return to this subject specifically in chapter nine, which deals with oversight and control of the civil service.

Regulation in Israel When Israel was established, the state permeated almost all spheres of life. In this sense, there was no need for regulation of the private sector because the state (and the Histadrut Labor Federation and Jewish Agency) performed these functions, and later even shaped the private sector through its industrialization policies (Levi-Faur, 2001). With respect to regulation, Israel inherited the British model, which advocates supervision by government ministries; indeed, most regulators in Israel are appointed by the government and its ministers. Several laws mandate consultation with a Knesset Committee regarding the appointment of regulators, but in general the Knesset has little influence in matters of regulation. With the increasingly litigious nature of Israeli society, laws and regulations have multiplied and government agencies have been created to enforce the regulations. Nevertheless, the parallel and rival trends of regulating and deregulating are interwoven since, as noted earlier with regard to patterns of behavior in the public sector in Israel, centralization is still so strong that discourse about the desired boundaries of regulation is just emerging (Arbel-Ganz, 2003: 85–6, 124–30). In examining the state budgeting process below, I point out that the ministries in charge of regulation usually take the position that no-one else can be trusted to make decisions, as illustrated by the following anecdote. When mobile phones first appeared in Israel, they aroused great concern in the Accountant General’s office, which oversees equipment acquisitions for the ministries. A decision was taken that senior officials could not use cell phones unless they had special permission. Following pressure, the Accountant General approved a quota of ten cell phones for every office, allowing the directors general to distribute them at their discretion (Galnoor, 2003c: 471). In a sense, the policies of privatization and reduced government intervention fly in the face of the centralized supervision sought by the Finance Ministry and,

Regulation 59 to some extent, the Justice Ministry and other ministries. While some regulators have limited authority, for example in the area of environmental pollution, others have far-reaching executive and quasi-judicial powers, such as the Israel Antitrust Authority or the Registrar of Nonprofits. Nonetheless, having authority does not ensure its exercise, as noted by the state Commission of Inquiry headed by Justice Beisky in criticizing the Bank of Israel’s Supervisor of Banks following the manipulation of bank shares in the 1980s (Israel, 1988: 355). Even when the regulator does exercise authority, this does not guarantee the exercise of equal opportunity by the government, or that justice will be done for all citizens, as evident from the High Court decision regarding policies made by the Israel Lands Administration (HCJ 244/00, Mizrahi Democratic Rainbow: New Discourse v. Minister of National Infrastructure, PD 56(6); Barak-Erez, 2000: 203–19). The Ministry of Education is responsible for the quality of education – how will it carry out this important task? In the current approach, a curriculum written in Jerusalem is conveyed to schools throughout the country, with ministry supervisors responsible for ensuring that students study it. In a different approach, the Education Ministry would continue to set policies and approve curricula, but oversight and monitoring would be applied by the school principals and teaching staff without regulators or external supervisors. However, one should also be aware of the dangers of privatization that lacks supervisory and regulatory mechanisms, as evidenced from the experience of Russian policies in the 1990s (The Economist, 1993). In Israel, centralized control and oversight continue, leading to a proliferation of regulation tasks by government offices, and also to great redundancy. For this reason, few bodies exist in Israel – unlike other countries – whose sole task is regulation, and which do not also engage in the task regulated. Regulation in Israel, done primarily by government ministries, is adversarial in character. The Ministry of Communications is now actually a centralized supervisory authority, and this is also true of the Ministry of Environmental Protection, responsible for protecting the coastline for the public and future generations (Protection of the Coastal Environment Law, 2004). An example of an authority established by law in 1996 that defined regulation as its exclusive task is the Authority for Public Services – Electricity. This authority, as its title indicates, was established to be a meta-body to supervise the entire field of energy – electricity, fuel, gas, land, and water.3 By mid-2010, this goal had not yet been attained. Israeli regulation also suffers from the problem noted above – as time passes, regulators tend to develop symbiotic relations with their “clients,” and in effect stop serving the public. Criticism has also been voiced that when regulators resign from government ministries, they are hired for senior positions in the private companies they had previously supervised – or were supposed to supervise – while they were civil servants. The debate about regulation is fundamentally ideological: between those who support broad state regulation over many areas, and those who advocate limiting regulatory powers, except in critical areas such as safety, drugs, environmental pollution, and food.4

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Regulation and deregulation The questions raised in this chapter concern the character of the institution of state and the role of the public sector, and the civil service as part of that in the future. The European experience, more relevant for Israel, is still evolving. The trend in Israel to remove functions from the civil service, for example, led to the strengthening of regulation and even the establishment of special regulatory bodies such as those in the USA. Following this, calls for deregulation were again sounded (as happened in the USA), to eliminate supervision from some bodies and limit the regulation of others. At the same time, demands rose for re-regulation – strict enforcement and even restoration of supervision in cases where a government monopoly was converted into a private monopoly lacking oversight and restrictions (Veljanovski, 1987). The issues of regulation and deregulation preoccupy not just academic research, but also ideologies and politicians of the neoconservative school and their opponents (Giddens, 1998). One can distinguish conflicting trends: the desire to dissolve the civil service entirely, particularly its regulatory functions, and “regulation proliferation” as a result of privatization. Some believe that the welfare state will be replaced by a “regulation state,” but these conclusions are hasty – even for Israel – because the pendulum continues to swing and may yet change direction.

6

Civil servants

This chapter does not examine the question of size – whether the number of employees in Israel’s governmental public sector (the civil service) is commensurate with the size of the population or comparable with other countries; as noted in chapter two, there are no clear-cut answers to these questions. Here I present the differences between government ministries, draw a profile of civil servants, and examine recruitment and promotion, wages, and the level of education and training. In chapter seven, I look at the senior echelon.

In the ministries Table 6.1 presents the number of employees in selected ministries. The large number in the Ministry of Health stems from the inclusion of employees in government hospitals; excluding them would diminish the civil service by more than a third. The Ministries of Justice and Finance, which primarily engage in regulation, are the largest after the Health Ministry, while nine other ministries have between 1000 and 3000 employees. To these should be added personnel employed via subcontractors and employment agencies, which operate in most ministries. The number of employees in each ministry tells only a partial story. A ministry having few employees can have a large budget and considerable power. The proposal we made to reduce the number of government ministries to 15 (see chapter two) relies not on a test of size, but rather on an analysis of the functioning of the ministries in terms of continuity and needs. For example, transforming government ministries into staff centers for policymaking, regulation, and monitoring, and removing their task of providing direct services, would enable a relatively small number of employees. In keeping with this approach, government hospitals would no longer be part of the Ministry of Health, which would then employ only a small staff. Can we assess the relative power of the ministries or their influence on policy setting in the executive branch? Heading the list of powerful ministries, well above the others, is the Ministry of Defense because of its critical function and the size of its budget – some 16 per cent of total government spending in 2008 (Budget Law for the 2008 Fiscal Year, 2008, Book of Laws 2141, 20 March 2008, p. 270). The Ministries of Finance and Justice also occupy important, albeit different, spheres

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Table 6.1 Number of employees in government ministries (2008) Ministry

Number of employees

Ministry of Health (including government hospitals) Ministry of Justice Ministry of Finance Ministry of Welfare Office of the Prime Minister Ministry of Education Ministry of Defense (2007) Ministry of Agriculture Ministry of the Interior Ministry of Industry, Trade and Labor Ministry of National Infrastructure Ministry of Transportation Ministry of Foreign Affairs Ministry of Housing Ministry of Immigrant Absorption Ministry of Environment Ministry of Tourism Ministry of Communications Ministry of Public Security Ministry of Science and Technology

28,186 7,329 6,209 2,771 2,708 2,580 2,310 1,780 1,722 1,446 1,250 1,017 939 794 521 484 214 176 155 136

Total

62,727

Source: Israel, Civil Service Commission (2009) Report for 2008, pp. 6–7 (including temporary and special contract employees).

of influence. The Ministry of Finance was always very powerful by virtue of its control over budgets and capital import (Gross, 1966). However, the Emergency Economic Stabilization Act of 1985,1 intended inter alia to allow for closer monitoring of the budget, transformed the Ministry of Finance into a centralized planner of activities in other government ministries (except the Defense Ministry). We will return to this matter in chapter eight, which discusses the budgeting process and functions of the Ministry of Finance. The rise in power of the Ministry of Justice derives from changes in the Israeli legal system. The “judicialization” of the public sphere in Israel and the increased resort to courts to resolve public and political disputes also affected the public management sector (Galnoor, 2004). Corruption cases involving politicians and public servants in national and local governments multiplied since the 1980s (Rubin-Shostak, 1998), while the Attorney General and the legal advisors in the ministries increased their influence on management processes. All these changes affected the number of employees involved in investigations and enforcement – those working for the Ministry of Justice, the police, and the prison system – as well as the number of judges. Table 6.2 reveals that the growth in instruments of investigation, enforcement, and litigation was commensurate with population growth in Israel – which

Civil servants 63 Table 6.2 Number of employees in law enforcement agencies (1970–2007)

Ministry of Justice Judges (including Religious Courts) Police and Prison Guards

1970

2007

% Change

1,365 248 12,897

7,040 665 35,110

+516% +268% +272%

Source: Israel, Central Bureau of Statistics, Statistical Abstract of Israel, 1971 and 2008.

increased by a factor of 2.4 in the 37 years between 1970 and 2007. Simultaneously, the range of functions of the Ministry of Justice grew significantly, and this is reflected in the relatively large rise in the number of employees. The Office of the Prime Minister was originally a random collection of functions. It had no staff to help the government and its head determine policy. Direct election of the prime minister from 1996 to 2001, and the personalizing of politics, strengthened the role of the Office of the Prime Minister as coordinator of the other ministries, and the number of its employees more than tripled from 764 in 1990.2 However, because of its structure and the lack of organizational tools for staff work, the actual influence of the Office of Prime Minister on the activity of other ministries and the implementation of programs across ministries is still limited. Other powerful ministries are those with a diverse range of clients, such as the Ministries of Education, Health, Industry, Trade and Labor, Agriculture, and Welfare. The federative structure of government ministries in the Israeli civil service and the lack of a senior staff in parallel positions across ministries inhibit not only joint programs and coordinated policymaking, but even the willingness to share information among the ministries.

A profile Below is a collective profile of some characteristics of civil servants. In chapter seven, we will look specifically at the senior echelons as well as the representation of women and Arabs in the civil service. The portrait of the civil service that emerges from Table 6.3 shows a sharp increase in the average level of academic education over the years, stemming primarily from the changed hiring requirements and also the higher wages paid for holding an academic degree. This change is also reflected in the considerably larger proportion of employees in professional rankings (engineers, economists, computer technicians, etc.), the vast majority of whom hold academic degrees. The average age of the civil servant is relatively high, and has risen over the years. This is because most new employees are hired at low entry positions and slowly work their way up the ranks. As a result, as we shall see in chapter seven, senior public servants are even older on average. The system does not create much opportunity for entry at higher levels, with the exception of postings that are nontender political appointments. Senior-level hirings are also blocked

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Table 6.3 Profile of civil servants (1975 and 2006) Characteristics

1975

2006

University educated (B.A. degree or higher) Average age Average years of employment as a civil servant Proportion of employees in professional ranking Women

26% 41 8.5 36% 39%

41% 44 13.0 57% 64%

Source: Israel, Civil Service Commission (1976) Report for 1975 (Hebrew); for 2006, data made available to the author from the Civil Service Commission.

because of tenders that give priority to internal candidates. Because the system has not changed, the average length of service has increased at higher levels and has naturally lengthened over the years. The proportion of women in the civil service rose sharply over the 30 years surveyed, mainly because of changes in the structure of employment in the labor market. Most Jewish women hired for the civil service joined at the lowest administrative level – primarily as clerks in full- or part-time positions. These positions pay low wages, but offer the advantages of tenure and proximity to home. Problems related to the advancement of women are discussed more extensively in chapter seven.

Recruitment and promotion When the civil service in Israel was founded, it already contained some of the internal tensions that would mark it over the years: first, the aforementioned partisan politicization; second, the differences in education, status, methods of promotion, and wages between its two divisions – the clerks, on the one hand, and the professionals and senior officials, on the other (Reuveny, 1974). As early as the 1950s, professionals and academically trained civil service employees demanded differential wages, and thus the professional ranking was born: categories of professionals, headed by the engineers, who had separate wage scales. As a result, the civil service is divided into two clusters: the first, the professional rankings, includes 18 specialized fields, the largest of which are nurses, academics in the humanities and social sciences, doctors, engineers, lawyers, and social workers; most of these are organized into separate trade unions as well. The second cluster, the administrative rankings (previously called the uniform ranking), includes low-level technical employees and clerks who are also organized into a civil servants’ union. In 2008, the ratio was 6:4 professional to administrative employees. This warp and weft of the Israeli civil service thoroughly stratifies and compartmentalizes the service, rigidly dividing it into ministries and units, with an additional elaborate division into many professional ranks. This structure impedes creation of a sense of common mission – an esprit de corps – among civil service employees, especially at the higher levels.

Civil servants 65 The Civil Service (Appointments) Law instituted the merit system, by which candidates for civil service positions are recruited according to job descriptions that include a list of qualifications, experience, and education required, as well as other prerequisites. The list is narrowed by using public tenders and competitive exams designed to appoint those who are most suitable. Conversely, in the “spoils system,” as termed in the USA, employees are recruited based on their personal connections, campaign contributions, or party affiliation (Mosher, 1968; Meier, 1993). When the state of Israel was created, senior civil service posts were awarded to party members, generally those from the party of the minister. As long as Herut and the Communist Party were not in the government coalition, for example, very few of their members held senior civil service positions. Consequently, in many ministries one could identify the political “tree rings” – the party of the minister and the length of his or her service based on the grades of politically appointed employees who remained in the ministry after the minister left. In the system used in Israel, employees are generally recruited for low-level entry positions in a specific ministry or unit on the assumption that they will slowly rise in grade from within. Clear training and promotion tracks have never been developed, so the primary way for an employee to advance is to wait for a job vacancy in that ministry and apply for it (hoping it will not be awarded to a political appointee or someone already occupying that post in a “temporary” appointment). Recruitment from outside the civil service for mid- or high-level positions is infrequent. In the Foreign Ministry, for example, only posts at the lowest grades are open to newcomers – with the exception of ambassadors, who are political appointees. Chances are slim that senior civil servants will transfer during their career from one ministry to a parallel posting in another, therefore their primary loyalty is to their ministry and unit, not to public service in general. This problem is particularly acute among senior staff with no professional experience in other organizations within or outside the civil service (Dror, 1971). Advancement is thus completely random, and – beyond the official basic requirements of education and experience – there are no training tracks for preparing professional civil servants – engineers, doctors, economists, etc. – for senior management posts (Weinshall, 1969). Moreover, since government ministries have virtually no control over promotions and wages, they cannot reward outstanding employees, while, conversely, they are prevented from firing unproductive employees because of collective agreements with the unions. Also contributing to this sorry state of affairs is the fact that vacant posts are published first in an internal tender open only to ministry employees and other civil servants, and published outside only if no appropriate candidate is found internally. The State Comptroller made note of another serious shortcoming: in more than half the public tenders issued during 2002–04, candidates were selected who had held the same post on a temporary basis before issue of the tender, thus harming the principle of equal opportunity for all candidates (Israel, State Comptroller, 2006a: 43–7). The absence of recruitment systems and promotion tracks, and the failure to address senior staff needs, worked synergistically to prevent the emergence of a

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Civil servants

public service ethos in the British, French, or German sense of the term – a civil service with a sense of identity, cohesiveness, and esprit de corps. All these are needed to help foster professional and institutional independence from the political echelon. In a civil service of this type, while there is a risk of bureaucratic rigidity that encumbers ministers in getting officials to implement their policies, this rigidity is formed only at a much later stage. Professional–administrative autonomy precedes that phenomenon, as captured in the BBC television series Yes Minister. In Israel, containing promotions within the narrow boundaries of a ministry severely impedes its ability to hold on to outstanding employees, and to develop a broad service perspective among those who choose to climb the ranks slowly. The former are lured by more lucrative places of employment, while the latter become increasingly frustrated as political appointees are parachuted in from outside, blocking their path of advancement.

Wages The issue of wage levels for civil service employees led to creation of a committee in 1949 headed by David Horowitz, then Director General of the Finance Ministry. The committee set a uniform wage scale with 13 grades, in which the wage of the highest-grade employee would be no more than three times that of the lowest-grade employee, sometimes less as a result of linking salaries and family allowances to the cost-of-living index. These arrangements did not last, both due to pressure to change the wage tables, and because the uniform scale was split into professional rankings (Samuel, 1958). Despite the changes, wage differentials grew only slightly in the civil service and remained low over the next decade (a ratio of 1:2.5) as shown in Table 6.4. Nevertheless, “negative precedents in labor relations” were visible in the civil service even in the early years of the state, especially with respect to wages (Kfir and Reuveny, 1998b: 27–37). In 1958, one could find earmarked benefits – family allowances, professional literature supplements, on-call pay, and more

Table 6.4 Monthly salary of selected civil service posts (1958, in Israeli Lira) Rank

Position

Administrative Rank 13 (lowest rank) Administrative Rank 9 Administrative Rank 4 Engineers Rank Physicians Rank Administrative Rank 1 (highest rank)

Mail carriers Clerks Department Directors District Deputy Hospital Executive Directors Ministry Director Generals

Net salary* 200 234 354 363 504 505

Source: Rosolio, 1959: 19. Note * Net salary after all benefits and deductions, including income tax, for a married employee with one child after three years’ employment in the civil service.

Civil servants 67 (Rosolio, 1959: 17) – which gradually distorted and swelled the scale, splitting the wage structure into separate bailiwicks to this very day. The civil service inherited many pre-state traditions, including an eclectic approach to its system of wages. The history of wage struggles in the civil service can be summed up by two facts: first, the many “wage committees” created over the years that recommended restructuring the pay scale to give it order and logic; second, the inability to implement these recommendations. Thus an impossible labyrinth of wage arrangements was created that has more exceptions than rules, particularly hundreds of special wage supplements for selected groups and ministries (Reuveny, 1998: 116–9). The lack of a rational wage structure with internal logic is one of the major obstacles to improving the civil service. In November 1961, following a series of extended labor disputes in the civil service, the government appointed a committee headed by then Bank of Israel Governor David Horowitz to examine wage policy in the public service. The recommendations of this committee, submitted to the government in April 1963, were based on the principle of equal pay for equal work, and creation of a uniform wage scale in the civil service (Israel, 1963). These recommendations were not implemented, and several more committees, convened over the years to study wage issues in the civil service and the public sector, also bore no fruit (e.g. Israel, 1976). An important effort was made in the late 1980s and early 1990s: The Zussman Committee, which examined the wage structure in the public sector, identified serious flaws that had worsened during the years of high inflation, and recommended its comprehensive and immediate replacement by one simple wage table for all public sector employees (Israel, 1989b). After extensive deliberations and tough negotiations with labor representatives, these recommendations, too, were set aside. As a result, despite the system of index linkage, wages in the civil service are made up of elements that differ between ministries, and even within each ministry, in a way that not only undermines human resource management, but also harms employees who are unable to move to parallel positions at the same grade in other ministries. For example, most government ministries have “unique” wage supplements, while other ministries have “non-unique” wage supplements to compensate their employees for not being “unique.” An employee who wants to transfer from a unique to a non-unique post or from one professional grade to another, sometimes within the very same ministry, could lose a significant portion of his or her salary. Over time, salaries have also included components that became hidden perks, such as on-call payment, car allowance, and overtime pay (there is even a “global” overtime payment, meaning that it is unrelated to the actual amount of overtime). However, these benefits – which the employees justifiably see as part of their wage, because they replaced raises – are not included in the calculation of pensions. As a result, many retirees from the civil service receive an insufficient pension and could even find themselves below the poverty line. The Histadrut Labor Federation, the trade unions, and the employee committees played a major role in setting wages and even personnel policies in the civil service. This initially stemmed from labor movement traditions, and later was institutionalized by laws, the Civil Service Personnel Code, and the collective wage

68

Civil servants

agreements: “Senior hirings were controlled by the political echelon and entry-level hirings, by the labor unions” (Nachmias and Rosenbloom, 1978: 55). The advantages of the collective agreements were that they aimed to create a fair structure; they safeguarded the wage levels of low- and mid-level civil servants; and they created employment security, protecting workers from arbitrary dismissal. Among the disadvantages, they fostered an adversarial system of negotiation3 that revolved primarily around wages (not, for example, productivity or working conditions); and they thwarted every attempt to institute progressive management systems. Among other things, they prevented the justified dismissal of civil servants who performed their jobs poorly. Agreements signed between workers’ representatives and the Finance Ministry’s Director of Wages created a system of linkage among the salary tables, which prevented changes in human resource management in the civil service. Regrettably, the principle of excluding unique salary supplements from the pension calculations was accepted by the unions. The decline of the Histadrut served to enhance the power of the separate trade unions, and wage agreements now primarily benefit those in stronger groups, without protecting the wages or pensions of the lower-echelon workers, primarily those in the administrative ranking. The Civil Service Commission, which should be concerned about protecting all government employees, has not been able to address this problem because it is not a partner to the salary negotiations. As a result, the wage system in the Israeli civil service has no rational structure or internal logic. Transparency is lacking altogether, as wage differences among ministry employees are considered a state secret. There is also no wage policy capable of linking wages and management. It is surprising that a seemingly flexible wage structure has become so rigid with respect to applying basic management principles to wages, such as rewarding merit. Instead, new wage agreements are struck every few years between the various civil service trade unions and the Finance Ministry’s Director of Wages. Employees cannot easily distinguish their wages from their extra allowances, and no clear distinction is made between pay raises and promotions or seniority supplements. Some payments are made only to a particular group of employees (such as special allowances to tax division employees) to prevent “parallel repercussions” (similar demands by other groups). The complex and opaque wage system fosters discontent and strikes, and this further damages the public image of the civil service. Wages in the civil service offer no incentive to join, especially among young people who could earn more in the private sector. Employment security in the civil service is an attractive element, but appeals primarily to those at the lower administrative grades. Thus there is a risk of attracting less talented people to professional and senior management positions. Wage differentials within the civil service grew incrementally through the first two decades, but widened dramatically thereafter, as seen in Table 6.5. The reasons for the change are the salary raises of the directors general in 1977 and their linkage to the salaries of assistant ministers, as well as institution of the “senior contract” in 1990 outside the collective wage agreements, applicable to the two grades below that of director general (at 80–90 per cent of the director general’s wage). In 2009 there were 703 “senior contracts” in the civil service, about 60 per cent

Civil servants 69 Table 6.5 Comprehensive remuneration of directors general compared with the lowest civil service wages, selected years Year

Ratio

1953 1972 2000

1:1.4 1:2.5 1:7.0

Source: Reuveny, 1972: 21; Israel, Civil Service Commission, 2001.

of the employees in these grades (Israel, Civil Service Commission, 2009: 10). It is doubtful that the senior contracts achieved their stated goal – management flexibility. They improved the salary of the senior employees in the civil service, but did not protect them from arbitrary or political dismissal. The internal wage differentials also derive from the benefits given to individuals, special groups, and specific groups in the civil service who went on strike or threatened to strike, and managed to improve their salaries. Momi Dahan (2004) has shown that the salary raises of 6.5 per cent in 2000 did not stem from incremental increases (promotions in grade and seniority), as is generally believed, but about half originate in separate wage agreements signed by the Finance Ministry with units such as the Income Tax Authority, the National Insurance Institute, and the Employment Service in order to resolve labor disputes. The experts agree that corrections must be made to distortions in the salary structure, benefits, and retirement arrangements in the civil service and the entire public sector, and salaries must be linked to human resource management policies. How can this be achieved? The first step is to remove wage matters from the exclusive authority of the Finance Ministry, and incorporate them into a comprehensive public service policy for which the Civil Service Commission is responsible. Thereafter, two options exist for creating a wage structure that would resemble systems that function well in other countries. The first is to establish a uniform governmental or public wage system that meets the criterion of “comparable pay for comparable work,” as suggested by the Zussman Committee in 1989. The alternative is to recognize the federative character of the civil service and decentralize the authority to determine salaries among the government ministries. Thus each ministry – while adhering to the general policies, the approved budget, an agreed lid on employees’ number, and overall wage structure – can award incentives and benefits according to its own management needs.

Education and training Higher education is a prerequisite for functioning in the employment market of the twenty-first century. Thus, in many countries, including Israel, an undergraduate degree is a basic requirement for mid- and higher-level positions in the civil service. For many posts, such as working in the office of the State Comptroller,

70

Civil servants 60

56 48

50 44 40

58

59

52

43

36

30

26 22

21

20 10 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2007 Employees with professional ranking

Figure 6.1 Proportion of civil servants at the professional level (1960–2007).

a graduate degree is now required. The level of education of civil service employees in Israel has risen steadily: the proportion of those holding academic degrees rose from 13 per cent in the early 1960s to close to 50 per cent in 2009. Another indication of increased academization is the proportion of civil servants in professional rankings, as most have academic training in their field – physicians, engineers, social service workers, psychologists, computer technicians, etc. The proportion of professional workers rose by a factor of 2.5 over the past 40 years (Figure 6.1). Many employees engage in studies or in-service training courses at state expense, in addition to the professional training every ministry provides in specific fields. In the 1960s, the Civil Service Commission established a training and education center, intended to provide schooling to lower-echelon employees and training courses to mid-level employees. This center was closed in 1997. A “training grant” was established in 1961 as part of a wage agreement, designed to enable employees with an academic degree to continue their education in areas related to their job. Over time, this grant was made to other employees as well. In the 1993 wage agreement, the Finance Ministry approved a supplement entitled “Training Grant B,” reflecting that this had become a salary perk that was more about “grant” and less about “training.” Civil service employees in Israel aspire to broaden their education, learn new fields, and train for more advanced positions, but no system has been developed that integrates training, development of management skills, and promotion. On the other hand, civil servants do receive a raise for academic degrees – a good method, had it not been abused by the purchase of degrees or their attainment from dubious educational institutions – a practice that ended by law in the early 2000s.

Civil servants 71 Ensuring higher education for civil servants is therefore only a partial solution, and part of the problem is that advanced jobs now require too narrow professional degrees. Despite the many recommendations, a special management school for senior civil servants was never established, such as those in France and many other countries. The assumption that an undergraduate degree is enough has not been proven, nor that advanced professional studies are sufficient for knowing how to manage, particularly jobs in which management skills are crucial. The Kubersky Commission, cited in chapter four, recommended creation of a National Policy and Administration School for all Israeli public officials. Based on this recommendation, a detailed plan was drawn up for training senior officials before they join the service and employees who are on a promotion track to senior positions. Had that school been established, it would also have opened entry-level tracks above those at the bottom of the scale in an effort to attract young people from outside and to compensate valued employees. Such management training would have created a framework for development of senior, service-wide staff, as well as policies that would integrate studies and training with job promotion. The school plan was approved by Prime Ministers Rabin and Peres as well as Finance Ministers Shohat and Meridor, and almost implemented in 1996, but it was ultimately buried by the Netanyahu administration (Galnoor, 2003c: 499–530). As a result, even with regard to promotion, education, and the training of employees – as with salaries – there is no clear, rational, and comprehensive policy.

7

The senior echelons

In this chapter, I look at the senior echelons of the civil service and those who hold these positions. While the distinction between managing and policymaking can be unclear at times, these senior officials have a key role in shaping policy. Below I sketch the profile of senior officials, look more closely at the directors general, and then examine which groups in Israeli society find it hard to reach these top posts. In this context, we also discuss affirmative action.

Senior civil servants “Senior staff” in the governmental civil service is defined here in a limited way: as the three highest grades of government ministries. These include directors general and equivalent positions, deputy directors general, department or district heads, directors of national units, assistant directors general, heads of key units, and several others. In 2009, there was a total of 1165 senior staff in the civil service and statutory authorities (but not government companies) (Israel, Civil Service Commission, 2009: 10) In his survey of 294 civil servants at the three highest grades (including directors general) in the years 1966–70, Arye Globerson (1973) found predominantly men (96 per cent), a fairly high average age (50), Ashkenazim (97 per cent), and holders of academic degrees (60 per cent). Another finding was lack of mobility: these officials had held the same job in the same ministry for many years. More than a decade later (1985–86), David Nachmias (1991) surveyed 261 civil servants at the three highest grades beneath the directors general in government ministries, and found a similar profile: Those who make it to the apex of the Israeli bureaucracy are predominantly middle-aged (mean age = 50.3), middle-class males, vatikim (long-time residents; 93 percent were either born in Israel or lived there at least 30 years), Ashkenazim (of an American–European descent), raised in urban areas (most either in Tel Aviv or Jerusalem), and educated to at least the level of the bachelor’s degree. (Nachmias, 1991: 414)

Senior echelons 73 Accordingly, notes Nachmias, “the bureaucratic elite as a group is quite homogeneous and unrepresentative of the social structure” in Israel. Even if we set aside the under-representation of Arabs and women in the senior staff, the fact that only 20 per cent are of Mizrahi origin, 22 per cent from the working class, and very few from the periphery creates what he calls a “meritocratic politocracy.” Nachmias concludes that the combination of political appointments and academic credentials sets a very high bar for those not among the well connected and lacking a university degree. In his view, the merit system of recruitment based on competitive tenders has contributed to fostering inequality and a lack of diversity in the senior echelons. Thus political patronage and the criterion of education only exacerbated the homogeneity of the senior staff. The difficulty with this conclusion is that educational credentials are not necessarily correlated with political patronage. In countries where appointments are not political, the requirements for academic education are even higher (Ball and Peters, 2000: 232–6). The issue of political appointments will be examined more closely in chapter ten, but the research cited above indicates that such appointments were made in Israel long after the Labor Party domination ended in 1977. Change is hard to show in the absence of more recent data, but one comment should be made: education is the key variable in the above profile of senior personnel, with the exception of gender and nationality. Indeed, it can be said that, had education been the sole deciding factor, discrimination would have been relatively easy to overcome because the civil service encourages and even helps its employees to continue their education. The fact that 80 per cent of the senior staff had higher education, most even graduate degrees, also reflects the wage benefits conferred by the civil service for higher education. In our view, therefore, political appointments are the main factor determining the profile of the senior echelons, and the increased number of political appointments after the mid-1980s fostered greater diversity and equality, but for the wrong reasons: These senior officials were generally not appointed for their management skills. In the absence of data about the senior echelons, this change can be tracked only among directors general, as seen in Table 7.1: the proportion of those born in Europe or America dropped from 65 to 25 per cent in the periods surveyed. With regard to other characteristics, only partial data about senior civil servants can be found for the post-2000 period. Those at the senior grade are older – 58 per cent are over 51 years old; and better educated – 93 per cent have a bachelor’s degree, and 49 per cent have a master’s degree (Civil Service Commission, 2009: 12, 14). They are predominantly Jewish, male, and urban, though now there is more geographical – and dramatically more ethnic – diversity (sometimes for political reasons). In summary, senior civil servants in Israel do not resemble their counterparts in Europe in terms of class and wages (Hood and Peters, 1994). As noted, senior staff remain at their ministry jobs for long periods (while political appointees parachute in from the outside); they feel no loyalty to the civil service as a whole; and they lack training in their primary task – management. Indeed, many respondents in the research by Nachmias (1990: 19) reported that they feel untrained for their tasks.

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Directors general Although the role of director general in a government ministry was influenced by the British system, it was shaped mainly in the tradition of Zionist institutions where administrators were party appointees. This system of appointments for directors general was formalized and enshrined as the Civil Service (Appointments) Law (1959), in which the government makes appointments based on the ministers’ recommendations rather than public tender. Beyond this, the role of the director general is not clearly defined, even in the Civil Service Personnel Code. To hire a director general, every minister is, of course, entitled to issue a tender or appoint a search committee, but in practice the office has become so politicized and personalized over the years that a director general will not be asked to remain on the job even if the new minister comes from the same political party. The job of director general has also served as a stepping stone to a political career, especially in the Mapai Party – to a position as minister or deputy minister (Czudnowski, 1977: 233). This was also evident in the 2006 elections, when six ex-directors general were elected to the Knesset. Candidates for director general undergo a vetting process by the Appointments Committee, chaired by the Civil Service Commissioner, which informs the government if there is reason not to go through with the appointment. The government, however, can ignore these recommendations. Research about directors general is sparse, but data that exist appear in Table 7.1. Until 1996, all directors general of government ministries in Israel were Jewish and male, and the average age was 47. Since 1996, five women served as directors general of government ministries, and in 2003 the first Arab director general was appointed, to the Ministry of the Interior. Since the 1980s, Ashkenazi Jews of European origin are no longer the majority; their place has been taken by native-born Israelis, including many of Mizrahi origin. By the early 2000s, directors general are no longer predominantly of one ethnicity, and education also fails to distinguish them: The proportion of directors general having academic degrees gradually increased, reaching 88 per cent in 1992 (Frankenburg, 1999). Table 7.1 Ethnic origin of directors general (1952–96) (N = 150)

1952–79 in per cent 1980–95 in per cent Total in per cent

Europe-America

Asia-Africa

Israel

Total

55 65% 16 25% 71 48%

3 4% 7 11% 10 7%

26 31% 41 64% 67 45%

84 100% 64 100% 148 100%

Source: Unpublished surveys carried out by Alex Radian in the early 1980s, which appear in the Kubersky Commission Report (1989a: vol. 2, 118) and the doctoral dissertation of Reuven Frankenburg, 1999: 91–112, 227.

Senior echelons 75 Most of those appointed to the position of director general came from outside the ministry, though over half were previously employed in the civil service or the military. There are no hard data, but a perusal of the list of directors general leads to the conclusion that virtually all were political appointees, even though some defined themselves as expert in the field. The trend of appointing political allies expanded in the 1980s, and matters did not improve after 1996. The frequent turnover of directors general has implications for the nature of their role. If the director general is viewed as an arm of the minister, no importance need be attached to the length of the term, but if the director general is viewed as an autonomous professional, it would be hard to make a contribution during a term shorter than three years. This minimum had been met in the past according to Table 7.2: the average length of service of a director general until 1996 was 3.37 years. However, this average conceals the fact that turnover may have been rapid in most ministries, but counterbalanced by relatively long terms during Israel’s early years by ten directors general who served ten years or more. In any event, turnover increased with political instability: the frequent changes of minister brought about frequent replacement of the directors general. From 1996 through 2006, the average term of a ministry director general was 21 months (Ilan, 2006), less than half the previous average term until 1996. In the Ministry of Industry, for example, eight directors general served during this period; seven in the Office of the Prime Minister; and six in the Finance Ministry. As we shall see later in this chapter, rapid turnover politicizes the professional levels of the ministry, impedes continuity in policymaking, and Table 7.2 Selected data about directors general (1949–95) (N = 150) Education upon Primary and secondary entry (N = 142) Undergraduate degree Graduate degree

25 (18%) 63 (44%) 54 (38%)

Appointment (N = 149)

From within the ministry From outside the ministry

Turnover per decade

Number of Directors General (average)

Years served (range)

3.3

3.2–5.6

2.3

0.9–3.0

Years of service

48 (32%) 101 (68%)

Total directors general in the decade Average years served by directors general

11 ministries, very high turnover (more than three per decade) 12 ministries, medium turnover (three or fewer per decade) 2.87 3.37

Until 1970 1971–1995

4.4–5.7 1.7–3.8

Source: Adapted from Frankenburg, 1999: 91–112, 227.

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undermines the ability of the ministry to plan and implement policy that applies for longer periods. The directors general head the management staff of the ministry, and also link the civil service with the political echelon. Beyond this, their status and activities vary from ministry to ministry. When asked, most directors general acknowledge that they were appointed for political reasons or because of their personal relationship with the minister.1 While they reported that their job focused primarily on internal ministry affairs and was less about “politics,” in practice they devoted a great deal of time to outsiders such as interest groups, the business sector, representatives of local authorities, and organizations receiving ministry allocations. The directors general reported that the budget preoccupies them more than any other activity, and they described the great efforts they invest – particularly heads of the weaker ministries – in raising money from the Finance Ministry’s Budget Division (Frankenburg, 1999: 158). They also complained about being so preoccupied with their duties that they had little time to meet with directors general from other ministries. The fact that directors general are political appointments hinders them from working together as a professional body to promote public management in general. In 1985, the Directors General Forum was established, with the goal of increasing cooperation among them, but this seems not to have been achieved, as evidenced by the enormous difficulties in carrying out inter-ministerial projects. The status of the directors general was somewhat strengthened in 1977, when their salaries were linked to the salaries of deputy ministers. Personal contracts were introduced in the 1990s, and awareness of their importance grew during the period of political instability. Nevertheless, these changes did not offset the harm to the status of the ministries and their heads when privatization took over some of the vital civil service tasks (discussed later). Surprisingly, the process of privatization was accompanied by increased internal centralization as the Ministries of Finance, Justice, and the Office of the Prime Minister tightened their control over the other ministries. Other practices that diminished the authority of the directors general include the close scrutiny of Budget Division officials, who serve as desk officers of each ministry; the need for authorization of every expenditure from the ministry accountant, who is subordinate to the Accountant General; the professional accountability of the deputy ministers to the Civil Service Commission; and the subordination of the ministries’ legal advisors to the Attorney General. The power of the directors general also depends on the importance of their ministry, and whether positions defined as “equivalent to the director general” exist in that ministry. Over the years, certain tasks within some ministries were elevated to be equivalent to that of the director general, which diminished the authority of the director general over that ministry. In the Finance Ministry, there are seven such equivalent positions (budget division director, accountant general, tax authority director, and others); in the Justice Ministry, the Attorney General and State Prosecutor have more power than the director general. This is also true in ministries having powerful subsidiary units or those with independent statutory

Senior echelons 77 authority, such as the National Authority for Water and Sewage in the Agriculture Ministry, or the Central Bureau of Statistics in the Office of the Prime Minister. Sometimes political arrangements created autonomous enclaves within the government ministry. In the Ministry of Education, for example, the Department of State – Religious Education, and the relatively new Department of Ultra-Orthodox Education, are not in practice accountable to the director general of the ministry. In general, ministry directors general are not creative and innovative leaders in Israeli public management. Indeed, they are caught between a rock – subordination to the regulatory ministries – and a hard place – political loyalty to the minister. This conflict, and the short term of office, discourage many talented individuals from applying for this job. Efforts to change the role of the directors general have in the past followed two tracks. The first would fully politicize the entire senior staff of the civil service, thereby liberating the ministers and directors general from their dependence on the permanent staff and allowing them to implement policies without bureaucratic interference (Dery, 1993). This approach was not officially adopted, but the proliferation of political appointments beneath the grade of director general testifies to its practice in many ministries. The second track would seek to recruit higherquality directors general and reduce politicization. The Kubersky Commission Report (Israel, 1989a) had recommended strengthening the status and prestige of the director general in the civil service, creating tools to enhance cooperation and coordination among them, appointing a deputy director general from among the civil service to ensure continuity, and conditioning the appointment of directors general on vetting by the Appointments Committee, headed by a public figure. These recommendations have never been implemented. The next attempt to control political appointments was made in 1994–96 as part of a reform launched by the Civil Service Commissioner called “ChangeGenerating Steps.” In July 1994, the government appointed a committee “to formulate new criteria and procedures for civil service appointments that are exempt from tender” (Israel, Civil Service Commission, 1995). The report of this committee, submitted to the prime minister and ministers in October 1995, recommended that the reality in Israel of having politically appointed directors general be recognized and continued. However, noted the report, the list of other civil service positions filled by political appointment should be shortened, and a barrier should be erected to prevent political interference of any type below the grade of director general. It also recommended that, while the deputy director general may be appointed by the director general with the consent of the minister, she or he must come from within the ranks of the civil service. These recommendations were also never implemented (Galnoor, 2003c: 388–93, 465–8). Frankenburg (1999: 186–7) concluded that the directors general have little clout, both internally (a limited ability to manage the ministry), and externally (a limited influence on policymaking). These conclusions seem surprising in light of the public and media image of an omnipotent public bureaucracy. Little has changed in the decade since Frankenburg’s research, and despite the claims of the ministers that they cannot carry out the policies for which they were

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elected, the civil service in Israel is loyal to the political echelon, sometimes at the expense of loyalty to the law and the public. Political appointments in the civil service have allowed political modes of action to infiltrate management procedures at the expense of professional staff work (more on this in chapter 10). The most glaring example is the annual clash over budget allocations, in which appointed civil servants negotiate directly with representatives of parties in the Knesset, and the boundary between the branches completely dissolves (Galnoor, 2003b). In light of the unhealthy situation of political appointments and unethical conduct in the civil service, consideration should be given to changing the law and abandoning altogether the practice of political appointments of the directors general by the government and the ministers. At the very least, the Appointments Committee should be strengthened by bringing in nonpolitical public figures, and expanding its authority so that it does not just vet candidates for the government, but can actually veto unsuitable appointments. A complementary proposal is to appoint directors general for a set period (and establish criteria for their dismissal), which would prevent a rapid turnover of directors general – who now come and go with their minister – thus bringing continuity and stability to the system.

Who’s missing? Civil service positions are clearly defined, but a state institution is also obliged to ensure recruitment for these positions, and promotion within the service, are carried out equitably. Is the civil service obligated to be “representative,” or at least to reflect the diversity of the population at large, its main groups and social strata? Opinions differ. In the early years of the state, discussion revolved around whether members of political parties that were not part of the government coalition suffered discrimination in recruitment to the civil service. For example, in elections to the Civil Servants Union in 1953, representatives of the coalition parties won 93 per cent of the votes, reflecting the domination of these parties – led by Mapai – throughout the civil service, not just at the highest grades (Galnoor, 1982: 197). After the 1977 election, when the Likud Party came to power for the first time, there were Likud ministers who justified political appointments on the grounds that they were bringing balance to the civil service. In the 1950s, a decision was made to allocate civil service positions to new immigrants (these days it would be called “affirmative action”), both in order to create jobs and also slightly to temper the absolute control of the veterans. The Personnel Code at the time also created a mechanism for giving priority to soldiers following their military service, and to disabled veterans (Tirosh, 1999: 34–6). Clearly, the civil service cannot replicate the social mosaic, but discrimination against three groups, each for its own reason, is blatant: those of Asian or African ethnicity, discussed above in the context of the senior echelons; women, whose presence among the senior echelons had been practically nil; and Arabs, who for long years were almost entirely excluded from the civil service.

Senior echelons 79 Women in the civil service Two facts sum up the situation of women: first, since the 1980s, there are more women than men in the civil service; second, the higher the grade, the fewer the women. The discrimination was thus described in 1995 when the percentage of women in the four highest grades was 35 per cent: In the current situation, there is a “preference” for men. If there are two candidates of equal skill, a man and a woman, data indicate that the man will almost always be appointed to the job. Data on the distribution by gender at the highest grades of the civil service reveal discrimination. (Civil Service Commissioner I. Galnoor to the Knesset’s Constitution, Law and Justice Committee, 30 January 1995) The combination of organizational obstacles and personal barriers cited in research about women seeking employment yields discrimination that prevents their advancement (Yishai and Cohen, 1997: 444–9; Tirosh, 1999). Change was supposed to follow enactment of the 1993 amendment to the Government Corporations Law, which stipulated affirmative action for women in appointments to the boards of government corporations. However, implementation of this began only a year later, when the High Court of Justice invalidated the appointment of additional men to the boards of public bodies that were composed entirely of men [HCJ 453/94, Israel Women’s Network v. Government of Israel et al., PD 48(5)]. This struggle was successful, and led to the appointment of women to the boards of government corporations – bodies that are expandable – but not to their appointment to senior civil service positions, where men were in direct competition for the same job. The next stage was a 1995 amendment to article 15A of the Civil Service (Appointments) Law, which stipulated: “Among employees of the civil service, expression shall be given, taking the circumstances into consideration, to the appropriate representation of members of both genders.”2 This meant that, for the first time in Israel, affirmative action in the civil service was enshrined in law. Affirmative action is an intervention policy designed to achieve a goal about which there is relatively broad social consensus. For employee hirings, the principles of affirmative action can be formulated as follows (Galnoor, 2003c: 363): • • • •

it is necessary because the “hidden hand” of social and economic dynamics is not functioning well; the intervention is specific and declaratory, but cannot itself correct the lack of equality; it is temporary, until signs indicate a breakthrough; it is a policy that “affirms” and does not “discriminate,” as it offers corrections for a discriminated group – this correction overrides the possibility that, in a specific case, the affirmation of one inevitably leads to discrimination of another.

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The apparent injustice caused by affirmative action can appear in a theoretical situation in which two candidates apply for the same position (say, a man and a woman), and are identical in all their qualifications. In this theoretical situation, justice would require tossing a coin to decide between them. In reality, however, the woman does not have an equal chance because “for some reason” the coin almost always falls on the side of the man. Only in a situation of equal qualifications should we intervene and give priority to the woman, thereby counterbalancing the discrimination. The limited damage incurred by this method to a specific person is justified for purposes of achieving a broader social goal, and is no different in principle than expropriating private property for public use, or preventive arrest. Damage is minimal in this approach: if the qualifications between the two candidates are not similar, affirmative action (or tossing a coin) should not be used, but the stronger candidate should win. Hence, in using this method to promote women or to recruit Arabs to the civil service, the state must not compromise on standards, nor set an artificial quota that must be met in a specific period, such as doubling the percentage of women, for example, within a set number of years. How does one determine which population groups are entitled to affirmative action? As noted earlier, it must be used sparingly, and only for social goals about which there is relatively broad consensus. Since enactment of the amendment in 1995, improvement has been slow but dramatic. The number of women on the boards of government corporations grew from 7 per cent in 1993 to 28 per cent in 1997, and 38 per cent in 2000. Subsequently, there was a small decline in the proportion of women, but it remained above 30 per cent – a ratio set as the threshold for the representation of women. In 2008, the proportion rose again, to 38.5 per cent (Israel, Office of the Prime Minister, Press Release, 16 March 2008). In 2008, women filled 65 per cent of the positions in the civil service on average – 72 per cent in the lower grades; 60 per cent in the middle grades; and 46 per cent at the four highest grades – compared with only 23 per cent in 1994 (Krauss, 2004; Berger and Shaked, 2005: 19; Israel, Civil Service Commission, 2009: 149). These figures reflect a significant improvement over the 1980s, especially the narrowing gap between the proportion of women and men at the highest echelons. The number of women serving in the post of director general or equivalent rose from none in 1990 to eight in 2008. But the road to equal opportunity in the civil service remains long for women, who also still experience discrimination in wage levels and working conditions (Efroni, 1990; Maor, 2004). Arabs in the civil service Unlike women in Israel, who face obstacles to their promotion as civil servants, Arab citizens of Israel, who comprise about 20 per cent of the population, have been almost entirely shut out of the civil service employment rolls until recent years. The exclusion of Arab Israelis from the civil service comes in the context of ongoing discrimination against this group, as noted by the Orr Commission

Senior echelons 81 investigation (Israel, 2003) in the wake of the killing by Israeli police of 13 Arab citizens during political demonstrations in 2000. The very few Arabs employed by the Israeli civil service entered at the lowest levels, or in positions that deal directly with the Arab population of Israel and require knowledge of Arabic, such as in the Ministry of Education, the courts, and the Income Tax Authority. Discrimination against Arab citizens of Israel is much broader than hiring practices or the civil service, but for purposes of this book, we focus on this area, based on records kept since 1992. The data in Table 7.3 obscure the fact that most Arab civil servants provide services only to the Arab population of Israel. This refers primarily to the fields of health, interior affairs, income tax, education, welfare, and religious affairs, hence some 64 per cent are employed in the northern and Haifa districts, where most of the Arab population of Israel resides (Israel, Civil Service Commission, 2008: 9). Arab citizens do not hold policymaking positions in Israel, and the vast majority do not serve in the upper grades: Only 158 Arabs were at the four senior grades of the civil service in 2008. The concept that one can hire an engineer who is an Arab, not necessarily for work with the Arab population, is still foreign to the civil service. Most government ministries and units have between zero and ten Arab employees. The situation is only slightly better in government corporations – in 2005, there were 50 Arab board members, who comprise some 9 per cent of all the board members (Haidar, 2005: 93; Israel, Civil Service Commission, 2009: 135). The discrimination is collective – Arabs work in the civil service in small numbers because they are Arab, not because they lack qualifications (thousands of Arab university graduates are unemployed), or because they pose a security risk (the Finance and Housing Ministries have hundreds of employees, but in 2005 only three and eight of them, respectively, were Arab). Furthermore, in the past, the few Arabs who did work for the civil service were hired thanks to patrons in political parties or with the approval of the security services (particularly those hired by the Ministry of Education as teachers or supervisors), while those without patrons did not stand a chance. This has increased the reluctance of Arab citizens to compete for tenders. Table 7.3 Number of Arab citizens employed in government ministries Year

Total Arab employees

Percentage of civil servants

1992 1995 1998 2001 2005 2008

1,117 1,997 2,537 3,176 3,251 3,883

2.1 3.5 4.4 5.7 5.7 6.7

Source: Haidar, A. (2005) “The Representation of Arab Citizens in the Civil Service, Government Corporations and Local Government,” The Sikkuy Report 2004–5. [Online http://www.sikkuy.org.il/ english/2005/ali_haidar05.pdf (accessed 3 February 2010)]. Also, Israel, Civil Service Commission, 2006: 3 and 2009: 135.

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The Kubersky Commission Report recommended “persistent and targeted efforts to bring qualified members of minorities into the civil service,” and the government that assumed office in 1992 under Yitzhak Rabin resolved to act to achieve this goal. A concrete program to integrate Arabs into the civil service was launched in 1994 with the allocation of 160 mid- and high-level positions to Arab and Druze university graduates. The objective of this special program – affirmative action by administrative procedures rather than legislation – was defined as “opening doors” – signaling to Arabs that the civil service was not closed to them, and encouraging them to compete in public tenders, which were published in Arabic for the first time. This program also sought to overcome the reluctance of government ministries to accept Arabs in their ranks. The program was successful and, for three years (1994–96), 862 more Arabs and Druze were hired by the civil service, an increase of more than 60 per cent, the vast majority via the regular channels of a tender (Galnoor, 2003c: 437–50). The program was interrupted for several years and then rejuvenated upon amendment of the law, in which Arabs were now added to the list of those eligible for affirmative action in the civil service – Amendment 11 to the Civil Service (Appointments) Law (2000). In addition, a special Ministers’ Committee for Arab Affairs decided in 2004 to raise the proportion of Arabs in the civil service to at least 8 per cent by 2007 and 10 per cent by 2010. In practice, the pace slowed, but continued to climb more slowly up to 2008 (Table 7.3). The number of Arabs increased by a factor of 3.5 in these 16 years, but the government is still far from achieving even its initial goal.

The question of representation Other groups are also under-represented in the civil service, such as Israelis of Asian–African origin, as noted above, or new immigrants, residents of peripheral areas in Israel, and the ultra-Orthodox. We chose to look at the two most underrepresented groups, women and Arabs, not in order to claim that the civil service must represent the social mosaic – democratic states have a parliament for that purpose – but to suggest that if the hiring and promotion practices of the civil service had been based on equal opportunity, as required by law, its diversity would have reflected the social map more accurately. The examples of women and Arabs prove this claim – it cannot be said that they lack credentials, or are not interested in joining the civil service and advancing through its ranks. Indeed, the special programs that have been initiated indicate the opposite. Affirmative action, as noted earlier, is mainly declaratory, temporary, and incremental; it is successful when the need for it fades away. The justification for using affirmative action for women and Arabs is not just the commitment to equality, but the need to make it possible for excellent people to join the civil service and make it better.

8

The budget process

The state budget is the yearly – and, in some countries, multi-year – work plan of the government. Discussing the budget as if it were merely an aggregation of numbers would be like talking about Newton, the tree, and the apple without mentioning gravity. The “gravity” that shapes the dynamics of the budgeting process in a democratic state is the struggle for resources. Budgeting is fundamentally a political process – making decisions about social values and political priorities from among the various options, with an emphasis on the dimension of time (Wildavsky, 1979). The need to set priorities derives from the fact that money in the public coffers, too, is a scarce resource. In democratic countries where the national budget is transparent to the public, as it should be, it is a fascinating document of governance, revealing society’s true objectives and priorities. Interspersed among the dry numbers and fine print, great dramas unfold – who will receive how much, what will be cut, who will survive and who fall, to what society is devoting its common resources, and what it wants to achieve. The process is political, as the budget arbitrates the clashes of wills in society, choosing among them. The budget does not end the arguments, but establishes some order among the adversaries until the next round of bargaining or elections. For all these reasons, the budgeting process is not the exclusive purview of one governmental branch, but there is a division of labor: in a parliamentary system such as Israel, the executive branch prepares the budget proposal; the legislative branch approves it as law; the government ministries see to its implementation; and the parliament and its committees – and the State Comptroller – are responsible for oversight and control. Ever since a distinction was made between the king’s and the public purse, the budget became a piece of legislation, not just a document of intentions. Thus parliament established the principle that, in democracies, there is no taxation without representation, and no expenditures without legal authorization. There are two parts to the budget document: expenditures, the legally binding part, which authorizes government ministries to spend certain amounts or to commit to spending based on the detailed line-items; and revenues, a listing of taxes and other sources of income. Unlike expenditures, revenues are not legally binding, but an estimate contingent on economic developments. Both sides must

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Budget process

Debt repayment, 32%

Civilian spending, 18%

Defense spending, 16% Investments and credit, 5% Transfer payments, 29%

Figure 8.1 Budget expenditures (2009, in rounded percentages). Source: Israel, Ministry of Finance, Budget Division (2009) State Budget Proposal for 2009–10: Jerusalem. [Online http://www.mof.gov.il/BudgetSite/EconomicPlan/ Lists/20092010/Attachments/2/012009-2010.pdf (accessed 15 January 2010)] (in Hebrew). Other income, 12% Grants from abroad, 3% Direct taxes, 44%

Indirect taxes, 41%

Figure 8.2 Budget revenues (2009, in rounded percentages). Source: Israel, Ministry of Finance, Budget Division (2009) State Budget Proposal for 2009–10: Jerusalem. [Online http://www.mof.gov.il/BudgetSite/EconomicPlan/ Lists/20092010/Attachments/2/012009-2010.pdf (accessed 15 January 2010)] (in Hebrew).

be in balance, and the authorized budget also indicates how to cover any deficit. In Israel, the Ministry of Finance is responsible for fiscal policy, and the central bank (Bank of Israel) for monetary policy. The budget is the distillation of fiscal policies. It is commonly called “the budget pie” because of its division into major slices of expenditures (Figures 8.1 and 8.2), and because of the finiteness of the resource – one cannot, after all, have the pie and eat it, too.

Budgeting as a political tool Budgeting is a tool for decision making about values, not just with regard to expenditures – such as the share allocated for welfare services – but also with regard to revenues. The burden of taxes, licenses, and duties reflects society’s

Budget process

85

Table 8.1 Methods of taxation based on social objectives

Regressive Proportional Progressive

Income ($) Tax at a set amount ($) Tax as a percentage of the salary (%) Income ($) Tax at a set rate (25%) Tax as a percentage of the salary (%) Income ($) Taxes up to $ 5,000 (25%) Taxes from $ 5,001 (30%) Total tax ($) Tax as a percentage of the salary (%)

Citizen A

Citizen B

1,000 100 10 1,000 250 25 1,000 250 – 250 25

10,000 100 1 10,000 2,500 25 10,000 1,250 1,500 2,750 27.5

willingness to transfer private resources into the public treasury for purposes of meeting common goals. Moreover, taxation is also a tool of democratic regimes for redistributing resources among citizens – making the burden more equitable and reducing social gaps, as illustrated in Table 8.1. Table 8.1 shows that, in a regressive tax system, although an equal amount is taken from each citizen, injustice is inherent in the burden – the payment of 100 shekels is more onerous for a poor person than for a wealthy person. Examples are a driver’s license or a public parking fee. Although the proportional tax system is more just, 25 per cent of their wage is still a much heavier burden on low-income earners than on those whose income is ten or even 100 times higher. Value added tax (VAT) is of this type. Progressive taxation imposes an increasing marginal burden (“higher tax brackets,” meaning more taxes) on those with higher income, usually up to a specific ceiling. Its goal is social – use of the taxation tool to redistribute income. In the example in Table 8.1, the additional amounts taken from citizen B are transferred to citizen A through public services. This system has been used in income taxation in many countries at various percentages and brackets. Taxes imposed on capital gains, property, inheritance, and the like are also generally considered progressive. In Israel in 2009, income tax was not imposed on those who earned under NIS 55,000 a year (about $14,000 in 2009), and the maximum tax imposed on those earning NIS 454,680 (about $116,600) or more a year was 46 per cent (Israel, Ministry of Finance, 2009b). Data from the early 2000s indicate that the social gap in Israel has been increasing rapidly, due inter alia to regressive taxation (Zeira, 2004: 57).

Principles of budgeting For the budget to be a true work plan for the government, and at the same time to provide accountability to the public in a democratic state, it should adhere to several budgeting principles that have been developed over the years, as follows (adapted from Burkhead, 1956: 105–6, with the exception of the two final criteria; and Galnoor and Gross, 1969: 23–44).

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•

Comprehensiveness: the budget must reflect all state revenues and expenditures, including advance payments, guarantees, accrued debts, designated income, etc., such that no fiscal activity of the government or its arms takes place outside the budgetary framework. Exclusiveness: the budget should deal only with financial matters, not with substantive legislation. Periodicity: a clearly defined and comparable time period must be established, often one calendar year, to which all the data must relate; the process must be cyclical and incorporate a transparent time frame for all stages of the budget – preparation, authorization, implementation, accounting, and monitoring. Accuracy: the expenditures should be exact and the revenues correctly (usually conservatively) estimated, coupled with consistency of the data. Publicity: the budget must be clear, transparent, accessible, and user-friendly. When the budget document is presented with unclear headings and hidden line-items, the principle of transparency is violated. Accountability: the budget must establish explicitly who has the authority and responsibility – legal and practical – to make specific expenditures and raise specific revenues according to the ministries, other units, and their subdivisions. Public discourse: the budget proposal must be prepared openly and on time to allow for public scrutiny and debate as the bill passes through the parliamentary process of approval.

• •

• • • •

To ensure adherence to these principles, parliament oversees implementation of the budget. Thus the government must receive authorization for every significant transfer between budget lines, or must submit a “supplementary budget” when unanticipated needs call for significant changes. There is tension between the need for oversight and control, which requires full details of ministry purchases; and the need to plan and monitor performance, which requires aggregate data about the goals for which the money is used. Accordingly, several budget models have been developed; the two main types are as follows (Galnoor and Gross, 1970). Line-item budget This is a detailed and comprehensive listing of inputs such as salaries, equipment purchases, publications, and car and telephone expenses of each ministry and unit. An “item” is usually an outlay for which a receipt can be obtained and registered. The major advantage of this kind of budget is that the data (money) are easily comprehensible, comparable, and useable for purposes of control, monitoring, and bookkeeping. A line-item budget facilitates comparisons between income and expenditure, and makes it clear whether expenditures have actually been authorized. It helps prevent embezzlement of public funds and establishes clear accountability in the civil service, which facilitates the work of the auditors. A line-item budget exists in all countries, but in many (22 of the 27 OECD countries, for example), an additional type of budget is used for political and administrative planning. The major disadvantage of a line-item budget is that the inputs of

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all the ministries resemble each other, regardless of their distinctive activities, but the actual use to which these expenditures are put is not evident. It’s like reserving a hotel room based on the hotel staff wages, its electric and water bills, and how much it spends on kitchen purchases. Israel uses this input-oriented budget, and the number of line-items – which have the legal status of regulations – is among the highest in democratic countries, certainly relative to the budget size. In 2004, there were 8104 such line-regulations, and every transfer of funds between lines required the approval of the Budget Division in the Ministry of Finance (Ben Bassat and Dahan, 2006: 169). Output/outcome-oriented budget This general term covers a variety of budget types that seek to portray a causal relationship between expenditures and results. In a budget of this type, quantifiable data about the expected outputs (e.g. kilometers of roads to be paved; hours of study per student; destructive power of weapons to be purchased, etc.) appear together with the inputs. Some take this to the next level, and show in the budget the actual objectives and expected benefits (“outcomes”) from the inputs and outputs (e.g. users of roads; improvement in studies; contribution to security; etc.) (Galnoor and Gross, 1969). The advantage of an output/outcome-oriented budget is that these collective values provide the very raison d’être for a public budget; the disadvantage is the difficulty of developing measurable, or even agreed-upon, indicators to evaluate social outcomes. Finally, we present the concept of zero-based versus incremental budgeting – two competing approaches to the process and content of budgeting. In the first, the government has to build the budget anew each year (or other defined time period) and again justify every penny spent. This means a periodic examination of all the programs, and renewed decisions about their fate. If done properly, this system of budgeting is not viable in a democratic state with long-term commitments toward its citizens and promises by elected officials to their constituents, not to mention the administrative burden of this budgeting process. Nevertheless, the idea is a good one, and it can be selectively adapted so that expenditures that have become fossilized in the budget will be reviewed periodically to make room for new programs. As shown by Lindblom (1965) and Wildavsky (1979), incremental policymaking and incremental budgeting are a reality in most countries. The budget is constructed brick by brick on cumulative past decisions, and the part that can be changed each year is relatively small. The advantage of an incremental budget is that it is political, that is, it is attentive to the cumulative demands of society. It is hard to estimate the ratio of nonincremental changes in an annual budget, but in Israel these changes are small (with the exception of unanticipated security-related expenditures) because of the rigidity of existing obligations (especially the weight of debt repayment), and centralization, which hinders budgetary entrepreneurship in the ministries. The importance of budgeting as a political and management tool thus resides in its ability to link the unrestrained desires of various segments of society with the

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need to prioritize their importance according to the willingness to pay for them. Thus the correct relationship is created in democratic countries between political activity, which deals with values and ideologies, and civil service activity, which seeks to enhance the rationality of the entire process.

The budgeting process in Israel Soon after the founding of Israel in 1948, the Finance Ministry and the Bank of Israel established guidelines that recognized the governing and economic importance of a sound budgeting process, even making use of the services of a United Nations expert (Aukrust, 1958). Siegfried Moses, Israel’s first State Comptroller, also made a contribution: rather than engaging in monitoring, he published detailed principles to which a national budget must adhere (Israel, State Comptroller, 1961: 21–8). The Budget Law in Israel is anchored in the Basic Law: The State Economy, enacted in 1975. The Budget Principles Law (1985) added additional principles intended to prevent deviation from the budget passed by the Knesset (Rubinstein and Medina, 2005). Israel’s budget has made great strides in adhering to and implementing most of the principles cited earlier. The “explanations to the budget proposal,” added in 1955, have expanded significantly (Galnoor, 1972), and are now open to the public on the Finance Ministry website. Nevertheless, the budget is still far from transparent, not only because of many obscure line-items, but because some public expenditures appear in the budgets of the Jewish Agency, the Zionist Organization, and the Jewish National Fund.1 The Budget Division starts to prepare the budget proposal in the middle of the year and – following preliminary discussion with the ministries – it is submitted to the government, usually in August. The proposed budget then reaches the Knesset two to four months before the beginning of the fiscal year. In 2009, a two-year budget was approved after the election, for the first time. According to the Basic Law: The Knesset, failure to approve the budget law within three months of the beginning of the year constitutes a no-confidence vote in the government, and a date for new elections must be set. The State Budget proposed for 2009 totaled NIS 314 billion (about $83 billion), and breaks down into the major categories shown in Figures 8.1 and 8.2. The heavy expenditures are debt repayment, internal and external; and defenserelated activity. On the revenues side, the large proportion of indirect, non-progressive taxes (VAT, sales tax, fuel tax, licenses, and fees) stands out in comparison with direct taxes (primarily income tax). Ministry expenditures are divided into a “regular budget” – for ongoing programs – and a “development budget” – for investment in construction, roads, waterworks, industry, and debt repayment. In a parliamentary system, the executive branch has more power in the budgeting process than the legislative branch, in contrast with the presidential system such as that in the USA, in which the budget is largely in the hands of Congress. In Israel, once the budget proposal has left the Finance Ministry and been approved by the prime minister, it will undergo relatively few alterations

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as a result of negotiations with other ministers, political parties, or the Knesset Finance Committee. With the exception of periods when the coalition was fragile and the prime minister had a hard time passing laws (for example, during the Barak and first Sharon administrations), the government usually puts the budget proposal through the Knesset without significant change (no more than 3 per cent of total expenditures). Based on 15 years’ experience in passing budgets, former Finance Minister Avraham Shochat remarked: The Finance Ministry is very centralized, the body that actually makes the decisions. Government deliberations generally dabble in the margins, as do the Knesset deliberations. No budget was ever really changed – not by the government and not by the Knesset. (Ben Bassat and Dahan, 2006: 29–30) While this statement is generally true, it could be modified somewhat, because the initial budget proposal has already undergone alterations following concessions made by the prime minister and finance minister to coalition parties, especially those in strong bargaining positions. Ironically, during the years of direct election of the Prime Minister (1996–2001) – a measure intended to increase executive power vis-à-vis the Knesset – the small parties acquired much greater bargaining power in the budgetary process. An examination of budget allocations among ministries since 1977 found an increase in the relative portion of ministries headed by small parties, especially religious parties, particularly during the first Netanyahu (1996–99) and Barak (1999–2001) governments (Arian et al., 2002: 118–20). Deliberations in the Finance Committee commence after the budget has passed its first reading in the Knesset. Although this Committee has almost unlimited power over government policy, expressed in the budget, Committee members are not equipped to grapple with the complexity of the budget proposal. As noted, changes are usually marginal: preplanned additions from the budget reserve designed to respond to specific demands of Committee members. These changes generally do not relate to major socioeconomic policies, and they certainly do not touch on security matters. The authority of Knesset members was further reined in as a result of irresponsible private members’ bills that proposed expenditures beyond the budgetary limits. As a result, the Basic Law: The State Economy was amended in 2003 to require that a private bill entailing expenditures in excess of NIS 5 million (about $1.3 million) must be approved by 50 Knesset members at each reading. To summarize, the limited involvement of other ministries in budget planning, and the superficial deliberations conducted by the government and the Knesset Finance Committee, create a centralized and partially secretive budgeting process. Israel ranked second among OECD countries for a centralized budget process (Ben Bassat and Dahan, 2006: 32). In consequence, no organization throughout the political system, exclusive of the Finance Ministry, is capable of grasping the full budget picture, comprehending its voluminous data, or analyzing its socioeconomic implications. This monopoly is unnecessary, and indeed contravenes policies of the Finance Ministry itself, which encourages constructive competition in

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the economy at large, and discourages centralization. Since democracy postulates that not all wisdom is concentrated in one location, the most important policy area in Israel – the budget – contravenes democratic process. The Arrangements Law is one glaring example.

The Arrangements Law The “Arrangements Law in the State Economy (Legislative Amendments to Achieve Budgetary Objectives and Economic Policies)” was first enacted in 1985 during a major economic crisis, and was designed to allow the government to take drastic measures to end inflation and stabilize the economy. The law was never revoked, however, because the Finance Ministry realized what a powerful tool it was for instituting policies that the Knesset would not have approved in regular legislation or, conversely, for nullifying the content of other laws that had already passed against the Ministry’s position. Over the years, the Arrangements Bill has turned into a “bypass law,” enabling the hasty dispatch of existing laws under cover of passing the budget, or allowing for fundamental changes in the governance of social and cultural affairs. The explanation that accompanied the Arrangements Law proposed in 2005 noted explicitly that it “comes to revoke various laws and regulations in laws, and to defer their execution…to facilitate long-range structural efficiency of the public sector and reform sectors of the economy.” The Arrangements Law encompasses many unrelated legislative matters, some only tenuously linked to the budget itself. The structural changes promoted by this omnibus law are clearly ideological – an effort to enhance a market economy at the expense of a welfare state. On this, there have been no significant differences since 1984 between Finance Ministers who came from a range of parties. The argument against this law is not about the government’s right to make or change policy using the many tools at its disposal, but about the illegitimacy of using the Arrangements Law to do so. Despite harsh criticism of this legal but unconstitutional tool, it is still in use (Nachmias and Klein, 1999; Ben Bassat and Dahan, 2006).2 Nevertheless, the number of issues incorporated into the Arrangements Law has decreased in recent years. For example, in the 2003 fiscal year, this law dealt with no fewer than 169 separate issues; in 2009, it dealt with 68 issues. True, every public issue has financial implications, hence one could argue that it is related to the budget; but the examples below should demonstrate clearly that many issues included in the Arrangements Law of 2009 were either broad policy subjects or not directly relevant to the passing of this particular budget.3 • • • •

Amendment of the Israel Bar Association Law concerning the legal services provided by a foreign attorney about foreign matters. Transfer of medical care for road accident victims to the national health funds. Amendment of the Daily Meal for Schoolchildren Law concerning the effect of the New Horizon Program on the criteria for receiving a daily meal. Amendment of the Toll Roads (Carmel Tunnels) Law concerning changes in the terms of use for the road.

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Amendment of the National Health Ordinance concerning establishment of an information database. Amendment of the Rights of Tenants in Public Housing Law concerning the rights of a continuing tenant. Decision on National Priority Areas promoting the development of regions or towns that the government decides are of national priority, subject to the provisions of this section.

It can be seen from these examples, and the long list of changes executed over the years via the Arrangements Law, that the Finance Ministry has turned into a legislator. Other ministries, even the Justice Ministry, have exploited the fast-track legislation of the Arrangements Law to enact laws that would be impossible to pass in regular legislation, or would take too long to pass, or would give a platform to opponents of the issue or other interested parties. Nevertheless, other ministries are not usually involved in preparing the Arrangements Law on the rationale that these relate to wide-ranging “structural changes” that cut across ministries. Even the government does not have the time or ability to burrow into this long, dense document fraught with amendments on a plethora of subjects; ministers tend to voice their views only about issues related directly to their own ministries. The Arrangements Law is hastily deliberated in the Knesset Finance Committee, rather than in the Knesset committee designated to deal with a specific issue, or the committee that originally deliberated the law for amendment. Passage of the Arrangements Law makes use of a simple, but effective stratagem: each issue dealt with by the law holds the entire budget hostage, because failure to pass the budget would bring down the government. Since only those who formulated the Arrangements Law can find their way around it, and the process is so rushed, even they sometimes fail to grasp it entirely, reflected by several disastrous formulations that had to be remedied by repeated amendments (Galnoor, 2003b). Those who defend the Arrangements Law claim that the intent is to prevent rash budgetary decisions – that it is a tool to protect against irresponsible private bills proposed by Knesset members, or a way to overcome opposition to worthy laws that must be passed. These are anti-democratic arguments: at issue is not whether or not some of these laws are worthy, but the very purpose of the budgetary process in a democracy, as presented at the beginning of this chapter. With this kind of reasoning, the country could be run by bureaucrats, or the government could ignore the Knesset when it appears to be acting rashly or not legislating “properly.” The Arrangements Law is not a legitimate tool, and the government has other methods for dealing with the fiscal irresponsibility of elected officials. This law harms the work of both legislative and executive branches. Above all, it reflects impatience with the slow, orderly, democratic legislative process, and therein lies its greatest danger.

The Budget Division of the Finance Ministry The Budget Division of the Finance Ministry was founded by Ya’akov Arnon in the 1950s, based on what he was familiar with in the Netherlands, the country of

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his birth. The Division hired the best and the brightest of the Hebrew University economics graduates, the “Patinkin boys,” named for Professor Don Patinkin who founded its economics department. Over the first decades, this group evolved into a cohesive and professional team, adopting budget methods from other democratic countries, and adapting to changing needs. The economic crisis in the 1980s made control over the state budget a sacred value, justified at the time because of the dire economic straits and political instability. As a result, the professionals of the Finance Ministry – and the Budget Division in particular – wore a halo of dedicated professionals, heroically holding a finger in the dike against the greed of politicians, parties, and interest groups. But something went wrong. Even today, employees of the Budget Division are first-rate professionals, but the self-definition of their task needs revision. What happened to this division is what happens to all bodies unable to change over time: it carries the weight of an old institution clinging to power, unwilling to make structural changes, and in thrall to a narrow economic worldview. The budgeting process in Israel did not adapt and keep pace with changes in other countries. One example is the Budget Division’s insistence on maintaining the line-item structure, with its multitude of items as the only budget document – a format that serves better the needs of oversight and control, and less well the needs of the economy (Dery and Sharon, 1994). The Budget Division’s methods pose a thorny dilemma: on the one hand, a tough sentry is needed in the political reality of Israel to guard the state coffers that are repeatedly pilfered – and that is the job of the Division. On the other hand, the results of this approach are devastating for the setting of socioeconomic policies. It is also harmful for the civil service, because the Division has not learned to differentiate between the macro-level (the need to guard avidly against overspending) and the micro-level (close supervision over the line-items). The former is necessary to protect the economy; the latter to protect the power of the Budget Division itself (Galnoor, 2003c: 499–503). The Kubersky Commission Report reflected this: The Budget Division interferes in the ongoing management of every ministry and discusses its expenditures down to the smallest detail. Those who hold a ministry desk in the Budget Division view themselves as authorized to intervene in specific, purely professional decisions simply because these decisions have budgetary implications. (Israel, 1989a, vol. 2: 95) Politicians assert that their ability to set national priorities was usurped by the Finance Ministry, while directors general believe that the Finance Ministry’s claim of taking a broad view of the budget is a pretext for “the Division’s obsessive need to control the budget details of each and every ministry” (Neubach quoted by Dery and Sharon, 1994: 20). Over the years, an unwritten code is passed from generation to generation in the Budget Division. The code is a subtext, but its main points are discernible and can be articulated – in a somewhat exaggerated version – as follows.

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The burden of proof is on the supplicant. The Finance Ministry, correctly, sees itself as the trustee of public funds, hence the requirement that ministries justify every budget expenditure. While the demand is reasonable, it leads the Budget Division to reject new ideas: “You didn’t do your homework;” “You have to offer alternatives;” “You want money? Prepare a more persuasive proposal.” However, it is the Budget Division that often fails to do its homework. We make sure expenditures do not exceed the budget. This claim is true because, as noted, the Israeli national budget is incremental. The Budget Division views the previous year’s budget as virtually sacrosanct, and every request for change in the line-items – not just requests for supplements or transferring savings from one year to the next – meets a negative reaction. More than the ministries themselves, it is the Budget Division that perpetuates budgetary conservativism, including wastefulness. Resources are limited. This statement is always true, but the national budget is more flexible than a family budget. The national pie has a thick layer of frosting (expenditures authorized, but not spent); concealed layers (reserve funds); and also lots of crumbs (estimated revenues, supplementary budgets, guarantees, etc.). The Budget Division controls them all (on the reserve funds, see Ben Bassat and Dahan, 2006: 133–6). The budget flies on automatic pilot. This is a reference to expenditures over which the Finance Ministry has no control. Some are anchored in laws or in prior agreements such as wages, and some derive from demographic changes (increasing number of pupils, state allowances, price increases, etc.). Furthermore, the Budget Division has no control over about a third of the annual budget, which is set aside for debt repayment. Since most of the expenditures that remain are line-items from the previous year, it is a relatively small percentage (more during periods of growth) on which the Budget Division engages in pitched battles every year with government ministries. See what happens with the defense budget. The Budget Division has no control over the defense budget line-items. Even setting a ceiling on defense spending has not been the responsibility of the Budget Division, because in the past this slice of the pie was not really forced to compete with other slices. The total amount of defense spending is now deliberated in the government, and this is a major and positive achievement of the Budget Division. However, the lack of Budget Division supervision over the defense budget, and the wasteful practices of that ministry, are used by the Division as an example of why relying on the ministries is a bad idea. The example does not apply, however, because security is considered in a category all its own in Israel, and not comparable with other government activities. Stick to the personnel cap. Through its control of the budget for personnel posts, the Budget Division seems to control the number of civil servants and public sector employees in general – even though this is not its role. Thus the state budget sets a “personnel cap” – a limit on the number of employees in every ministry and unit. In practice, however, this number is meaningless: although the cap to limit personnel is updated from time to time, it does not affect the number

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of temporary or subcontracted employees, not to mention outside consultants and subcontractors. Secondly, although official amounts spent on wages seem to decrease, this is not the case. Instead of salary raises, the Finance Ministry bestows ranks or makes other fictitious payments (“Training Grant B”). By the way, this also illustrates why an exclusive input (line-item) budget is a bad policy tool, as it would place financial considerations above professional considerations, and organizational-administrative issues would become marginalized. Reducing the personnel cap by several percentage points is a favorite ploy of the Budget Division, even though the apparent cutback is a sham. The Finance Ministry has a broad perspective. Responsibility for fiscal policies and macro-budgeting is the central task of the Budget Division. On the other hand, micro-budgeting – intervention by Budget Division desk officers in the lineitems of the ministries – is harmful mismanagement and deters new initiatives. In professional matters such as welfare, education, health, immigrant absorption, and tourism, Budget Division employees have no expertise whatsoever, and their economic tools generally lead them to ask the wrong questions.4 Moreover, what “broader” perspective is necessary to determine what equipment the ministry needs, or how many mobile phones it may allocate to senior officials? Why is such intervention necessary from the Finance Ministry desk officers or the auditors? We have a greater sense of responsibility. This is the most problematic message of the Budget Division’s unwritten code, because it conceals a subversion of the democratic order, combining contempt for politicians with a willingness to disregard Knesset legislation and explicit government decisions. For governance, this approach is dangerous; and for management, centralization breeds inefficiency. Examples include wages not being considered an administrative tool with which to increase productivity; and reducing the budget by ordering an identical, across-the-board cut in all the ministries, rather than engaging in a painful elimination of unnecessary projects. The Budget Division is apolitical. While this is true with regard to party politics, the Budget Division fits comfortably into the neoconservative school, and those who leave the Division are usually snapped up by business.

Reforms required in the budgeting process Attempting to isolate the budgeting process from politics is unrealistic, although obviously there is room for improvement – “sharpening the knife that cuts the public pie” (Gorham, 1968: 236–41). How can this be accomplished? Let us first examine several assumptions regarding budgeting. Monetary units (such as dollars) are a simple common denominator understood by everybody, one that allows us to make an initial comparison between things that differ from one another. The more easily the essence of a specific product or activity can be expressed in monetary units, the more convenient it is to assess its relative value, for example, stock market shares or bank loans. Conversely, the more we need another quantitative or qualitative measurement, the harder it is to capture the essence of something monetarily. For example, the monetary value of

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an antique or of preventing air pollution is only a partial and limited indicator of the value of these goods. The convenience of using currency as a common denominator fosters polarized approaches to its use in public management. In one approach, every government action should be evaluated in monetary terms, on the assumption that the intrinsic value is already incorporated in the cost/price. For example, the profitability of investing in education could be measured by the students’ future contribution to the national product, or the contribution of an academic degree to an individual’s future income, though the intrinsic value of education as enriching the individual is ignored. Measuring value by a monetary yardstick is problematic: sometimes the result is accurate, often it is partial, and sometimes it is irrelevant or deceptive. The opposing view entirely denies the value of monetary criteria in the assessment of public affairs, claiming that values such as security, welfare, or education cannot be construed in financial terms. The most radical proponents of this view tend to favor “absolute truths,” which are above trivial material interests; they entirely forego the use of valuable financial indexes as assessment tools. This commonly results in rhetorical justifications such as, “This investment will undoubtedly benefit many people;” “This expenditure will improve our standing;” and the like. Such justifications may be correct, partially correct, or altogether baseless. Both these approaches hold a narrow view of the role of public budgeting in a democratic country. Exaggerating the importance of financial criteria leads to emphasizing the control of expenditures (in dollar terms of inputs), and insufficient attention is paid to what is actually accomplished. Exaggerating the irrelevance of financial criteria sidesteps discussion of the fact that every dollar – including those spent on the noblest of goals – could have been spent on something else. In addition, when one fails to recognize that “politics” is interwoven into the budgeting process, the improvement of budgeting as a tool to improve governance is thwarted, and discussion is cut off for key issues such as: How can the budget accurately reflect the real costs of programs such as vocational training, traffic accident prevention, or homeland security? How can services such as irrigation projects or family planning be evaluated effectively? Can the budget identify the benefits to clients served by public services such as hospitals, homes for the elderly, or schools? Such questions reflect the fact that budgeting embodies much more than fiscal policy. Indeed, the use of budgeting exclusively for oversight and control is a wasteful use of management opportunities and limited resources. Israel lags behind other democratic countries in use of the state budget as a policymaking tool, for a number of reasons. •

•

First, the budget proposal presented to the government lacks options, as the Ministry of Finance does not request alternative proposals from other ministries. Although the budget proposal constitutes the government’s overall annual program, it presents only one alternative, which the government can vote up or down, followed by hasty and minor modifications. Second, deliberations during the budgetary process focus on expenditures; ministries are not required to present outputs of their annual programs (what

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•

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Budget process they plan to produce or whom they serve), or outcomes (the anticipated benefits of the outlay). The ministries are more familiar with output and outcomes, while detailed expenditures are the expertise of the Finance Ministry. Third, the annual Budget Law includes an “Arrangements Law” that encompasses much more than budget and taxation “arrangements.” Over the years, as noted, the Arrangements Law has become a tool for promoting a specific socioeconomic ideology without substantive public or Knesset discussion. Fourth, the Budget Division of the Finance Ministry zealously guards its exclusive control, preventing any other body from analyzing the budget proposal. Ministries are directed to discuss budget lines relating to input rather than their annual programs, activities, or services, while the government, the prime minister, other ministers, and the Knesset Finance Committee lack independent means to grapple with the budget proposal – the one and only voluminous version presented by the Finance Minister. Fifth, until the budget proposal is made public, the process takes place behind closed doors. The Ministers’ Committee for Economic Affairs does not participate in defining overall policy, and procedures are strictly compartmentalized, each ministry receiving only those sections of the proposal that relate to its activities.

The cumulative result is that budget centralization discourages creative management, and is the main reason for the lack of innovation in Israel’s socioeconomic policies, while the contribution of the government, government ministries, or outside organizations is minimal.5 Concerning the changes required, the budgeting process in Israel has not undergone comprehensive structural reform since the 1950s, unlike many other countries. Much can be learned from their experience and adapted to Israel (Galnoor, 1974; Ben Bassat and Dahan, 2006: 177–85). Accordingly, fundamental changes are required: • • • •

• •

ending the monopoly over the budgeting process held by the Budget Division of the Finance Ministry; increasing transparency at all stages of the process, including advance publication of a user-friendly version of the budget proposal to encourage public discussion and media debate (Forum of Social Organizations, 2006);6 fostering extensive discussion in the government about alternative options to the socioeconomic policies embodied in the budget proposal; increasing the professional contributions of the ministries to the budget process through their work plans and programs; creating commitment to outputs and outcomes, not just inputs, within the approved budget; preventing budget overruns by internal ministerial control over its own budget lines; introducing a document, additional to the line-item budget proposal, that would analyze outputs and outcomes; significantly changing the format of the parliamentary debate about the budget proposal and introducing control mechanisms over the budget.

9

Oversight and control of the civil service

Hans Kelsen, the jurist and philosopher of law, emphasized the principle of the universal applicability of the law, from which derives the need to develop tools of oversight and control over all public institutions, including the civil service, which is the implementing arm of the executive branch (Kelsen, 2000 [1929]: 83). To this must be added the principle of accountability: oversight aims to prevent the misuse of public funds, and control aims to prevent the incorrect use of resources that society places in the hands of the executive authority. Oversight is relatively easier to perform because it relies primarily on an investigation of the facts. Control is more complex because it calls for monitoring and inspection during and after the activity, thereby requiring more discretionary judgment. An example: following a particularly hard winter in Israel, the Knesset approved a supplementary allocation to the Education Ministry to be used for the repair of leaky school roofs. In a case like this, oversight entails investigating that the ministry did not use this allocation for another purpose; that the funds actually reached all the schools damaged, even the most remote; and that public tenders were issued for hiring contractors. Control would entail an inspection of whether the roofs had been up to standard in their construction, and whether it makes sense at all to fix roofs in old structures. It’s also evident from this example that the boundaries between oversight and control are not clear-cut, and that these concepts embrace a range of definitions. The approach can also differ depending on the starting point. Some emphasize only the legal aspect or the need to bridge between efficiency and accountability. Some aspire to change the goal of the task – not just to arrest wrongdoers, but also to deter and repair, viewing oversight and control as tools for organizational learning and the ongoing improvement of public administration (Peters and Savoie, 2000: 21). We also note that too much oversight and control can breed bureaucratization: numerous forms to fill out, endless waiting, and over-complication. The danger also exists that, on the pretext of oversight, the political echelon will corrupt the administrative echelon, making it dependent on its good graces – personal and party patronage, familiar from the history of American cities (Key, 1942). Here, too, one must aim to balance the need for initiative and professional discretion by public servants with the need to prevent an abuse of power.1 The discussion that

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follows does not attempt to address all these issues, nor to insist on the difference between oversight and control, but rather focuses on five areas of oversight and control with respect to the Israeli civil service: political, the administrative oversight of the State Comptroller, legal, internal, and public (partially based on categories suggested by Key, 1959: 312–36).

Political oversight and control The Knesset provides the primary oversight for the civil service, as the ministers bear parliamentary responsibility for what happens in their ministries, public authorities and government corporations under them. But how reasonable is it to expect 120 Knesset members to provide oversight for 100,000 civil servants? While it is tempting to answer this in the negative, the formulation of the question misrepresents the oversight role of Knesset members, who are not expected to stand watch over every act and expenditure in the executive branch. The oversight and control provided by the Knesset are political and carried out with the tools at their disposal. These include legislation, especially the Budget Law; approval of delegated (secondary) legislation – the regulations set by the ministers; monitoring through the Knesset standing committees; parliamentary queries to ministers; parliamentary committees of inquiry; and informal relationships between elected representatives and senior officials. The elected representatives must oversee the entire steering of the state and its navigation by the executive branch. Above all, they must examine critically the decision making by ministers. Attention to detail is not their mandate, unless there are exceptional cases worthy of a parliamentary question in the plenary, a committee investigation, a parliamentary investigation, or a special audit by the State Comptroller. Baruch Bracha (1996: 231–2) singles out delegated legislation as the key area for parliamentary oversight – or lack of oversight – by the executive branch. Indeed, the concern that administrative regulations will not accord with the legislator’s aim is well founded in Israel, and not yet legally resolved. On the other hand, the Knesset committees work intensively to carry out oversight, and this sometimes bears fruit. Nevertheless, elected officials in Israel, as in many countries, tend not to invest much effort in oversight, a job that holds little political glory because of the difficulty of finding one’s way through the bureaucratic maze and the reluctance to spar with ministries (Ball and Peters, 2000: 161). The two most effective oversight tools in the hands of the legislators – the budget (see chapter eight) and the State Comptroller’s reports (see below) – are not adequately utilized. Knesset deliberations about the budget or State Comptroller’s reports suggest that the MKs are still not capable of taking advantage of these tools to exercise political oversight and control. Under the current system, neither the Finance Committee nor the Knesset as a whole is capable of grappling with the budget proposal submitted by the government. Even conscientious Knesset Members who are determined to understand the budget cannot cope with the hefty budget tomes under tight deadlines and

Oversight and control 99 in the absence of professional support; at most, they examine the budget lines and issues of direct concern to them. The US House of Representatives has its own Congressional Budget Office that analyzes the President’s proposal, enabling members of Congress to have meaningful input. Although Israel’s parliamentary system is completely different, the professional tools of the Finance Committee must be sharpened in order to comprehend and deliberate on the budget proposal presented by the government. To reiterate, the legislative branch is not expected to replace the executive branch. The oversight and control exercised by the elected representatives over the civil service are intended to ensure accountability of the government and each of its ministers.

The State Comptroller The Office of the State Comptroller has unique standing in the Israeli body politic. Some view it as “the long arm of the Knesset”; others see it as an independent entity, a “fourth branch” unto itself. Neither of these views fully captures the essence of this office as it evolved in Israel. In countries that established a State Comptroller, it is constitutionally an extension of the parliament. This is also true in Israel – the Comptroller is elected by, and accountable to, the Knesset, and submits reports to the Knesset and its State Control Committee. Over the years, however, the Office of the State Comptroller has evolved into an independent monitoring mechanism with its own responsibilities and even authority for enforcement, not derived directly from its obligations to the Knesset and not part of its oversight role. This office became a constitutional body upon enactment in 1988 of the Basic Law: State Comptroller. The tasks of the Israeli State Comptroller differ from a classic financial audit. They include monitoring implementation of the Budget Law, scrutinizing expenditures, and control of operations – the legality of activity, sound management, efficiency, and fiscal prudence. The novelty of the law in Israel is that the State Comptroller can also examine the ethical conduct and “every matter it sees fit” to examine. In other words, the State Comptroller has broad powers: it scrutinizes a great many bodies and has few constraints on its activity. Constitutional and legal framework One of the first laws promulgated after the founding of Israel was the State Comptroller Law (1949). An integrated version was enacted in 1958 and subsequently amended many times. In 1988, the Basic Law: State Comptroller was legislated, listing the bodies subject to its audit – ministries, state enterprises, state institutions, state corporations, local authorities, and other bodies defined by law as subject to audit. The Basic Law is a framework law, which sets the scope of the audit, establishes that the State Comptroller is accountable only to the Knesset, stipulates its independence from the government, gives it authority to access information and other materials for conducting the audit, and establishes procedures

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for election of the individual to occupy this post. The State Comptroller is elected by a majority of Knesset members in a secret ballot (or, in subsequent ballots, a majority of those who vote) to serve a seven-year term, renewable only once. The Knesset is authorized to remove a Comptroller from office with a majority of twothirds of the Knesset Members voting. No specific qualifications are required, but to date the seven comptrollers had some legal training and, since 1987, all have been retired judges. The list of bodies subject to state audit is long and includes, in addition to those cited above, every entity in which the government has a management role, as well as every enterprise, institution, foundation, or body receiving direct or indirect funding from the state. The link to state funding renders many Israeli organizations subject to a state audit (Sharkansky, 1995: 95–103).2 It should be emphasized that the defense establishment, including the secret services, is subject to audit by the State Comptroller, as are public religious institutions, the health funds, universities, government corporations, state-funded nonprofits, and more. As noted, one function of the State Comptroller is oversight of party finances – ongoing party expenditure, the funding of primary elections, and the financing of election campaigns. It is within the Comptroller’s authority to impose fines on parties that violate the law. In special cases, the law grants the State Comptroller all the powers bestowed upon a state commission of inquiry, including the authority to interrogate witnesses. Regarding the scope of the audit, the key role of the State Comptroller is to examine the legality of activities in the audited institutions. Also examined are whether the decisions taken were legal, and whether those who made the decisions were authorized to do so. When State Comptroller Yitzhak Tunik investigated the banks following the manipulation of shares, for example, he concluded that the actions taken by the bank’s directors were illegal. The State Comptroller Law authorizes the Knesset’s State Control Committee, given a two-thirds majority of its members, to establish a state commission of inquiry based on a special report of the State Comptroller. By virtue of this clause, the Beisky Commission was established in January 1985, and three other state commissions of inquiry in 2008. When the audit raises suspicion of criminal activity, the State Comptroller reports this to the Attorney General, who decides if legal action should be taken. The autonomy of the State Comptroller is enshrined in law, and this is crucial for an auditing body. It is within the authority of the Comptroller to decide on the scope of the audit as well as the entities and subjects to be investigated (unless a request was received from the Knesset, the State Control Committee, or the government for an assessment about a subject within the purview of the State Comptroller). The work of the State Comptroller is independent of the legislative branch, although it is the Knesset that elects the incumbent; and is also independent of the executive branch, which falls under its scrutiny. This is also the reason for its administrative independence: The Office of the State Comptroller is not part of the executive branch and its staff are not in the employ of the Finance Ministry or Civil Service Commission. The budget

Oversight and control 101 for this office and the salary of the Comptroller are set by the Knesset Finance Committee. State Comptroller’s reports3 The major product of the Office of the State Comptroller is the Annual Report, which is submitted to the Speaker of the Knesset and the Prime Minister. The report is produced by some 550 staff (in 2008) employed by the Office of the State Comptroller (and Ombudsman). With the exception of specific sections dealing with state security and other vital state interests, the report is made public. During the course of the year, the Comptroller also publishes separate reports about audited bodies and issues of principle. Before publication of the final version of any report, the audited bodies are given an opportunity to respond to the findings, and these responses are incorporated in the report before its submission to the State Audit Division in the Office of the Prime Minister. The report of the State Comptroller is then submitted to the Knesset together with the responses from the Office of the Prime Minister and other ministries, and the decisions of the Ministers’ Committee for State Audit Affairs. The report is deliberated in the Knesset’s State Control Committee, which submits its conclusions and suggestions for action. This Committee is authorized to summon state employees and outside experts for a discussion of the report findings. The content of the annual report and the discussion of the report’s findings in the Knesset’s State Control Committee are covered extensively in all the media, although interest wanes rather quickly, depending on the sensitivity of the subject raised. Which channels monitor the correction of shortcomings? By law, the head of the audited body must report to the State Comptroller and the Prime Minister about decisions made in the wake of the report and steps taken to rectify the problems. Within eight months, the State Control Division in the Office of the Prime Minister must convey to the State Comptroller a report reviewing the measures taken by the audited bodies to address the problems. In addition, the Ministers’ Committee for the State Audit monitors the correction of the problems in the various ministries. The annual report also generally includes a review of the extent to which recommendations from previous years were implemented. Despite all this, the primary tools at the disposal of the State Comptroller in Israel – as in other democracies – are political and public, not legal. The Comptroller has no way to enforce recommendations it makes to audited bodies. The power of the State Comptroller is therefore a function of the status and prestige of this institution among those audited, particularly the government, the ministries, and those it serves – the Knesset and the public. The most direct contribution made by this office to good governance is its power of deterrence. The State Comptroller’s recommendations can have a significant impact on legislation, delegated legislation, and policymaking, as in the following examples. The State Comptroller’s analysis of the development of the Lavi aircraft in Israel (1987) contributed significantly to the decision to abort the project. An audit that revealed defects in the Party Funding Law led to changes in the

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law and a limit to the amount any one donor may contribute. Although report findings do not serve as evidence in legal proceedings, they can set legal events in motion: the State Comptroller’s report in 1991, revealing that funds had been transferred to the educational institutions of the Shas Party, triggered an investigation that ended in conviction of the minister. On the other hand, the Comptroller can also be ignored, as was the case following the 2003 report that revealed that the Ministry of Construction and Housing had funded illegal construction and development in the occupied territories without approval (Israel, State Comptroller, 2003). Special areas of oversight Over the years, the role of the State Comptroller has broadened – the scope of the audit, and the types of body and subjects audited. Amendments to the law in the 1950s added local authorities and the subsidiaries of audited institutions to the list of bodies subject to audit by the State Comptroller; a 1952 amendment gave the Comptroller the authority to investigate ethical conduct; and the jobs of ombudsman and monitoring implementation of the Party Financing Law were added later. The decline of other supervisory institutions and the waning of public faith in the political system enhanced the status of the State Comptroller. The first comptrollers in Israel saw themselves as teachers of the principles of sound administration and tried to prevent failings, to improve the financial systems of the state. For later comptrollers, the ethical behavior of elected officials, the prevention of political appointments, and donations to political parties became central issues. State Comptroller Ben Porat did not shy away from “proactive auditing” and published reports that intervened to some extent in shaping policy around issues such as immigrant absorption or preparing the home front for unconventional warfare. Eliezer Goldberg, who followed, was known for his broad perspective and willingness to examine issues that cut across institutions, as he sought to improve the overall management culture, such as a report that dealt with improving staff work in government ministries (Israel, State Comptroller, 2003). State Comptroller Micha Lindenstrauss announced upon taking office in 2005 that he views corruption as his primary challenge. The role of Ombudsman In 1971, the role of State Ombudsman was added to the Office of the State Comptroller. These tasks were combined in Israel due to the perception that the quality of service to the public is key to sound and efficient public management. Another reason was the desire to take advantage of the reputation of the State Comptroller and use it for improving services to the public. To that end, a special unit was created headed by the State Ombudsman Director. Who is entitled to complain to the State Ombudsman? Anyone directly injured (including prisoners), or representing someone injured, or Knesset Members regarding injury done to others. Complaints revolve around actions taken without lawful authority,

Oversight and control 103 12000 10000 8000 6000 4000 2000

19 8 19 0 81 19 8 19 2 8 19 3 84 19 8 19 5 8 19 6 8 19 7 8 19 8 89 19 9 19 0 91 19 9 19 2 9 19 3 94 19 9 19 5 9 19 6 97 19 9 19 8 99 20 0 20 0 0 20 1 02 20 0 20 3 0 20 4 05 20 0 20 6 07

0

Year

Figure 9.1 Number of complaints submitted to the Ombudsman (1980–2007). Source: Israel, Central Bureau of Statistics (2008) Statistical Abstract of Israel 2008, Table 11.12. [Online http://www1.cbs.gov.il/shnaton59/download/st11_12.xls (accessed 12 October 2009)].

Table 9.1 Complaints and justified complaints to the Ombudsman (2007–8)

2003 2004 2005 2006 2007

Complaints in process

Investigations completed

In per cent

Complaints justified

In per cent

7,949 8,411 10,267 13,546 13,495

6,378 5,969 6,649 9,800 10,919

80 71 64 72 81

1,250 1,044 1,128 1,569 1,815

36 34 33 32 34

Source: Israel, State Ombudsman, Annual Reports 2004–8.

improper behavior, and inflexibility in the bodies audited by the State Comptroller. One may not submit complaints to the State Ombudsman against the President, the Knesset or its committees, the government, a judicial act, or a judge. As evident in Table 9.1, the services of the State Ombudsman are in great demand, increasing 70 per cent over the past five years. About a third of the complaints are found to be justified every year, which is high compared with other bodies that handle complaints. The institutions cited most often for complaint are the National Insurance Institute, the Israel Police, the courts, Ministry of Justice, Ministry of Finance, Ministry of the Interior, and Ministry of Education (Israel, State Ombudsman, 2007). Justified complaints are transferred to the ministries for attention, and the process is generally conducted without publicity. Occasionally the State Ombudsman observes a general pattern of complaint and brings it to public attention. The handling of complaints by the State Ombudsman is regarded as relatively effective because it is under the aegis of the State Comptroller and complaints are handled discreetly, but data do not exist about the extent to which problems are actually remedied.

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As Ombudsman, the State Comptroller also has the authority to issue protection orders for whistleblowers who reveal corruption at their workplace or file complaints against their management. Oversight of party financing The first financial audit of political parties during an election campaign was conducted as a result of the Election Law of 1969.4 With enactment of the Party Financing Law (1973), the State Comptroller was given the authority to financially audit parties at the time of elections, and donations to parties and candidates. The law instructs the State Comptroller to submit an annual financial audit of the parties and special reports about spending during campaigns. In a striking expansion of its authority, the State Comptroller was also given the power to issue a “not positive” report and impose fines on parties that violate the law. In its report for 2003, for example, the State Comptroller reported findings that were not positive about seven parties, and sanctions were imposed on them for not fully recording all income and expenditures. State Comptrollers have not been content with just auditing party activities; time after time they have noted loopholes in the law that political parties exploited, such as accepting a large donation from a single source. In a controversial move in 1988, the State Comptroller published the names of donors who made political contributions over a specific amount and, in 1992, she added a list of donors who contributed to more than one party. In the Party Financing Report of 2003, the State Comptroller cautiously noted the positive effect that close monitoring had had on party financing and on “internalizing the obligation to comply with the law.” Establishing a State Commission of Inquiry An amendment to the State Comptroller Law in 1972 stipulates that if the audit uncovers serious flaws that suggest a broader problem, or to ensure ethical conduct in office, it is incumbent upon the State Comptroller to issue a separate report, on the basis of which the Knesset’s State Control Committee has the authority – at its own initiative or the recommendation of the State Comptroller – to establish a State Commission of Inquiry. Expanding the Comptroller’s authority to include the power to initiate a State Commission of Inquiry was intended for cases in which public pressure is insufficient, or if the members of the Knesset State Control Committee believe that government opposition to its creation is driven by improper motives. Initially, this powerful mechanism was used sparingly, and only one inquiry commission was established: In the wake of the State Comptroller’s report about the manipulation of bank shares (and despite government opposition), the Beisky Commission was created in 1985. This self-restraint ended in 2008, however, with establishment by the State Control Committee of no fewer than three state commissions of inquiry. It is doubtful that such commissions make a contribution to the watchdog capabilities of the State Comptroller.

Oversight and control 105 Who audits the auditor? Government ministries are obligated to provide the State Comptroller with all information and documentation requested. Clearly, the Comptroller’s office cannot examine every action of the audited body, and cannot repeat the audit every year. Hence the audit is to some extent a sample of the work and, above all, a deterrent. A very significant limitation on the Comptroller’s work is the emphasis on documents and correspondence, rather than an effort to reveal the informal decision-making process. The Comptroller’s dependence on written material could even foster use of an “unwritten code” in ministries to avoid a potentially incriminating paper trail. Nevertheless, the State Control Committee can summon witnesses to fill in the blanks. For example, following a State Comptroller’s report that dealt with a lack of preparation for immigrant absorption, Prime Minister Yitzhak Shamir was ordered to appear before the Committee in January 1991 to present his position. As the State Comptroller’s role expanded to include the auditing of policies and decision-making processes, that office became more vulnerable to criticism of having become – whether consciously or not – an active partner in policymaking. The core argument is that the State Comptroller is supposed to audit activity retrospectively, therefore policymaking is outside the realm of authority of this office. Those who bear responsibility for the policies are the elected officials and the civil servants appointed to implement those policies. Indeed, if the Comptroller would be a partner to policymaking at any level, he or she would have to be actively involved in it, and bear responsibility for the outcomes. Moreover, someone tasked with auditing does not have the tools to weigh policy alternatives prior to their implementation. The state auditors in most countries do not have as broad a mandate as the State Comptroller in Israel, as this anomaly would upset the balance among the branches of government in a democratic parliamentary system. The counter-argument is that the decline of the political–administrative system in Israel necessitated expanding the power of the State Comptroller, and that it is those audited, not surprisingly, who raise the same criticism about state commissions of inquiry and the Attorney General. It would be better, they argue, to prevent serious problems before they occur, or to prevent resources from being wasted, than to audit the damage ex post facto. State Comptroller Miriam BenPorat observed in real time, for example, that a large number of citizens were not given gas masks or other protective equipment during the first Gulf War. Although she was criticized for making her observations public, they did have immediate results. Similarly, the audit about the exorbitant costs of developing the Lavi aircraft also affected the decision to scrap this enterprise (Ben-Porat, 2005: 9–11, 51–7). It is my view that the Comptroller must act strictly according to administrative criteria, and not adopt the procedures of conflict adjudication. This office must not engage in judicial activity, not only because the legal tools are not available to it (tools that would ensure fairness toward both sides, the right of appeal, etc.), but because so doing would exceed the authority of this office.

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After six decades, the boundaries of authority of the State Comptroller are fairly clear, and incursions into other branches of governance can be attributed to the excessive ambition of members of the Knesset State Control Committee or the Comptroller him/herself. The proper arena for activity by the Comptroller is the Knesset and public discourse, and the power of this office derives from the public and political support it earns through the reports and the recommendations contained therein. Can the State Comptroller bite or just bark? The State Comptroller provides a monitoring mechanism that contributes to the accountability and transparency of the political and administrative systems. The powers of the State Comptroller are broad, both in terms of the types of body audited and the scope of the audit, defined as “every matter he sees fit.” The fact that the State Comptroller has become a powerful player is related to two areas mentioned earlier: first, expanding the mandate to allow for an audit of the decision makers and the decision-making process; second, focusing on the ethical behavior of senior officials, including ministers and prime ministers. Indeed, repeated State Comptroller’s reports about improper political appointments have resonated with the public and led to a gradual change in norms. The ongoing erosion of public trust in government institutions transformed the State Comptroller into a warrior for ethical conduct. At the same time, the State Comptroller’s audits have become increasingly legalistic, rather than retaining their fundamentally administrative approach to investigation and scrutiny. When politics looks like a swampland, it is natural to grasp at the high regard for retired judges, but to conduct an administrative audit, there is only the institution of State Comptroller (Dery, 2005). Can the State Comptroller bite or just bark? There is definitely a bite, but it is usually not fatal. Every time a senior official in an audited body says to him/ herself, or a colleague, “We can’t do that – it won’t get past the State Comptroller,” the monitoring mechanism has achieved its goal in the best way possible. This impact, however, cannot be proven, while the flaws in the administrative and political systems are visibly accumulating and repeating themselves, leaving the impression that the audit is worthless. Another reason the impact of the State Comptroller is not appreciated correctly is that the public demands authoritative decrees, while the findings of an audit percolate slowly, and sometimes need repeating until someone pays attention to them. Thus adding more powers to the State Comptroller is unnecessary, as the sanctions must take place in the political–public realm. Furthermore, the tried and true ways to apply sanctions against deviant bodies are at the disposal of the Knesset. The State Control Committee of the Knesset, for example, can recommend that a budget allocation to a specific ministry be withheld until the problem cited by the State Comptroller is corrected. In parallel, it is crucial that implementation of the recommendations to the audited bodies be monitored by the State Comptroller, the State Control Committee, other Knesset committees, and the State Audit Division in the Office of the Prime Minister.

Oversight and control 107 A more robust State Comptroller is good news for public management in Israel. Over the years, this auditing body has emerged to make powerful contributions and stimulate greater caution about the management of public funds by audited bodies, including the parties. Its power also has educational and deterrent value, especially in the face of weak oversight mechanisms in the Knesset. The impact of the Comptroller’s findings, however, is commensurate with the prestige of that office, and the audit’s effectiveness depends on its perceived legitimacy by the audited bodies, the Knesset, the government, and the citizens. For the State Comptroller to fulfill this function properly and maintain the trust of the public and those audited, the Comptroller must be vigilant to remain within the bounds of professional auditing, and not be tempted by the burning issues on the agenda of politicians or the media.

Judicial review In jurisprudence, the term “judicial review” is more commonly used than “oversight” or “control.” The courts exercise judicial review over administrative authorities in two ways: first, through petitions submitted by injured parties to the High Court of Justice or the District Court in its capacity as Administrative Tribunal; second, through appeals of decisions made by an administrative tribunal. Judicial review is fundamentally different from political oversight. The Knesset is concerned with policy and the State Comptroller with maladministration, while the courts are generally concerned with injustice to an individual. An independent judiciary that pursues justice ensures the civil rights of individuals in the face of the power of the ruling authorities. Nevertheless, the court’s concern with overall policy is indirect, if it exists at all. It can be said with only mild exaggeration that the courts have no interest in the administrative decision itself, but rather in the question of its legality. Except for cases of corruption and bribery, the courts generally focus on the process by which public servants exercise their decision-making power: Were there extraneous considerations or conflicts of interest? Was the process fair and transparent? The courts cannot provide effective oversight because they lack expertise in the many areas, some highly technical, dealt with by public management. Moreover, from a citizen’s point of view, the courts are not easily accessible, as adjudication is often prolonged and requires considerable resources. But the more general drawback is that court decisions do not accrue into an organized administrative codex (Shapiro, 1988), and are not constructed to provide consistent and ongoing monitoring of public affairs (Meier, 1993: 236). In Israel, the role of the court in overseeing public management has grown over the years in both scope and content, as evidenced by the many petitions to the High Court of Justice, including appeals of decisions by the Administrative Tribunals: in 2005, the High Court of Justice deliberated 2218 such cases, and a further 1120 were heard in the Administrative Courts. Clearly, courts in Israel attract citizens who feel injured by actions of the authorities.

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The question of the content of judicial review is broader and more complicated because the courts also examine the reasonableness of administrative decisions, as evidenced by the “Ginossar case.” In 1992, the High Court disqualified Yossi Ginossar, a former senior official in the General Security Services (GSS), from serving as Director General of the Housing Ministry because of his involvement in two unsavory affairs.5 Ginossar was disqualified even though he had never been indicted (he received a presidential pardon “in advance”), his administrative skills were never called into question, and his appointment was approved twice by the government. This failed appointment is an example of a breakdown in the mechanism established for filling such civil service positions. The initial screening was handled by the Nominating Committee headed by the Civil Service Commissioner; though this procedure was flawed, the High Court of Justice refrained from issuing a show-cause order to give time to the government to reconsider the matter. When the government approved the appointment, the courts did step in and issue a showcause order. In response, the government appointed a new Nominating Committee, which also vetted the appointment, and the government repeated its decision to appoint Ginossar. Only after these twists and turns did the High Court agree to review the substance of the government’s decision, which it found to be defective: The government’s decision is flawed. It is clearly unreasonable in the extreme. The government did not properly balance the various relevant considerations… When we concluded that the decision patently deviates from the realm of reasonableness and is marred by illegality, there was no alternative but to declare it invalid. (HCJ 6163/92, Eisenberg v. Minister of Construction and Housing, PD 47(2), 229) The Ginossar case exposed the difficulty of allowing politics and administration to proceed unscrutinized without the intervention – justified in this case – of the courts. Nevertheless, the court’s intervention was, in our view, intended to caution the authorities and to be remedial only. The argument of “unreasonableness” is intended for use only in exceptional instances (Galnoor, 2004). The authority to govern includes the authorization to make mistakes. In a democratic system, the remedy for errors by ministers and the senior public servants subordinate to them is the political sanction, rooted in the principle of ministerial responsibility.

Internal control, scrutiny, and auditing Political and judicial methods of oversight provide external scrutiny over the civil service, and this is their advantage. Their disadvantage is their distance from the field of action. In the field, every administrative unit and employee ultimately provides his or her own oversight. This is also true of internal control: the further from the action, the more formal and regulatory the oversight. The three areas most monitored internally within the civil service are finances, personnel, and

Oversight and control 109 legal counseling. In chapter three, we examined this from a different perspective in the context of regulation. Scrutiny within the civil service Oversight mechanisms are abundant: units within the Finance Ministry exercise financial control over the other ministries. The Budget Division oversees implementation of the Budget Law within each ministry and must approve changes in expenditure lines; major changes must also win approval of the Knesset Finance Committee. Revenues and outlays must be approved by the financial controllers of the ministries, who are subordinate not to the directors general, but directly to the Accountant General. Negotiations over wage agreements for state employees as well as wage demands and strikes are all handled by the Director of Wages. Structural reorganization within the ministries and changes in the job positions, grades, and salary supplements are handled by the Civil Service Commission. Thus the Deputy Directors General for Administration in the ministries are subordinate professionally to the Civil Service Commission. Yet, despite these rather stringent oversight mechanisms, the ministries continue to come up with ways to circumvent them, especially on matters of personnel and budget, and these escape routes have become more ingenious as the attempts to control become more stringent. Indeed, circumventing the oversight mechanisms sometimes gets help from the oversight units themselves, as in the following examples: • • •

in the wake of a government decision to cut the budgets of all the ministries by a set percentage, the cutbacks are actually carried out only on dormant budget lines or lines that had already been reduced; in wage agreements, special terms are invented for supplements to specific groups to avoid similar demands by other groups; the ministry undertakes a “reorganization” merely to gain more positions or paid promotions.

Another extension of oversight and control is practiced by the legal advisors in the ministries, who are subordinate professionally to the Attorney General in the Justice Ministry. The influence of the legal advisors on decision making in the civil service has grown significantly since the 1970s in the wake of the ongoing judicialization of politics and administration in Israel (Galnoor, 1977a: 20–1). The legal opinion of the Attorney General obligates the government and its head; similarly, the legal opinion of a ministry’s legal advisor obligates the minister and the director general. Overuse of this tool eventually leads to the legal advisors not limiting themselves to questions of “legal or not legal,” but allowing themselves to be drawn into questions of “worthy or not worthy” – a judgment call that should be made by the decision makers. Over-reliance on legal advice has led to the belief that has taken root in Israel’s civil service and even the Israel Defense Forces: “Don’t decide without first getting a legal opinion.”

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Internal auditors Every civil service institution has an internal auditor whose job, as defined by law, is “to independently assess the actions of the audited systems…by identifying the defects, ascertaining the reasons for them and the factors in their emergence, and making recommendations about how to remedy them” (Internal Audit Law 1992) (see chapter three; Israel, State Comptroller, 1986: Introduction). As an internal ministerial tool, the internal auditor can significantly help a minister or director general who is willing and able to make use of the auditor’s services. However, although the scope of the auditor’s activity was expanded, this institution has not yet found its proper place. Asher Friedberg (1998: 244) pointed out the problems in the status, place, role, and activity of the internal audit in the civil service. On the issue of oversight, New Public Management transfers the burden to the ministry itself, and ultimately to each unit and employee. In this approach, only the service provider can ensure the quality of the service, therefore instead of an army of regulators – as well as internal and external inspectors and auditors – it would be better if the employees themselves internalized the organizational mission. Employee participation makes possible the creation of a system of incentives that enables employees themselves to take charge of supervision and control (Olsen and Peters, 1996). As for external oversight, deregulation is recommended to reduce the over-centralization of budgets and personnel, as well as to enhance discretionary power by delegating authority to public managers. The delegation of authority means being directly accountable to the political echelon and the public. Although regulation must continue in vital areas such as health, security, or financial audits, punishment as a form of control would become the last resort, preceded by friendlier measures in which regulators and managers work together to find solutions. In places where this approach was instituted, the “lack of oversight” has proven to be more effective (Wilson, 1989: 301). With regard to internal scrutiny, deregulation will enable employees to oversee their own work and implement the organization’s programs to attain the satisfaction of its clients. To that end, there will be fewer rungs in the hierarchy and a flatter organizational structure, with fewer inspectors, budget monitors, personnel directors, comptrollers, and supervisors. The emphasis on external oversight has been called “overhead democracy” – a chain of inspectors between the civil servant, on one side, and the political representatives and public, on the other (Redford, 1969). As early as 1952, Paul Appleby suggested that first internal organizational ethics should be fostered, and then responsibility transferred to every civil servant (Appleby, 1952). Ethics of public servants Ethics in this context refers to the organizational, professional, and personal rules that guide the behavior of employees as public servants. The civil service imposes special ethical obligations on its employees that derive from their holding positions

Oversight and control 111 of trust and serving the public. A few of these responsibilities are defined by law (conflict of interest, nepotism, accepting gifts, etc.), but most are in the gray area called “proper conduct.” Questions of ethics are complex: To whom should the civil servant be loyal and to what extent is the civil servant obligated to obey the political echelon? What are the standards that define proper service to the public? What does “professional conduct” mean? Clearly, ethical conduct should be carefully distinguished from regulatory rules and laws. A civil servant who accepts a bribe, or provides service in a discriminatory manner, is in violation of the law. On the other hand, a civil servant who conceals from a citizen his or her rights, or fails to provide service on a false pretext, is in violation of the rules of organizational ethics. In 1987, the Civil Service Commission in Israel published Ethical Rules for Civil Servants, which dealt primarily with safeguarding state property, preventing conflicts of interest, behaving in an ethical manner, prohibitions on the receipt of favors, avoidance of false reporting, and the need for efficiency, credibility, and the maintenance of confidentiality. This ethical code for civil servants has not managed to instill values of ethical behavior or to imbue the bureaucracy with a service orientation (Werner, 1998: 147–8). The civil service in Israel is still far from internalizing the value of self-regulation.

Public accountability We began this chapter by noting that the Knesset, the public emissary, provides the primary oversight for the civil service, because it is the job of the elected representatives to ask broad questions such as: Is this the correct policy? Is the public interest well served? These questions go to the heart of public management, and the answers to them are not drawn from inputs such as budget monitoring or processes like legal oversight. What about citizens and the public at large – can they engage in monitoring and oversight of the civil service? New approaches in “participatory administration” emphasize the role of citizens in making the public bureaucracy more responsive to their needs. A democratic system of public management ascribes importance to striking the correct balance between the civil servant’s loyalty to the law, the political echelon, the civil service, and his or her ministry – on the one hand – and loyalty to the public, on the other. From this derives the demand for fair representation of various population groups (Mosher, 1968: 11–12), a concept that did not exist in Israel until the 1990s, when affirmative action was undertaken. From this also emerged the demands for transparency and participation through a deliberative democracy, with recognition of the public’s right to know as a precondition for monitoring civil service activity and understanding citizens’ rights. The Freedom of Information Law was enacted in Israel only in 1999, and its implementation is still in its infancy. There are two levels of public oversight. On one level, citizens act as individuals to demand that to which they are entitled: he or she demands information; appeals to the State Ombudsman; complains to consumer rights advocates in the

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media, turns to an administrative tribunal or court, etc. These channels were, and are, used extensively in the administrative culture of Israel. On another level, there is oversight and control over important matters by a particular group or the public at large. These include public interest organizations that seek to promote the rights of a specific group, such as the National Council for the Child or organizations for the disabled, which engage in oversight and monitoring of actions by the ministries that deal with this issue. Also in this category are social organizations such as the Movement for Quality Government in Israel, which keeps an eye on the ethical conduct of the government; and the organizations Sikkuy and Adalah, which seek to ensure equality for Israel’s Arab citizens. The media also engage in investigative reporting, monitoring, and exposing what happens in the civil service.6 Changes in the media world also introduced new forms of organizing, some short-lived, such as websites to lodge complaints against the civil service and access the rights of individuals and groups.7 This new form of relationship emerging between the civil service and citizens, based on direct accountability, will become part of a client-oriented organizational strategy (Barzelay, 1992: 109–14). In chapter four, we noted the emergence of an approach that views public organizations as bodies in the service of their clients. When this approach becomes integral to the internal incentive system of an organization, the clients will be able to participate in oversight and control over the quality of the service they receive. This might be done, for example, through client satisfaction surveys or ranking the ministry and its units on their achievements.8 These relations can be bilateral – not just oversight of ministry activity, but also citizen responsiveness to government policies, making enforcement unnecessary. A positive example of this in Israel was the requirement to wear seatbelts in cars, instituted in the 1980s, which was accepted immediately by most drivers, even though in practice it is hard to enforce.9 In this chapter, we have looked at various oversight and control mechanisms intended to ensure the civil service does what is expected of it – improves policymaking and the welfare of the citizens. We conclude by suggesting the possibility of another kind of relationship between the sides: civil servants and citizens willingly fulfill their obligations, reducing the need for oversight.

10 The culture of administration in Israel

The culture of public administration in Israel overlaps the political culture, but, as in any institution, it also has a culture of its own – some of what is defined in chapter four as “patterns of behavior.” Chester Barnard (1951) emphasized the moral element in the shared organizational memory. Philip Selznick (1956) described the distinctive organizational “personality” that emerges over time, creating structured and consistent differences, and leading various organizations to react differently to the same environmental stimuli. Other research has studied administrative culture from the outside and examined the orientations of citizens toward public bureaucracy (Wilson, 1989: 90, 301; Nadel and Rourke, 1975). This chapter brings together some of these elements: first, the political– administrative culture in Israel as reflected in political appointments; second, the burning issues – corruption and ethical behavior; and third, the image of the civil service and public trust in it. Finally, I present some additional characteristics of the administrative culture, including the decision-making process, to supplement those mentioned in other contexts, such as the secretiveness and territoriality.

Political appointments “Politicization” means that an issue or action has been given a political character or overtone. The politicization of appointments to the civil service means that the appointment of an individual is based not necessarily on his or her qualifications, but on political considerations such as ideology, political affiliation, previously shown loyalty to those making the appointment, etc. Thus a “political appointment” means an appointment of someone to a public office who would otherwise not have been appointed without his or her political affiliation or closeness to a political figure. The closeness could be ideological, personal loyalty, or the expectation of future favors.1 A comparative look Over the years, the approach that has taken root in all democratic countries is that the civil service as an institution is apolitical, and should function according to the

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criteria of professionalism, egalitarianism, impartiality, and continuity; hence most civil service employees are not replaced after every election. From this point on, however, the views are diverse, but what remains constant is the unavoidable tension between the elected politicians and the appointed administrators in the executive branch, as noted in chapter one. Any theoretical or practical attempts to separate policymaking (the job of the politicians) from policy implementation (the job of the administrators) come up against the simple fact that the process is ongoing: the policymakers and the policy implementers must work in dialogue and collaboration, and they influence one another. Therefore the question is how to balance the following two seemingly incompatible principles that must function together: • •

the democratic principle of primacy of the elected political leaders, whose obligation is to carry out the policies for which they were elected, and for which they alone are accountable to the public; the principle of professional autonomy of the public managers, whose obligation is to influence policymaking with their knowledge, expertise, and impartial considerations, and who must seek to prevent political leaders from making decisions based on extraneous considerations.

All democratic governments rest on the uncomfortable horns of this dilemma, and not surprisingly, each country has designed its own solution in keeping with its laws, political–administrative culture, and practical needs (Dery, 1999). In the federal system of the USA, precedence is given to the political echelon, thus senior civil servants enter and exit Washington every four years following a presidential election, even if the candidate from their party was re-elected. This refers to approximately 3000 senior officials, some 35 per cent of whom are appointed directly by the President, most requiring Senate approval. This system is part and parcel of the “checks and balances” among the branches of the government, drawn from the American constitution. The goal is to ensure ideological– partisan–personal affinity to the presidents so that they can carry out the policies for which they were elected. The major shortcoming of this system is the lack of continuity and stability in the federal administration, hence the wheels of policy are reinvented every four years, and this is a high price to pay. Furthermore, US presidents find it increasingly hard to obtain Senate approval for their proposed political appointments (Meier, 1993: 238; Light, 1995; Ball and Peters, 2000: 231; Peters and Savoie, 2000: 16). In Western Europe, most or all of the civil servants must avoid political identification to ensure impartial support for political leaders and nondiscriminatory services to the public. In the classic British model, which has been changing since the 1980s, priority was given to the principle of professional autonomy: civil servants, including permanent secretaries, were not replaced upon election of a new government or appointment of a new minister. The system was premised on a continuing career and adherence to the rules of loyalty, ethics, and discretion. The major shortcoming of this system is the great power it bestows on the senior staff, as opposed to the politicians, which can foster a rigid and lackluster bureaucracy

The culture of administration 115 that is not always responsive to the efforts made by politicians to change the policies.2 There are also mixed models that try to combine the two principles. In France, the civil service is very professional and no less rigid than that of its British neighbor. Nevertheless, a new government may appoint some 600 senior officials during its term of office, in addition to the small and personal “cabinet” that every minister may appoint to help implement policies and provide political acumen. What is special about the French system is that most of these political appointees are drawn from among civil servants. Ministers in France apparently understand that to be successful, they need the expertise, connections, and organizational memory of the senior civil servants. Politicization has increased even in countries with a civil service tradition, though the principle of an apolitical civil service has not fundamentally altered. Thus, for example, the World Bank’s “Government Effectiveness Index” combines several elements: the quality of public service provision, the quality of the bureaucracy, the competence of public servants, the independence of the civil service from political pressure, the credibility of the government, and its commitment to carry out policies. Political appointments become problematic when the system is not consistent and well regulated, and yields bad appointments. For Israel, the relevant questions are as follows: Which civil service appointments should be made by the political echelon and what is the best process for ensuring good or at least adequate results? Where should the line be drawn in these appointments – and how can we ensure the other professional appointments are not political? In the background lurks the fear that political appointments contribute to increased corruption in the civil service. Political appointments in Israel’s early years As pointed out in chapter three, political appointments to the Israeli civil service were made according to a “party key” that prevailed in the pre-state institutions. Although Ze’ev Sherf, the first Civil Service Commissioner, tried to copy the British model, he utterly failed. The temporary skeleton on which the civil service was hastily erected in 1948 was highly politicized, and proved over the years to be stable and inured to change (Sherf, 1959: 113). The Civil Service (Appointments) Law, passed in 1959, was designed to limit party influence and establish the system of public tenders. This law, however, exempted specific senior posts (director-general, Attorney General, Civil Service Commissioner, and Government Secretary) from the obligation of public tender, leaving it up to the government to make these appointments. The law also allowed the government to decide on a list of positions for which a public tender is not required, an “exemptions list,” discussed below. Politicization of the civil service, the statutory authorities, and government corporations created a public system that was loyal to the elected political leadership. In this sense, politicization in Israel resembles that of the federal

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bureaucracy in the USA, the difference being that in Israel these loyalties are not to an individual (the President), but are divided among the ministers and their parties. Political appointments were one of the key factors preventing the emergence in Israel of a civil service in the British or French tradition. The Israeli civil service has no distinctive identity, esprit de corps, internal cohesiveness, or institutional independence, unlike its European counterparts. It also lacks the power that politicians attribute to it. The claim made in the past against senior British officials – that they were excellent advisors to the ministers, but lacked managerial skills – does not apply to Israel, where neither talent is in evidence. The training and careers of senior Israeli officials do not prepare them either for advising on policy or for management, and political appointments further harm their self-image. Studies about political appointments in Israel are sparse, but it is known that ministers generally take advantage of the legal option of appointing directors general from their own parties or cronies (Amado, 2001). Indirect evidence for this is the finding that until the 1970s, a great many Knesset members and ministers arrived at their political careers from executive positions in the ministries, the Jewish Agency, or the Israel Defense Forces (IDF).3 Concerning the civil service itself, the coalition structure of the Israeli government also contributed to political appointments for professional positions under that of director general. Thus the goal of the Civil Service (Appointments) Law was only partially achieved, and the corruptive gap between the formal requirement of public tenders and reality was forged.4 The law that mandates public tenders can be circumvented in two ways. The first is official: by government decision to add posts to the list of those legally exempt from tender – a list that includes the CEOs who ministers may appoint to head the statutory authorities under them, as well as public representatives to the boards of government corporations. The second is not official, and includes measures such as temporary appointments that segue into permanence, and fictitious tenders. These prohibited appointments also include lower-level posts awarded to party activists or cronies. David Nachmias’s study concluded that the 1959 law managed to instill the requirement of education at the top ranks of the civil service, but that party considerations remained entrenched, sometimes in addition to – and even instead of – education (Nachmias, 1990: 19–20; see chapter seven). Among the 261 senior officials surveyed in the three ranks below director general, fewer than half testified that they obtained their jobs in open, competitive tender. Most had entered by way of temporary appointments and special contracts that had become permanent over the years. When these senior officials were asked, “To what extent in your opinion is the recruitment for senior posts in the civil service based on qualifications alone?” only 28 per cent responded in the absolute affirmative. The “political bureaucracy” of Israel (Shapira, 1976) began to shift in the 1960s. Appointments to senior posts of party members, including directors general, declined, and lower-level political appointments probably declined as well (Israel, 1989a: vol. 2, 118–9). In other words, the “party key” was applied less

The culture of administration 117 assiduously than before, and took place primarily in ministries controlled by minor coalition partners. The Nachmias data, however, indicate that the process was gradual. If, in the mid-1980s, most senior officials still believed that the merit system did not win them civil service appointments, clearly the process of depoliticization had not yet been fully realized. This conclusion is supported by the data in Table 10.1. Table 10.1 should be interpreted with some caution because the data are based on self-definition of the senior officials as reported in the 1980s. Based on this self-report, people who defined themselves as right wing had a hard time gaining appointment to senior positions until the 1960s; beginning in the 1970s, under the Mapai/Alignment governments, there was a sharp decline in the appointment of people who defined themselves as left wing; and interestingly, though these data do not appear in this table, following the ascent to power of a right-wing government in 1977, over 80 per cent of the senior officials defined their party identity, for safety’s sake, as “centrist”. The upheaval of 1977 and its aftermath In the 1977 election, the long years of Labor Party rule came to an end, and the party headed by Menachem Begin (later called Likud) came to power. As noted, the gradual process of depoliticizing the civil service had already begun, and the first Begin government (1977–81) contributed to this process by not dismissing senior civil servants from the Labor party era. It shrewdly recognized that the continuity of these officials would contribute to the ability of the new and inexperienced party to perform its tasks. The second Begin government, however, and much more so the Shamir government that followed (1981–4), retreated from the path of depoliticization, when the feeling grew among Likud activists that their party had not yet “taken over,” and they applied pressure to reap the benefits of party loyalty. The change became evident in the appointments of directors general. Under the first Begin government, all 21 ministers were replaced, but Table 10.1 Year of recruitment and ideological identification: self-report by senior civil servants* (N=238) Years

Left

Center

Right

1947–50 1951–60 1961–70 1971–76 1977–85

29% 24 35 6 6 100% (17)

9% 28 35 16 13 101% (192)

11% – 36 14 39 100% (29)

Source: D. Nachmias (1991) “Israel’s Bureaucratic Elite: social structure and patronage,” Public Administration Review 51: 413–20. Note * Three ranks below directors general; percents rounded off.

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only 13 directors general; under the second Begin government following the 1981 election, nine ministers and 11 directors general were replaced, meaning that almost all the directors general were political appointments and identified with the party in power. The trend toward depoliticization – not just of directors general, but of the entire civil service – reversed itself completely during the National Unity Government (1984–90), when the two large parties gave free rein to each other, and to the small parties in the coalition, to do whatever they wanted with respect to appointments in “their” ministries.5 Since 1990, many government coalitions were supported by a slim majority, and the method once used by Mapai – paying off coalition partners by political appointments in the civil service (ministries, authorities, government corporations, and throughout the public sector) – was reinstated. With the new system of primary elections within the major parties, and the candidate’s dependence on votes from the party’s inner circle, came promises of job rewards. As we shall see below, preventive steps were taken: a law was enacted that prohibits senior civil servants from being members of the body that elects the party’s candidates for office; a public committee was established to vet the appointments of CEOs and board members of government corporations; a High Court of Justice ruling annulled illegal hiring or firing; the State Comptroller exposed political appointments; and the Appointments Committee of the Civil Service Commission stepped up its oversight. Yet, despite all these efforts, political appointments did not fade away, and even multiplied, as evidenced by the ongoing struggle to limit them being waged between politicians and the oversight bodies, the courts above all. As noted, political appointments harm senior civil servants, in particular, who do not have clear career tracks and whose promotions are repeatedly put on hold. Thus a vicious cycle emerged: those senior officials who made it only through their survival skills in the bureaucratic maze are the ones who cause the politicians to complain that they are impossible to work with and that outsiders must be brought into the civil service. The exemptions list The Civil Service (Appointments) Law (1959) allowed the government to exempt certain posts from the obligation of public tender. In 1960, following a suggestion from the Civil Service Committee, the government established a list of 11 such posts, to include the State Prosecutor, District Supervisors of the Interior Ministry, Director of the Information Administration, Director of Water Affairs, and the Accountant General (Official Publication 807, 15 December 1960: 386). From the outset, the exemptions list lacked clear criteria for these political appointments, and over time it swelled into a random collection of 40 positions, some of which reflected new and real needs (Director of the Nuclear Research Center, Director General of the Antitrust Authority), while others reflected political exigencies, coalition pressures, or ministerial ambitions. The process of this nomination is not competitive: the minister proposes a candidate, who is interviewed by the Appointments Committee composed of the Civil Service Commissioner and two

The culture of administration 119 representatives of the public; the committee primarily deliberates any possible conflicts of interest (not management skills), and makes a recommendation. The committee’s recommendation is not binding on the government. Following a ruling in the High Court of Justice (“the Einstein case”), which criticized the improper use of this exemption clause, the government decided in 1999 to remove some positions from the list of exemptions and transfer them – together with other posts not on the list – to a screening process handled by Candidate Search Committees.6 What remained on the exemptions list were the positions of directors general, senior positions in the Finance Ministry and the Office of the Prime Minister that are equivalent to director general, the cabinet secretary, director general of the Government Corporations Authority, comptroller of the defense establishment, Director of the Investment Center, 11 of the political appointments to ambassadorships in the Ministry of Foreign Affairs, and several others – a total of some 40 positions (Civil Service Personnel Code, 11.961 and 11.962). As noted, the contenders for other tender-exempt positions must now appear before a Candidate Search Committee, established in 2002. This committee interviews candidates and recommends one or more to the minister or government – recommendations that are not binding. As of 2009, the Candidate Search Committee had screened candidates for 67 types of position, whose appointment is decided upon or must be approved by the government. Some examples include: • • • • • • • • • • • • •

Director General of the Chief Rabbinate; Director General of the Antitrust Authority; Director of Veterinary Services; State Prosecutor; Deputies Attorney General; Equal Rights Commissioner for People with Disabilities; Registrar of Nonprofits; Director of the Department of State Religious Schools; Fire and Rescue Commissioner; Head of the Water Authority; Economic Attachés to Washington, Brussels, and London; Director General of the National Center for Mapping; Chair of the Cable Television, Broadcasting and Satellite Council.

This hodgepodge of posts, with little in common, have nothing to justify their exemption from tenders. Some of the positions are sensitive and of national importance, others are professional or scientific and most ministers know little about them, while others are regulatory and government involvement in their selection is not desirable. Is the Candidate Search Committee up to the task of preventing the political appointment of unworthy candidates? Although the committee does publicize a vacancy in these posts and invites applications, reports about these quasi-tenders suggest that the minister and director general – who is a member of the Candidate Search Committee for positions in his or her ministry – have a decisive influence over the appointment. Although the changes made by

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the government in 2002 in response to criticism over political appointments were an improvement over the previous process of the Appointments Committee, they did not bring about real change. Furthermore, many more positions were added after 2002 for review by the Candidate Search Committee. It seems that a new loophole was found for political appointments (the exemptions list contained only 11 posts in 1961). The number of political appointments does not end here. Even without counting sensitive positions such as the head of the Mossad or of the General Security Services, another 30 tender-exempt officials are appointed directly by the ministers because of various laws or government decisions. These include, for example, the Registrar of Contractors (appointed by the Minister of Construction and Housing), Director of the Settlement Absorption Unit (appointed by the Minister of Immigrant Absorption), and positions in the Unit for Combating the Arab Boycott (appointed by the Minister of Finance). To these should be added another 70 directors in the statutory authorities, such as Director of the National Insurance Institute (appointed by the Minister of Welfare) and Director of the Airports Authority (appointed by the Minister of Transportation). This adds up so far to some 200 senior positions in the government civil service, not including government corporations. To the above senior positions must be added approximately 200 more positions of personal trust for minor, mid-level posts (bureau chief, driver, etc.). The total is some 320 positions for which incumbents are chosen by a variety of methods and committees without recourse to a tender. Quantitatively, fewer than 1 per cent of civil servants are political appointments, but these are positions with great influence in the civil service, and accompanied by a large corps of assistants, advisors, and experts. Appointment of the Director of Educational Television is a good example, and sheds light on the issue of political appointments in general. Educational Television is a problematic organization and a source of some contention, regarding both the need for its existence, and its placement in the Ministry of Education. Some want to eliminate it entirely and others want to strengthen its professional independence. All agree that it should be removed from direct political influence. In late November 1997, the government under Benjamin Netanyahu decided to add the position of Educational Television Director to the list of those exempt from tender, turning it into a political appointment and moving the appointment to the control of the Education Minister. This decision is wrong on several levels. First, no discussion was held on the issues of principle – the status of educational television and its director. Second, the worst of all decisions was made – to further politicize the office of director. And, third, the government abused its power by adding yet another position to the list of exemptions. Following this government decision, Knesset Member Avraham Poraz petitioned the High Court of Justice, which issued an Order Nisi instructing the government to explain why no tender should be issued for the position of Educational Television Director. As a result, the government rescinded its decision and has issued a tender for this position ever since, but the Ministers of

The culture of administration 121 Education only intensified their political involvement in this appointment, for a position that should be entirely professional.7 This was not the first government to take advantage of its power to add posts to the list of exemptions. Previous governments added professional positions such as Director of the Fuel Authority in the Ministry of Energy and Infrastructure, Director of the Israel Ports Authority in the Ministry of Transportation, and Deputy Director of Planning and Construction in the Ministry of the Interior. Following exploitation of the exemptions list by various governments, in 1982 a committee headed by Meir Gabbai, then Civil Service Commissioner, recommended revoking paragraph 23 of the Civil Service (Appointments) Law, thereby eliminating entirely all exemptions to the obligation of a tender (Israel, 1982). Another attempt was made in 1995 by a government-appointed committee that recommended the establishment of clear criteria for positions exempt from tender and reducing their number to 30 (Israel, Civil Service Commission, 1995: 11). In the aforementioned “Einstein Case” from 1998, the court invalidated from the list the post of Director of the Rural Construction Authority in the Ministry of Construction and Housing, and rejected government arguments that the head of this authority must be someone who identifies ideologically with the policy of settlement in the occupied territories. The court ruled that the use of paragraph 23 by Israeli governments is invalid and inconsistent with the purpose of the law, which is to ensure the use of tenders. After this ruling, the government stopped using this channel, but the number of tender-exempt positions only grew, as they can now be added upon recommendation of the Civil Service Committee via the Candidate Search Committee. Appointments to the civil service itself The hidden part of the iceberg of political appointments is the intervention of the ministers, directors general, and others – most of whom were themselves politically appointed – in the recruitment, promotion, and dismissal of employees at the nonpolitical level of the civil service. It is hard to pin these down because few employees dare complain or seek legal redress. Therefore we make do with the cases that have been revealed, and choose one example. We quote from the summary of findings in a State Comptroller’s report, with minimal shortening: In the audit of the Ministry of the Environment (hereinafter, “the Ministry”), it was found that dozens of political appointments were made in the Ministry during the term of office of Minister Tzachi Hanegbi (January 2001 to March 2003). Members of the Central Committee of the Likud, the Minister’s political party, and relatives of Central Committee members were appointed to a variety of jobs and positions for which no tender is required: some were appointed to posts exempt from a tender obligation because they are low level positions; some were appointed to posts that do require a tender, until completion of the tender procedures; and some filled vacancies in the Ministry via

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The culture of administration employment contractors. Thus, the framework of their employment, which did not require a tender, was abused to carry out political appointments… In the offices of the Minister and Director General of the Ministry, employees were hired in contravention of the approved list of positions and contrary to the directives that apply to employees of these offices. The report points out the responsibility of Minister Hanegbi for the many political appointments that were made in the Ministry during his term of office, and also the responsibility of his senior advisor, who became Director General of the Ministry…and who acted in the name of the Minister to carry out political appointments. In addition, the audit notes the responsibility of officials at the professional level in this Ministry – the Director General, the senior Deputy Director General for Administration and Personnel, and the members of the Tenders Committee – who serve an oversight and gatekeeper function, whose job included the prevention of political appointments. It was found that the Director General of the Ministry during the period that begins with the term of Tzachi Hanegbi as Minister and until May 2002… did not make any serious effort to prevent political appointments. The Deputy Director General for Administration bears responsibility for the political appointments as the one who did the actual hiring, without doing enough to prevent cronyism in the Minister’s appointments to positions and jobs, and even exceeded what he was asked to do to… (Israel, State Comptroller, 2004: 7–8)

In 2006, Knesset Member Tzachi Hanegbi was charged with fraud, breach of trust, election bribery, attempts to illegally influence voters, false evidence, and perjury. While Minister of the Environment, according to the indictment, Hanegbi worked “deliberately and methodically to bring about the appointment of members of the party’s Central Committee, including their sons, daughters, friends, and the like, to a maximum number of jobs and positions in the Ministry” (Yuval, 2006). As of December 2009, the case is still pending. Appointments to the statutory authorities Various laws authorize ministers to appoint directors of the authorities under their responsibility, similarly to the appointment of ministry directors general, although it could be argued that the comparison falls short because most authorities deal with professional and technical matters, and a tender would attract a wider array of suitable candidates. Wouldn’t a public tender yield more competent directors of statutory authorities, such as the Broadcast Authority, the Employment Service, the Airports Authority, and the Standards Institution of Israel, for example? Authorities have become fertile ground for political appointments, and it turns out that those who won a position by political appointment tend to make political appointments themselves, because their continued employment might depend on it (Zamir, 1990: 24). More documentation about political appointments appears in the State Comptroller reports

The culture of administration 123 about the Airports Authority, the Ports Authority, the Employment Service, and the Small and Medium Business Enterprises Authority (Israel, State Comptroller, 1988; 1989: 627–42; 2006b). Appointments to government corporations Political appointments to government corporations are not confined to members of the board, but also include regular employees who may have been appointed thanks to the influence of the ministers or their emissaries in the corporation. Following revelations of such cases, the Attorney General issued a directive that the appointment of employees to a government corporation based on political considerations is prohibited and illegal. With respect to board members, many were members of the minister’s political party, and in some cases, board members were not appointed because of quarrels between ministers over which of the loyalists would win the appointment (Zamir, 1987: 278–9). The Government Corporations Law (1975) establishes an Appointments Committee for vetting board chairs, members, and directors general. The task of this Committee is to examine whether the candidate has a personal, business, or political connection to the appointing minister, that is, whether the appointment is based on legitimate considerations. The Committee and subsequently the courts deliberated the question of what a “political connection” means and when it can be ignored to avoid invalidating suitable candidates. However, even these two bodies together have not succeeded in preventing unsuitable appointments, and one may ask why the ministers have exclusive control over these appointments.8 In 1995, the High Court ruled that the Appointments Committee had not properly discharged its duty with respect to the Appointment of Women to the Boards of Government Corporations Law.9 Clearly, political appointments not only undermine the professional level of the civil service, but also discriminate against specific groups, above all women and Arabs. Over time, the Committee improved its methods and formulated more explicit directives about the criteria for appointments to government corporations and statutory authorities. Damage wrought by political appointments Because some believe that Israel would do well to adopt the American system, in which all the senior officials of the civil service are chosen by political appointment, it is worth considering the damage wrought by such appointments as expressed by Israel’s High Court of Justice in the aforementioned Einstein case: Political appointment is a breach of public trust by the executive branch as a public body; it can undermine public trust in the civil service; it harms the principle of equality; it damages the level of professionalism of public servants who are not called upon by tender to prove that they are the most competent; it can lead to connections being more important than ability, and politics in the narrow sense becoming the core criterion for appointment; it can inflate

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The culture of administration the system to make room for the hiring of cronies, create new jobs for no good reason, or expedite promotions for currying favor; it can divert the authority’s attention from relevant considerations; it generates conflicts of interest and appeals to extraneous considerations by preferring a party or partisan needs over the public interest; it undermines public ethics; it can cause changes in public services just because the political leadership changes, thereby sowing instability and lack of professionalism…it can harm the morale of public service employees, impact the quality of the service, and damage its image. In all these ways, political appointments harm the fundamental principles of our legal system, our values, and the essence of public service. (HCJ 154/98, Histadrut Labor Federation v. State of Israel et al., PD 52(5), p. 122 (para. 4) – “the Einstein case”)

The system of political appointments in the civil service, which had declined until the late 1970s, saw a resurgence because of changes in the political system, in particular the institution of primary elections to choose party candidates. The recommendations of various committees and public opinion opposed to political appointments have not helped; as we shall see below, even monitoring by the State Comptroller, the trials of ministers and Knesset members, and court rulings have not been enough to uproot this phenomenon. Attempts at reform The very first High Court ruling to invalidate political appointments was made in 1967 regarding appointments to the municipal Religious Councils by the Minister of Religious Affairs.10 In the civil service, the first court cases related to relatively low-level positions: invalidation of the appointment of an elementary school principal in 1986 by the Director General of the Ministry of Education; and invalidation of the appointment of the Deputy Director of a National Insurance Institute branch in Haifa in 1987.11 Political appointments have proliferated since then, as evidenced by the number of High Court cases and repeated State Comptroller’s reports on this issue since the late 1980s.12 The court rulings and State Comptroller’s reports relate to the public sector in general; indeed, the blight of political appointments is particularly severe in the local authorities. This is primarily the result of a system of direct election of the mayors, giving them free rein to repay their supporters, combined with the need for candidates to raise money for their campaigns, and the lack of adequate oversight. In a few municipalities, over 90 per cent of positions were allocated without a public tender (Israel, State Comptroller, 2001: 284). Many efforts have been made to prevent political appointments, and there is no dearth of recommendations for improving or changing the appointment procedures. A committee appointed by the Civil Service Commissioner and headed by Yehezkel Dror recommended in 1986 that a sharp division be made between political appointments (including a handful of professional advisors to the minister) and the professional staff in the ministry (Israel, Civil Service Commission,

The culture of administration 125 1989b). In the wake of this report, the law was amended and civil servants were prohibited from being members in a party’s voting body, but the exemptions list remained in place and so did the political appointments in statutory authorities and government corporations. The Kubersky Commission took a similar line against the politicization of the civil service, and recommended strengthening the professional standing of the senior echelon (Israel, 1989a, vol. 1: 115–20). It also proposed that the appointment to positions exempt from tender be conditional upon the approval of an independent and professional Appointments Committee, that the appointment and status of policy advisors and political assistants to the ministers be institutionalized, and that the prohibition on political activity of lower-level employees be eased. The Kubersky Commission also recommended creation of a cadre of senior officials composed of the three upper levels in the civil service – a small, high-quality, and dedicated group with professional autonomy and a sense of mission. Admission to this cadre would be based on stringent criteria, including a professional, academic MA degree or higher. The Commission also recommended new systems of recruitment to the civil service, a cadets program, encouraging young people to join, individual contracts without tenure, and a rotation of positions of this elite cadre among the ministries and outside bodies to enrich their management experience. The government approved this report in 1990, including the proposed regulation of political appointments, but the recommendations were never implemented. The next reform came in 1994–96, and was initiated by Civil Service Commissioner Itzhak Galnoor. Called “Change-Generating Steps,” this program was approved by Prime Minister Yitzhak Rabin and Finance Minister Avraham Shochat. Its principal components were creation of a senior cadre in keeping with the Kubersky Commission Report; establishment of a school of policy and management for recruiting and training civil servants; reduction of political appointments; and erection of an impermeable barrier between the political and professional echelons (Galnoor et al., 1998). In July 1994, the government appointed a “Committee for Formulating New Criteria and Procedures for Appointment to Civil Service Posts Exempt from Tender.”13 The Committee report, submitted to the Prime Minister and other ministers in October 1995, recommended two principles. First, the number of political appointments to the civil service would be reduced to 30 positions, and this would include posts related to national policymaking only. Political involvement of any form whatsoever would not be allowed below the level of director general. The second principle was that every minister could create a small staff of personal and professional assistants (including a political advisor) to help implement policies; this would prevent the unlawful appointment of assistants and advisors to the ministers. However, all the nominees for political appointment by the government and ministers, with the exception of these personal assistants, would have to appear before an independent committee that would examine their qualifications. This would also apply to political appointments in the foreign service. The Committee also recommended passage of a law to prohibit politicians from promising jobs in the civil service as part of a coalition agreement.

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The recommendations of this committee were approved by the Prime Minister, and it was scheduled for discussion in the government meeting of November 1995. When Yitzhak Rabin was assassinated on 4 November 1995, the discussion was postponed to February 1996. Prime Minister Shimon Peres supported the recommendations of the new Criteria Committee, but most of the ministers were opposed to limiting political appointments because they feared that this would tie their hands before their party’s primary elections. The government decided to hold another discussion about the report in the Ministers’ Committee, where it remains buried to this day. Since then, matters have become worse with regard to political appointments, as demonstrated by the following examples. Upon taking office in June 1996, the Netanyahu government tried to dismiss the Civil Service Commissioner so he would not stand in the way of appointments it wished to make to senior civil service posts. The Movement for Quality Government and the Civil Service Commissioner petitioned the High Court of Justice against this decision on the grounds that a new government cannot dismiss the Civil Service Commissioner without due cause, especially since one of the Commissioner’s tasks is to prevent politicization of the civil service. In the wake of criticism from the court, the government rescinded its decision and restored the Commissioner to office. The court ruling stated that a change of government does not justify changes in the civil service, with the exception of those few posts called “positions of trust.” The post of Civil Service Commissioner is not a position of trust.14 Following this ruling, the Prime Minister issued a statement in July 1996 expressing full support for the independent statutory status of the Civil Service Commissioner and the constitutional status of the Civil Service Commission; he acknowledged the importance of maintaining the independence of this institution – one not subject to political winds or changes in government. Another example is the Netanyahu government’s decision in August 1997 to add the position of deputy general director to the list of exemptions. The purpose of this was to solve a coalition problem with the two religious parties. These parties agreed to divide up the tasks in the Ministry of Religious Affairs as follows: the position of minister would be rotated between the parties, and so would that of director general and deputy director general. To enable this flawed arrangement to proceed, the government wanted to include all the deputy directors general – some 20 positions – in the list of political appointees. Knesset Member Avraham Poraz petitioned the High Court of Justice against this decision, and the Netanyahu government rescinded it. In yet another attempt, three Knesset members tabled an amendment to allow the prime minister and ministers to turn more posts into positions of trust for which the obligation of tender would not apply.15 Although these cases ended well, they illustrate the vulnerability of the existing practices. If not for the High Court intervention and the media criticism, the dike between the political and professional echelons in the civil service, already breached, would have burst. The Supreme Court, however, is a corrective authority only, and cannot install a professional culture of public management. Even after these rulings, other incidences arose of inappropriate political appointments, and politicization of the civil service grew.

The culture of administration 127 A suggestion was made to grant the Knesset the authority to examine and approve (or not approve) appointments to senior civil service posts, not unlike congressional hearings in the USA (Amado, 2001). The problem with this proposal is that it seeks to transplant a foreign concept into the Israeli parliamentary system, one that is inconsistent with the principle of ministerial responsibility. It is also doubtful that a hearing such as this would prevent political appointments from being made because the political background or personal connections of the candidates is usually quite well known already, and has received considerable media coverage. Above all, there are serious drawbacks to a system of appointment that is ostentatious, not necessarily effective, and suffused with irrelevant political considerations. An incisive critique of this method and the preparation of the candidates, orchestrated by public relations professionals, can be found in the memoir of Robert Reich (1997), Secretary of Labor (1992–96) under President Bill Clinton. Political appointments have not proved to be an effective way to improve the ability of ministers to design and implement their policies. Indeed, these appointments have led capable people to leave the civil service because they have no hope of promotion. Others refuse to apply for work there. Why were none of these efforts – including court rulings – successful in uprooting political appointments, or at least regulating them? Primarily because of the desire of politicians to keep giving out jobs to their loyal supporters. This seems to have two aspects. One is the nexus between power and wealth – financial support given by the wealthy to political candidates in exchange for business-related favors. The other aspect is the nexus between political appointments and primary elections in the parties – “vote contractors” recruit voters for candidates in exchange for jobs in the civil service, the statutory authorities, the government corporations, or the local municipalities. For these reasons, ministers and Knesset members fail to heed the “good advice” – that legal constraints on political appointments could actually help them withstand the pressure of party colleagues. The politicians are concerned that the inability to hand out jobs would undermine support for their candidacy. Another reason political appointments have not been eradicated is the lack of sanction against those caught doing it, particularly since the court can invalidate the appointment, but not punish the appointer.16 The public seems to have reconciled itself to political appointments, and no effective deterrent currently exists – not even punishing these political sinners at the ballot box. The failed efforts to set mandatory criteria and clearly separate political from professional appointees suggests that the current situation – in which politicization is covert and unregulated – is quite comfortable for the politicians. And yet political appointments undermine good policymaking. They are also not consistent with a public service ethic and are patently corrupt – they take a public asset and turn it over to unauthorized parties. Given these circumstances, probably the best alternative is to take the extreme step – to prevent all political appointments to the civil service. The ministers would be allowed to appoint only a small, professional staff to help them formulate policy. And all the others – directors general, those on the list of positions exempt from tender, appointees in the statutory authorities and government corporations – all without exception would be appointed in well

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designed public tenders under the supervision of an independent Appointments Committee. The expression “well designed tender” means that the intent is not to leave the current system of tenders in place, but to rebuild it according to the original criteria of equal opportunity for all candidates and selection of the most suitable one.

A public service ethic In a monotone at odds with what he was saying, the notary announced that the wealth of the former [Argentinean] president amounted to $389,626,000 in assets, bank deposits in Europe and the Caribbean, shares, convertible debentures, and companies listed under other names, in contrast with the modest declaration of wealth of two million, eight hundred thousand dollars that he had submitted when his term of office was over. (Tomas Eloy Martinez, 2002, translated from El Vuelo de la Reina) A public service ethic means that the holders of public office act on behalf of the public interest and do not use their position for private gain. In a corrupt regime, individuals who control public resources derive personal or group benefit by virtue of their position (Heidenheimer, 1970; Heidenheimer et al., 1989). A public service ethic is systemic: it is rooted in culture, institutions, and the behavior of the governing authorities, and is concerned with norms, not just laws. Discussions of corruption, however, tend to focus more on the violations and violators, hence also on deterrence and enforcement. Since the discussion of a public service ethic is drawn primarily from conjecture, as data are so hard to come by, I preface it with four comments: First, a public service ethic relates to the entire political–administrative system, not just the civil service. Indeed, public officials in Israel have been indicted for corruption, bribery, forgery, fraud, and more. The reason this subject comes up in the context of the civil service is because a significant part of the damage caused by unethical conduct concerns the exploitation of resources under public management: the embezzlement of public funds, election bribes, political appointments, preferential treatment in licensing, illegal contracts, misuse of public property, fraudulent receipt of public funds, illegal gifts, and so on (Shiffer, 1989). Second, data are scarce outside the cases that reach the court, as corruption takes place far from the public eye, and always leaves hanging the question of whether what has been revealed is just a fraction of what remains concealed. International comparisons of corruption are based on surveys, speculation, and attitude research – such indices are culture-bound and biased. Some societies, for example, are more suspicious of their governments than others. Nevertheless, studies of various indicators of corruption do suggest some valid, positive correlations – they identify a characteristic and measure the change over time.17 Furthermore, even setting aside comparisons, the subjective attitudes in a society (e.g. “everyone is corrupt”) are also of importance, because democracy rests on the presumption that those in public office are not abusing their authority.

The culture of administration 129 Third, in discussing the Civil Service (Discipline) Law, we mentioned that it is hard to gauge the extent to which disciplinary procedures contribute to the proper conduct, ethical behavior, and honesty of civil servants. Published data suggest a low proportion of disciplinary offenses among civil servants, but most offenses are not directly related to a public service ethic. A committee headed by Mordechai Kremnitzer concluded that the data published by the Disciplinary Unit in the Civil Service Commission do not reflect the full scope of corruption and shed no light on the effectiveness of current methods of deterrence. Furthermore, noted the committee, matters that do reach disciplinary proceedings are only the tip of the iceberg, and suggest a “troubling phenomenon of disciplinary violations that call for vigorous measures” (Israel, 1998: 15). Fourth, the line that divides democratic from undemocratic governments is also the line that demarcates corrupt from uncorrupt regimes (Treisman, 2000). In that sense, it makes no difference whether the corruption takes place in the king’s chambers, the bureaucracy, the military, or the party, because the basic principle of acting for the public good does not exist in nondemocratic regimes.18 Changes in ethical norms in Israel The Israeli political system was dominated by one party for a long period, and many scholars have documented the culture of governance that evolved as a result (Arian, 1955; Akzin and Dror, 1966; Caiden, 1970; Sharkansky, 1987; Shiffer, 1989; Etzioni-Halevy, 1993). Of particular interest is Yair Aharoni’s view (1991: 109–24) of the public system from the perspective of a business firm in the Israeli economy until the 1980s. Aharoni concluded that to succeed, Israeli entrepreneurs had be close to the decision makers, and that their only hope of success rested in their ability to develop symbiotic relations with the government. Those who played along with what was called “the system” (hashita) stood a good chance of gaining government benefits or being able to operate outside the law in the quasi-official “black economy.” Aharoni describes how the Israeli economic system operated in the shadow of the political system, to the extent that, even after the Likud came to power in 1977 – and despite its waving the flag of free enterprise – no significant change was instituted with regard to government involvement in the economy.19 In retrospect, Aharoni’s depiction is too black-and-white, in terms of both the economic situation under Mapai and the far-reaching changes that began in the early 1970s (Galnoor, 1991: i–iii). Nevertheless, “the system” and all its ramifications distorted relations between the public sector and various groups in the society. As early as 1950, a report by Emil Shmorek, the Jewish Agency auditor, noted irregularities in the conduct of this body’s employees. The response of Levi Eshkol, then Jewish Agency treasurer, has entered the political lexicon of Israel: “Do not muzzle an ox [from eating] while it treads the grain” (Deuteronomy 25:4). An opposite illustration can be found in the “Book of Taxpayers” published by the Income Tax Authority in 1953–56, listing the taxpayers by name and the declaration of each – an attempt to use public pressure on taxpayers whose standard of living was not justified by their tax declaration, in the opinion of the tax authorities.

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What was “the system”? …the civil service is still political in the wider sense of the term: it has relationships with sectors and pressure groups, is considerably involved in channeling information to the communications media, and is an excellent springboard for political posts…Many have reached the top administrative echelons because of their ability to function in the labyrinth of interrelationships among the government, parties, affiliated organizations, and special interest groups. (Galnoor, 1982: 75–6) The opposition parties did their best to fight the system. They were joined by several nonpartisan players, the best known being the “Row of Volunteers,”20 active in 1954–57, and the weekly Ha’Olam HaZeh, published 1950–93. 21 How did “the system” undermine ethical norms? Although at first the benefits given by public officials were not intended to line their own pockets, but rather to benefit their parties or social and economic groups, the seeds were sown for a culture of “illegalism” that gradually grew into personal corruption, which appeared later (Sprinzak, 1985). Simcha Werner (1998: 143–6) noted the pattern of “selfcircumvention” that first appeared in this period and continued to undermine the moral basis of public management in Israel: the distortion of wage arrangements, circumventing of budget procedures, and need for proteksia – knowing someone in power – for an exchange of favors. Other cases in the political–administrative folklore come to mind, such as the mythological “note” given to cronies applying for a job on which was written “hamochaz me’anash,” an invented acronym in Hebrew for “The bearer of this note is one of us”; or the red Histadrut membership card that had to peek out of one’s pocket when in a government office; or the inflation of expenditures in public offices in order to transfer the balance to the political party coffers. And yet, despite all this, the general Israeli public did not view the bureaucracy as corrupt (Nachmias and Rosenbloom, 1978: 56). Upon completing his term as Attorney General, Yitzhak Zamir wrote: Criminal corruption manifested in bribery, stealing from the public coffers, or the like seems not to be prevalent among public officials in Israel. Cases of corruption that became public can still be regarded as exceptions from which no society is exempt. Nevertheless, one can learn from these that we are not immune from the spread of criminal corruption… (Zamir, 1987: 274) Zamir then warns against a decline in the ethical conduct of public officials that will lead to criminal corruption. Transition from “the system” of benefits for the collective to benefits for personal gain was gradual, but sensitivity to public ethics began to rise in the 1970s, together with the demand for applying the values of universalism and neutrality in service provision (Danet, 1989). Several cases came to light in the period following the 1967 war. Some were rumors, such as rumblings about those getting rich on constructing fortifications along the Suez Canal (the “Bar-Lev Line”);22 some triggered the creation of state

The culture of administration 131 commissions of inquiry, such as the Netivei Neft oil company affair in 1972 (see below); some went to court – such as the affairs involving Minister Avraham Ofer in 1976 and Yaakov Levinson in 1984; and some ended in convictions – Joshua Bension (1975), Asher Yadlin (1977), Michael Tzur (1977), Leah Rabin (1977), and Rafael Levi (1987).23 Since then the list has lengthened, and citing individual cases is unnecessary except to note that the tension remains: civil servants must balance adherence to the law and rules with the exercise of common sense and discretion (Wilson, 1989: 34). Rules alone, rigidly enforced, could lead to over-bureaucratization and paralysis; while leaving decisions to the discretion of the official, if not applied impartially, could lead to corruption. The fear that all civil servants are corrupt might cause honest officials to expend enormous amounts of time and energy in proving they are above board (Garment, 1999: 9). At any rate, a tradition of professional ethics has evolved in democratic countries in which civil servants are subject to special rules of behavior that include loyalty, impartiality, etc. – not to mention a public service ethic.24 Comparative measures of corruption International organizations have reached the conclusion that political and administrative corruption undermines business, investment, and development, and have begun to publish comparative indices. The World Bank, for example, issues the Worldwide Governance Indicators in the World Development Report; others survey expert opinions and public attitudes in a range of countries (see listing in Lederman et al., 2005: 8–9). The World Bank defines corruption as “the abuse of public power for private gain,” a situation in which holders of public office demand or receive bribes for patronage, contracts, licenses, biased verdicts, tax relief, etc. Their index is based on the polling of experts and surveys conducted in over 60 countries regarding the “control over corruption.” Transparency International defines corruption as “the abuse of entrusted power for private gain,” and bases its data on the perception of corruption by this definition, as assessed by experts in various countries and opinion surveys (www.transparency.org). The validity of these reports is controversial, and they should be regarded as very crude indicators that primarily reflect internal changes in how corruption is regarded in these countries. In 2005, Israel ranked 21 in the Control of Corruption Index of the World Bank (2006), scoring 78.8 out of 100. In the Corruption Perception Index developed by Transparency International, Israel ranked 16 in 2001 (scoring 7.6 out of 10); dropped to 28 in 2005 (scoring 6.3); and to 30 in 2007 (scoring 6.1) – out of 179 countries.25 In the 2007 World Bank index (Figure 10.1), Israel places behind most of the countries in Western Europe (except Italy) and North America, and is in the company of Portugal, Qatar, Malta, and Taiwan. Another interesting measure is the “Bribe Payers Index” – the extent to which businesses in export countries engage in bribery abroad, based on the responses of senior business executives. Israel ranked 19th out of 30 exporting countries, near Italy and Hong Kong on that list (Transparency International, 2007: 332). Even with some skepticism about the

Bangladesh Venezuela Russia Belarus Ecuador Philippines Nicaragua Malawi Ukraine Honduras Nepal Bolivia Benin Argentina Thailand Bosnia-Herzegovina Mali Serbia India Peru Mexico Panama Colombia Macedonia Brazil Bulgaria Romania Madagascar El Salvador Turkey Poland Lithuania Czech Republic Slovakia Greece Latvia South Africa Korea, South Costa Rica Hungary Italy Slovenia Estonia Uruguay Portugal Spain Japan France Chile United States Belgium Ireland Germany United Kingdom Austria Australia Norway Canada Netherlands Luxembourg Switzerland New Zealand Sweden Denmark Finland Iceland

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Figure 10.1 Control of corruption in 67 countries (2007). Source: Adapted from World Bank, Governance Indicators 1996–2007, 2008.

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The culture of administration 133 reliability of these data, it is still clear that the perception of corruption in Israel has grown in recent years, and that a culture of corruption pervades both public and business sectors. But to understand the situation in Israel better, levels of corruption should be distinguished. The basic (personal) level This includes specific acts of petty corruption, such as a police officer accepting payment for ignoring an offense, an inspector granting a license to a business in exchange for services, or a clerk accepting a bribe to expedite a request.

Venezuela Ecuador Belarus Russia Bangladesh Philippines Ukraine Nicaragua Honduras Nepal Malawi Argentina Bolivia Mali Benin BosniaSerbia Panama Madagascar India Thailand Brazil Peru Mexico Macedonia Bulgaria Romania Colombia El Salvador Turkey Poland Lithuania Greece Italy South Africa Slovakia Latvia Hungary Costa Rica Czech Republic Korea, South Portugal Spain Estonia Slovenia Uruguay France Chile United States Japan Belgium United Kingdom Ireland Norway Germany Austria Luxembourg Canada Australia Netherlands Iceland Switzerland Finland Sweden New Zealand Denmark

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Figure 10.2 Corruption perception index in 67 countries (2007). Source: Adapted from Transparency International, Corruption Perceptions Index, 2008.

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Some people believe that a certain amount of petty corruption is necessary, especially in developing countries, as a way to overcome bureaucratic red tape. Petty corruption was also regarded by some as a necessary supplement to civil servants who earn low wages – it is tolerable, as it contributes to the economic development of new countries by creating an individual market of “supply and demand.” The demand is from individuals who need licenses, permits, documents, or exemptions; or from businesses that need contracts, licenses, exclusive agency, priority status, special treatment, or a way to circumvent mechanisms of control. The supply is from officials in charge of granting licenses, permits, subsidies, or customs duty exemptions, who take advantage of this demand to line their own pockets. The interface between the two yields the basic level of petty corruption in society – still a specific and localized act. The view that petty corruption by individuals is a necessary evil, and even contributes to “oiling” the economy, is no longer accepted. Studies carried out by the International Monetary Fund and the World Bank indicate that petty corruption is one of the main barriers to economic development because it directs investments to areas suffused with bribery, which are not necessarily worthy investments for the country. It also deters external investors who are not willing to play the game, and creates market distortions that hinder opportunities for small businesses, whose ability to survive is jeopardized by bribes. This contrasts with big businesses, which can afford to give bribes, thereby actually forcing small businesses out of competition. Remedies proposed to prevent such petty corruption would minimize the points of contact between the trajectories of supply and demand. They might include reducing state involvement, cutting out some bureaucratic red tape, decentralizing authority, increasing competition, and, mainly, providing fair wages to civil servants. The systemic level This refers to wide-ranging corruption that permeates – depending on the issue – elected officials, business interests (legitimate or not), and civil servants. An example: an inspector who receives a bribe from a business firm and shares it with his political superior, a parliament member from that district, the tax assessor, police officer, and – if necessary – also with judges. Licensing and tax authorities are generally crucial links in this chain. Systemic corruption can strike deep roots throughout the culture of governance, particularly because of the interweaving of interests not just of the wealthy and powerful, but of political figures and public management authorities, such as the police, courts, media, businesses, and social nonprofits.26 On the systemic level, chains are created with links that reinforce each other and allow for the maintenance of a corrupt culture of governance. In democratic countries with systemic corruption, scandals sometimes come to light (such as those following an election), and then one can notice the differences: between a vertical chain, in which there is collusion within an organization of politicians with officials, who cover for each

The culture of administration 135 other in supplying services for personal favors; and a horizontal chain, in which cross-institutional corruption permeates the bodies covering for each other – parliamentary committees, government ministries, courts, the police, enforcement and regulation bodies, and even professionals such as lawyers, accountants, assessors, engineers, etc. Systemic corruption might originate in the expansion of petty corruption into intermediary areas such as appointing cronies to jobs that control resources, funding candidates for election, circumventing procedures mentioned above, or turning a blind eye to borderline illegal activity done in public. A line seems to connect fictitious travel reports (for purposes of reimbursement) and the appearance of systemic corruption. Remedies proposed to end systemic corruption – beyond removing the economic incentives – can take different directions. One uses legislation, litigation, and increased enforcement in order to reveal and break the chains of corruption. The assumption is that a well ordered society protects itself from corruption by the unequivocal enforcement of laws, especially to deter potential offenders by the threat of their being caught and brought to justice. Such methods also set clear limits between the permissible and the forbidden in the public sphere, in order to prevent ambiguity or commonly used fictions, and they neutralize in advance the claim, “But everybody does it.” The other remedy, distant from judicial deterrence, relies on inculcation of a public service ethic in the political– administrative culture. The fundamental presumption is that those in public office are honest until proven otherwise, and the prevailing view is that they operate fairly, transparently, and in an egalitarian manner. This remedy calls for the development of screening mechanisms to identify qualified and conscientious public servants and conduct corruption-discouraging training programs. The goal is to make stringent control superfluous, and to rely on the integrity of honest employees. The governance culture in Israel What is the level of corruption in Israel and where does it manifest itself? This question cannot be reliably answered – facts are few, though impressions abound. At the basic, personal level – petty corruption by low-level officials – the situation in Israel seems relatively good. While offenses by low-level civil servants are occasionally discovered, especially during trying economic times, they do not add up to the deeply rooted corruption familiar from corrupt regimes in some other countries. The cases revealed in Israel so far occupy a kind of middle level of offenses: political appointments to sensitive positions, sexual harassment, and breach of trust. Most of the offenders, by the way, are politicians, not civil servants. Surveys that compare respondents’ impressions about the pervasiveness of corruption reinforce this impression. As shown in Table 10.2, respondents in Israel, as in other countries, have a tendency to accuse most institutions of some degree of corruption (almost all institutions score above three in the rankings). Political and religious institutions were

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Table 10.2 Ranking of perceptions* about the level of corruption in various institutions, Israel and 47 other democratic countries (2003) Sector or institution General

Public Management

Political parties Parliament/Legislature Religious bodies Legal system/Judiciary Business/Private Sector Tax revenue Customs Medical services Education System Police Military

Israel

Average, other countries

4.3 4.1 3.8 2.7 3.1 3.3 3.1 3.1 2.7 3.0 2.3

4.0 3.7 2.7 3.6 3.4 3.4 3.3 3.8 3.1 3.6 2.9

Source: Israel, Knesset, Research and Information Center, August 2005: 6–8, adapted from Transparency International, Global Corruption Barometer, December 2004. Note * To what extent do you perceive the following sectors in this country to be affected by corruption? (1 – Not at all corrupt…5 – Extremely corrupt).

considered even more corrupt in Israel than in other countries. On the other hand, respect for the integrity of the judicial system was particularly striking, and even the business sector did slightly better in Israel. All public management institutions in Israel were ranked less corrupt than the political institutions, and also less corrupt than their counterparts in other countries. Note also that the military, the education system, and to a lesser extent the police were considered less corrupt (in 2003).27 In response to another question in the survey – did the respondents or members of their family pay a bribe in any form – 87 per cent of the respondents worldwide answered in the negative, versus 97 per cent in Israel. So is the situation in Israel better, at least relatively? The concern is that the lack of clear ethical norms will spread to the systemic level, creating horizontal and vertical chains of corruption that will be very hard to dismantle. There are already many signs of this, especially in the bonds forged between the wealthy and the powerful, and despite the efforts of the legal enforcement institutions, no determined efforts have been made to prevent a slide down this slippery slope. Countries with an extended history of democracy have generally elevated their public service ethic, while the situation is paradoxically reversed in Israel: on one hand, Israel does well on all the general indicators of democracy – political competition, orderly regime change, high citizen involvement, and freedom of the press. All these should rank Israel high on the scale of a public service ethic, but this did not happen. One proposed explanation is that the increased amount of corruption is the result of governmental instability, as in “eat and be merry because tomorrow we may no longer be in power.” But this explanation is partial at best, because the decline in ethical conduct began during a period of stable

The culture of administration 137 government. In place of an explanation, a description may be useful: reduced corruption of the type that benefits one’s party or sector – corruption not for personal gain – did not yield the anticipated improvement in a public service ethic based on universal rules of politics and administration. In this sense, the weakening of the central governance authority was not accompanied by a change in the rules of the game, nor were sufficient resources allocated to it.28 Indeed, the perception that a public service ethic is less important for the state than other interests, such as financial or political gain, apparently continues to prevail. Thus insufficient investment was made in developing a governance culture, and from there the path to using public office for personal gain is short. Three brief examples illustrate this point. In the first two – the Netivei Neft affair in the 1970s and the Talia Sasson report some 30 years later (2005) – the government itself (both the political and administrative echelons) blatantly circumvented fundamental rules of democratic governance. The third example – the Bar-On–Hebron affair in 1997 – showed clear signs of systemic corruption (Negbi, 2005: 13–29). The Netivei Neft affair The Netivei Neft Company was established covertly after the 1967 war, and all its shares were held in trust for the Israeli government in order to extract oil from the occupied Sinai Peninsula without becoming entangled in the international market and the Italian oil companies operating there. Appointed to head the company was Mordechai Friedman, a private businessman with a professional reputation in the field. The company extracted large quantities of oil and contributed significant foreign currency to the state coffers, but from the outset its activity was clouded by rumors of mismanagement, disappearing equipment, bribery, and fraud. Following a memorandum sent by Dr David Niv of the Geological Institute to the Ministry of Science, a State Commission of Inquiry was set up under then Supreme Court Judge Alfred Witkon (Israel, 1972). The commission’s investigation revealed anarchy in the company’s management, a failure by Friedman to distinguish between company business and his own, and a lack of supervision by the Finance Ministry and the Government Corporations Authority. No-one disagreed, however, that the company had fulfilled its mission. Friedman noted: “They told me to bring oil, I brought oil, the rest is not important.” In its report of 1972, most members of the Commission of Inquiry, including its chair, Justice Witkon, thought that Friedman should not be dismissed. Although the report had harsh words about irregularities, lack of oversight, ministerial neglect, and so on, it concluded that Friedman was an “actionism” man of the first order and did not deserve to be reprimanded for not being a good “administrator.” In a minority opinion, Commission Member Meir Zorea demanded that Friedman be fired immediately on the grounds of unethical conduct. The Commission report aroused considerable public controversy, and Friedman was ultimately forced to resign just before the Golda Meir government convened to fire him. Friedman

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was eventually convicted of concealing income and foreign currency offenses, and sentenced to prison. The Netivei Neft affair made visible the culture of “actionism” cited in chapter four as one of the defining features of public management in Israel: an emphasis on getting things done and seeing results, even at the expense of taking shortcuts in the law and ethical principles, viewed as obstacles to be circumvented. Giving precedence to getting things done at virtually any price could initially be in the service of public goals, but it ultimately corrupts the system and justifies the motive of personal gain. At the time, the State Commission of Inquiry gave its seal of approval to the governance culture of “actionism” in its negative sense, thus declaring that a state is permitted to act “differently.” This improper concept has accompanied the Israeli political–administrative system ever since, as a direct extension of methods used to cut corners and focus exclusively on results (“bring oil, I brought oil”). It fosters corruption. The Talia Sasson report The Sasson Report, published in 2005, revealed deep flaws in the culture of governance that had already appeared in the Netivei Neft affair – the state intentionally engaged in fraudulent self-deception (Sasson, 2005). This report documents violations of the law and the rules of proper management in the construction of “illegal” settlements in the Occupied Territories, carried out by politicians and senior civil servants in a number of government ministries. The report characterizes this policy as one of “looking the other way” – a patently unethical culture of winking at wrongdoers. The violations took place with the full knowledge of these authorities over a very long period, and revealed deliberate efforts to blur differences – between the legal and illegal, “political” settlements and “security” settlements, “authorized” and “unauthorized” settlements, new settlements and the expansion of existing settlements, settlements and outposts – and other invented terms designed to legalize and confuse: Unauthorized outposts were established in violation of proper procedures and rules of administration, and especially in gross and ongoing violation of the law. Furthermore, the state authorities speak in two voices. Sometimes they authorize and sometimes they prevent. The rules have become flexible. One hand works to build outposts and the other invests resources and forces in evacuating them… It is state and public authorities who are violating the law, the very rules and procedures established by the state for itself. (Sasson, 2005: 42) Of particular note is the fact that the government of Israel and the Prime Minister, who ordered this investigation, probably knew it would implicate them in illegal activity. In terms of a public service ethic, therefore, the report itself is part of the deception, because the government treated it like a fleeting incident

The culture of administration 139 intended to placate public opinion in Israel and abroad, and did not intend to implement its recommendations. Thus a straight line leads from the wrongdoing uncovered in the Netivei Neft affair to the fraud revealed by the Sasson Report some 30 years later. Government authorities engaged in deception pave the way for a culture of corruption. The Bar-On–Hebron affair In January 1997, Roni Bar-On was appointed Attorney General of Israel by the government headed by Benjamin Netanyahu. In a news report on the state television channel, a reporter raised suspicions of criminal activity around this appointment. The most disturbing was an allegation that it was part of a deal: the appointment aimed at helping MK Aryeh Deri in his trial in exchange for the support of Shas, Deri’s party, in evacuating the Israeli settlers from Hebron. Elyakim Rubinstein, the Attorney General appointed to replace Bar-On, wrote in a legal opinion in April 1997: The police investigation raised suspicions of crimes related to the appointment of Atty. Bar-On to the post of Attorney General. The materials suggest that MK Deri, Atty. Hoter-Ishai, and businessman David Appel – all linked in friendship and business – had an interest in the appointment of Atty. Bar-On to the post of Attorney General…The evidence suggests that individuals indicted for criminal activity conspired out of personal interests to determine who would become the Attorney General, and – through connections and political power – they even succeeded. (Israel, Ministry of Justice, 1997) During the investigation, evidence was also found that ministers and the Director General of the Office of Prime Minister did not provide the government with accurate information about the appointment. Following a public outcry, Bar-On resigned two days after his appointment. This case revealed a level of systemic corruption in the nexus of political and business interests conspiring to appoint a crony to the most senior legal position in the civil service – seemingly to influence a criminal case. The breach discovered in this appointment – thanks to the alertness of the media and the public response – was closed with creation of a special Appointments Committee to screen candidates for the position of Attorney General. But this did not end the systemic corruption, manifested in inappropriate political appointees and the willingness of the most senior officials, including the Prime Minister and other ministers, to use their power to promote extraneous aims and personal gain. During the Sixteenth Knesset (2003–06), the police conducted 28 criminal investigations against members of the Knesset. Subsequently, the President, Prime Minister, several ministers, and several Knesset Members were indicted on different, unrelated charges. Following each of the three affairs reviewed above, investigations were conducted and legal reports written in an effort to increase oversight and control,

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and to prevent corruption. I have already discussed the critical importance as well as the limitations of these tools. But beyond these and many other examples in Israel, strikingly absent is an effort to inculcate a culture of governance based on the axiom that public servants can be both autonomous and honest. Public attitudes In writing about Indian politics, economics, and governance, Bimal Jalan (2005: 8–9, 26) devotes a long chapter to types of corruption, and lists the reasons for its existence: a low level of education, internal schisms in Indian society that are exploited for personal gain, bureaucratic red tape, and instability. The question that most preoccupies him is why, in democratic India, where people are free to elect their government, is the public not vigilant about the behavior of its elected officials, and why does it continue to elect corrupt candidates, some even indicted for and convicted of criminal behavior. Is this an unavoidable aspect of government? Corruption in Israel differs from corruption in countries like India, but similarly the absence of public vigilance leads to a fostering of the incorrect notion that government and a public service ethic cannot go hand in hand.29 In a survey conducted prior to the 2006 Knesset election, for example, voters were asked, “What determines which party you vote for?” The ranking of responses was as follows: foreign affairs and security, social issues, economic issues, party leadership, and – in last place (13 per cent) – the fight against corruption (Yediot Aharonot, 17 February 2006). As to the question, “Would you vote for a party list that included people convicted or suspected of corruption?” the answers were (in percentage): Never – 25; Depending on the charges – 35; It would bother me, but I’d vote for it – 23; and It would not bother me – 15. These replies reflect the problem: the acceptance of corruption as divine decree. The vast majority of those surveyed in this poll (73 per cent) have a relativist ethic of governance – citizens who are reconciled to the notion that public officials are corrupt will not use their civic power to deter and punish. Consequently, the most severe sanction of political corruption – withholding support at the ballot box – is not part of the democratic toolbox. This threatens the dike-holding-back systemic corruption in the political–administrative culture, and allows corruption to become a “normal” part of the relations between society and the political system. What’s more, corrupt behavior in the political– administrative system percolates down to individuals and groups in society, in a kind of “Do as I do.” Hazardous zones To understand the nature of the systemic problem caused by the lack of a public service ethic in Israel, let us look at the problematic areas. Although the following list is based on impressions, the areas named are not surprising, as they are high-risk areas in other countries as well, and often appear in the Israeli media.

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State and Jewish National Fund control over land. This is a field with many opportunities for corrupt deals and misconduct by giving preferential treatment to specific groups or business interests. Symptoms of this are the pitched battles between ministers over who will be responsible for the Israel Land Administration. On the other hand, efforts continue to privatize state lands in Israel. Taxation, licensing, inspection, regulation, and approval of grants and exemptions. Opportunities for corruption come up primarily around tax evasions, construction permits, and business licenses. Misconduct in this field can remain on the level of petty financial corruption, but in the local authorities, for example, the corruption can be systemic. How the authorities manage these services plays a significant role in subjective attitudes among the public about the existence of corruption. The Occupied Territories. Control over several million Palestinians lacking political and civil rights over 40 years can itself corrupt. Instances of petty corruption have appeared among Israelis serving in the civil administration of the Occupied Territories, and there have also been cases of abuse of power by military commanders. Systemic corruption, however, is related to the settlements, whose construction and public finances have never had even a minimal level of transparency. To this day, aggregate data cannot be found in the state budget about the level of state investment in the territories. The existence of a shadow government in the territories is a recipe for lack of control by the central government. It also breeds contempt for the rule of law and administrative procedures, and ultimately corruption. Government and money. This is a relatively new domain that emerged in the past two decades.30 It has aspects of petty, personal corruption, such as building contractors supporting candidates for mayor in exchange for licenses; and it has symptoms of systemic corruption, as revealed in the Bar-On–Hebron affair, and in a more recent case (2007) in which the Head of the Tax Authority and several others were charged with corruption. Other cases include a wealthy businessman who supported former President Ezer Weizman; and illegal contributions to the election campaigns of candidates for prime minister and the Knesset. Privatization policies. Since the 1980s, various Israeli governments have advocated reducing the government sector and transferring government corporations and many services into private hands. The main reasons for this are to enhance economic efficiency, save public funds, and increase competitiveness in order to improve services to the citizen. We will discuss the issue of privatization separately, but in this context the following questions arise: Are state assets being passed into private hands according to clear and transparent criteria? In the wake of the privatization, has competitiveness actually emerged? Do these cases of privatization reflect considerations of the public good or the good of some business interests? A negative answer to one or more of these questions is a symptom of corruption (Galnoor, 2006). Public and parliamentary oversight is imposed over

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Corruption in Israel in the twenty-first century While most democratic countries have, over the years, moved in the direction of greater concern about a public service ethic – though corruption did not entirely disappear – Israel seems to have been moving in the opposite direction. According to indicators of government corruption, Israel ranks poorly among western democracies, and somewhere in the middle of democratic countries in general, which includes states that have introduced democracy within the past few decades. In the political system of Israel, a marketplace of supply and demand seems to have developed between those in power who are willing to accept favors, and private or business people who are willing to offer them. This is new compared with the party-sector corruption that characterized the early days of the state. The stepped-up efforts of legislation, litigation, and enforcement have not managed to eradicate this problem. The courts are perhaps the last bastion against the spread of corruption, but there is a significant gap between addressing specific cases of corruption and systemic unethical conduct. Closing this gap is not within the power of the judiciary, particularly since the public appears unwilling to use its clout to penalize politicians who take this path. Israel could not be described as riddled with the corruption of a third world country, certainly not at the level of petty corruption (bribing clerks and police officers). But corruption has proliferated in party and candidate financing, and signs of systemic corruption have appeared that link private interests with interests of senior officials in the political–administrative system. If this trend continues, it is just a matter of time before Israel graduates to the next level. Honesty is a value rooted in culture – in the matter at hand, in the political– administrative culture. Remedy will require major efforts of financial oversight and judicial enforcement, but these are not enough (Maor, 2004). In the long run, the political–administrative culture must change because this is what corrupts or cleanses the relationship between government and its citizens.31 To foster honesty, a diverse menu is needed of more than legislation and litigation. It would require instilling the values of democracy, rebuilding faith in political institutions, reforming the civil service, reducing centralization,32 strengthening the parties as viable institutions, recognizing the contribution of civil society and the media, strengthening the local authorities, and – at the top of the list – a return to the fundamentals: educating for democracy, ethical behavior, and good citizenship.

Images and the public trust Government in Israel was powerful from the outset, and the public bureaucracy – an important symbol of state – initially enjoyed a relatively high degree of

The culture of administration 143 compliance and respect. Bureaucracy, however, is not an inspiring institution to begin with, and even then, respect was diluted by a large dose of resistance and even defiance against authority. This was particularly true of groups that felt the burden directly, such as Arab citizens under the military administration, and new immigrants experiencing the confusion and lack of coordination among the authorities. The existence of a bureaucracy answerable to the political echelon removed a heavy burden from the government of having to penetrate groups in society and ensure maintenance for purposes of stability and continuity. The special conditions around the founding of Israel led to most of its civil service activities not being routine; research has shown the elements of resourcefulness, spontaneity, and even “non-bureaucratic” behavior (Katz and Danet, 1973: 329–37). But as time passed, although the bureaucracy became more professional and increasingly anchored in rules and criteria, it also became more “bureaucratic” – rigid and cumbersome. The image of the civil service grew increasingly negative, even though the number of civil servants per citizen declined and intervention was reduced. In writing about government and politics in Israel, Oscar Kraines reflects on the bad relationship between bureaucrats and the public, and how the feeling gradually emerged that only through favoritism (proteksia) could anything be accomplished (Kraines, 1961: 215). In the early 1970s, Nachmias and Rosenbloom (1978: 152–5) found that Israeli bureaucracy was not considered attractive: two-thirds of respondents said they would not want to work in the public service, and 80 per cent supported the need for depoliticization. The authors conclude that politicization is a key factor in the negative image of the service, and there is no reason to believe this image has changed since then, particularly since the accusation of corruption has been added. Furthermore, since this research was conducted, the gap has only widened between the wages of civil servants and those in the nongovernmental public sector, especially for high office and professional posts, in comparison with the remuneration for similar positions in the statutory and local authorities. Note that this is not the understandable gap between the public and private sectors, but a gap within the public sector itself, for example, between the director general of a ministry, who might earn about $100,000 annually in 2009, and the director general of the Ports Authority or a government hospital, who earned at least 50 per cent more. In recent years, this has attracted a great deal of attention on publication of the top salary-holders in public bodies, and revelations of salary excesses among employees of the Bank of Israel, in particular (Israel, Ministry of Finance, 2005; Israel, State Comptroller, 2006a). The uncomplimentary image becomes worse when one adds the degree of public confidence in the executive branch, particularly the civil service (Table 10.2). As we shall see in chapter eleven, where we discuss the necessary reforms, there are no shortcuts to earning public trust. In the list of issues that need to be addressed, it is not only image that requires reworking, but the entire structure and composition of the civil service, and the quality of its personnel.

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Administrative culture in Israel In this chapter, I have discussed three key aspects of the administrative culture in Israel: the system of appointments to senior civil service positions, a public service ethic, and public trust. As noted, administrative culture is derived from the political culture, and has the same distinctive combination of two components: the bureaucratic “personality” of the civil service, and the public attitude towards the civil service. To describe this culture, we have to examine a variety of aspects, such as the degree of reliance on laws and official rules, decision-making patterns, planning and staff work as opposed to improvisation and day-to-day activity, obstacles to cooperation and coordination, public attitudes towards service providers, and willingness to work for the civil service, among others. In the absence of empirical studies – with the exception of outdated research by Caiden (1970) and Nachmias and Rosenbloom (1978) – and some new research, we have presented several characteristics of this culture, such as its secretiveness and territoriality, as well as the obstacles in the way of improved service provision. This analysis has been based on research as well as reports of involved participants, and now I add evidence about the decision-making process in the culture of Israel’s civil service. The example below concerns decision-making about the future of Rafael Advanced Defense Systems Ltd during the Rabin administration in the years 1994–95. Rafael was, at the time, a subsidiary unit in the Ministry of Defense, and one that enjoyed considerable freedom on the grounds of safeguarding state secrets. Its employees were compensated beyond what was customary in the highly paid defense establishment, for example with special fringe benefits such as a sabbatical year. Despite its significant professional accomplishments, Rafael ran into financial trouble and found itself deeply in debt, primarily because it had incorrectly assessed the declining demand for weapons following the end of the Cold War. Deliberations about its future and the need to restructure continued for a long time, and focused on separating its business enterprises from the services it provides as a “national laboratory” for state security. Heading the committee’s deliberation about Rafael’s future was Yitzhak Rabin, Prime Minister and Minister of Defense; other participants represented the many government bodies that had some connection to the matter, reflecting the federative structure of the Israeli government apparatus. Accordingly, even though a fateful security issue was at stake, territoriality was paramount, making every cross-turf decision a Herculean task. The participants operated as spokespersons for their ministries and units, and in the absence of agreed data – not to mention a working policy paper with a presentation of alternatives – the deliberation turned into a power struggle among the Defense Ministry, the Finance Ministry, and Rafael itself. The following description is based on the Rafael case, though formulated in somewhat exaggerated general terms. This is a schematic description, but it reflects the decision-making process in the Israeli political–administrative culture. This method has its advantages: those who are close to the subject, with relevant knowledge, are brought into the process and have an opportunity to present their views and even to try and abort the

The culture of administration 145 Decision-making deliberations • •

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New projects are generally born out of crisis or public pressure, not because the system encourages new ideas, initiatives, or revolutionary programs. The project is initially discussed in a very small group, generally composed of people who know each other, or from the same ministry. This might lead to a preliminary testing of the water in the political echelon. If the project emerges “wet but still intact,” the project managers decide among themselves whom to inform and how to proceed. The project managers are not entrepreneurs – they do not believe in systematic R&D, but jump right into action. Without revealing too much or making any commitments, feelers are put out to various experts concerning the legal, economic, or security aspects of the project. All other aspects (especially “social” concerns) are not considered professional and will be addressed in later stages, if at all. If none of the experts rejects the project out of hand, the project managers – now armed with “professional” and compartmentalized responses – move on to the critical next stage. Now the inner circle is widened to include all relevant players, or those who “must” be informed. This criterion is flexible, because the circle does not necessarily include all those who would be affected by the project, but primarily those who need to know, that is, without whom no decision can be made, or who could abort the initiative, or who are needed for the next stage. A meeting is held in which the project is presented orally, then reactions are heard from those who would be affected by it. The arguments pro and con are less important than making note of which people or organizations are opposed, and how deep their opposition is. Concerns raised or suggestions to call in experts are met, then and there, by the ammunition stockpiled for this purpose. The verbal battle that determines the fate of the project is primarily a power struggle and not a debate of ideas, data, logical arguments, or alternatives. At this stage, if there is no serious opposition, a committee, steering committee, or forum (titles vary) is established, composed of those involved in the project, and excluding those deeply opposed to it. The degree of opposition anticipated determines whether a proposal will be formulated. The absolute objection of an influential body, such as the Budget Division, or a confidant of a powerful minister, or even someone with great personal clout, can sink the entire project. Alternatively, an effort will be made to persuade the objector to join the inner circle. If the forecast is optimistic, the proposal will now be put into writing for the first time in a document that details only what is in

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The culture of administration agreement. Other positions, alternatives, contrary data, or the absence of data are not mentioned in the document. The proposed plan is unequivocal and action-oriented, supported by the opinions of carefully chosen experts, and accompanied by scores of elaborate technical appendices. By this stage, the agenda has been set in stone – it is hard to make changes, and the only option is to accept or reject the project in its entirety. The final decision: the type of project determines how, and in what forum, the final decision will be made, but efforts are invested to avoid unpredictable and “irresponsible” political forums such as the government, ministerial committees, the Histadrut Labor Federation, and Knesset committees. The political echelon – the minister or ministers – are brought in as needed, sometimes at an earlier stage (if the minister supports the project), and sometimes only at the final stage (if there is concern that the minister may oppose it). The project managers and confidants are careful that no “outsider” finds out what is being cooked up until the final decision stage – not the media or interest groups, and definitely not those who will be directly affected by the decision – the public. Confidentiality does not always work, of course, and leaks (sometimes by the minister him/herself if there is no other way to thwart the project) could sink a secret plan.33 The public stage: once a project passes all these stages, it must be sold to the public, especially if new legislation is required – after all, at issue is public funding in a democracy. Publication of the finalized plan, including data and the proposed benefits to the public, is entirely a public relations operation. By this point, no outsiders, especially not Knesset committees or the media, have the resources (or will) to challenge the project.34 The project managers would be shocked by the idea that an open public discussion could make a useful contribution. (Condensed from Galnoor, 2003c: 167–82)

entire idea. At an early stage, the project is debated and considered from different angles, and the measure of opposition (whether biased or impartial) is well taken. Some experts are consulted and even political sensitivities of the minister and advisors are taken into consideration. Any idea that survives this obstacle course could not be entirely without merit. Any strong internal opposition is, to a large extent, already absorbed during the process of screening and pre-decision, and therefore the chances improve that the project will be supported and implemented. What characterizes the entire process is the pragmatism of an incremental progress, carefully testing the ability to carry out the project, not unlike what was described with respect to the budgeting process.

The culture of administration 147 The advantages to the method, however, are offset by some serious flaws, primarily its narrow outlook from beginning to end (Gross, 1966). Decisions made by this method have a good chance of being unsuitable, in the best case, and usually are of inferior quality. The process is designed primarily to mobilize support and test the ability to carry out the plan, rather than to reach the optimal decision in the given circumstances. Support can be mobilized even for a bad decision, just as a good decision can fail to garner support; the latter, in fact, is preferable, because rejected initiatives at least don’t cost money or resources. The administrative decision-making process described above adopts the methods of political decision-making, that is, it shows how the techniques of political deliberation have permeated what should initially be a professional judgment. The first, nonpolitical stage of the decision-making process should be a broad, open forum with diverse views and backgrounds, free as much as possible from extraneous considerations. Naturally, this stage cannot be entirely devoid of political and other influences, but it can be richer and certainly more systematic. Politics will surely infiltrate, and forcefully, but this should be confined to the later stages. Moreover, the process described above is very conservative. It nips innovative ideas in the bud because of the difficulty of winning support for them. It seeks compromise among opponents too early, rather than leaving that for the later political stage. This is also why brainstorming – the goal of which is to stimulate ideas, not to measure power – rarely takes place in the lexicon of Israeli public decision-making, because it is considered a waste of time, ineffectual, and academic. It rather prefers the Oral Tradition – no position papers, no authorized or agreed data, and no understanding that such tools are important as the basis for a well structured professional deliberation. Much of the discussion is a sterile argument about “the correct facts” – and this is also true for deliberations by the government or directors general. Data or statistics presented may be under suspicion a priori – why would anyone “reveal their cards unless they are stacked in their favor?” The cloak of secrecy turns the decision-making process into even more of a power struggle, and more centralized. Those who participate in it are carefully screened and have narrow expertise, or are people who can be trusted not to take objectionable positions. The expectation is that they will be loyal representatives of their own ministry or unit (even in the rare case that they have another opinion), therefore the deliberation is actually a struggle between the different bureaucratic and organizational interests. Organizational and interpersonal politics thereby eliminate one of the major advantages of this kind of decision-making process – the savings in time. Because changing the project parameters is so difficult, serious outside opposition, if it suddenly appears, can halt the entire project. An example of this is the “Two Seas Canal Project,” which appears to have been decided by this method with the participation of the best experts.35 Only after the project was launched did outside opponents prove it was not economically feasible; the project was cancelled, the donations were returned, and the investments were lost. This entire process is marked by an unwillingness to involve people who truly have a vested interest in the project, those whose lives will be affected by the

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decision – the public, the clients, and the relevant employees and organizations. Involving these parties in the early planning is considered superfluous “noise” in the system: why awaken sleeping dogs before their time? Later, they will have an opportunity to object, but now their involvement could bury the entire project. They are ignored not because they have nothing to say, but because they may very well have something to contribute. The democratic dictum that it is appropriate and even useful to ask the opinions of those affected is not accepted in the Israeli political–administrative culture. As a result, decision makers do not initiate public discussions, and the media have only limited access, especially because of the secretiveness. As for Rafael, the company on which the above description of the decisionmaking process was based, even though a decision had to be made that would be critical for the state, the defense establishment, and thousands of employees, no careful professional work preceded it that could provide a basis for a well considered, acceptable decision. As a result, it took another seven years for the government to decide in 2002 to turn Rafael into a business-oriented, government corporation. This, in short, is a culture more political than administrative.

11 Public management reforms

More than 60 years after its inception, Israel still lacks an effective civil service in terms of structure, modes of operation, and a division of labor between the political and administrative echelons. The continuous instability of the political system also undermines the functioning of public institutions, especially the civil service and, as noted in the previous chapter, contributes to the penetration of political patterns of behavior into administrative decision making. Rather than finding that professional considerations are exerting a greater influence on policymaking, we are witness to the politicization of these administrative decisions in the form of aggressive negotiations and ineffective compromises. This phenomenon is apparent throughout the nonpolitical executive echelons – the public sector at all levels – government ministries, statutory authorities, government-corporations, and the local authorities. The budgeting process discussed in chapter eight illustrates the problematic nature of public management at all levels. Democratic states periodically introduce reforms into public management in order to adapt the government machinery to changing needs. Since the 1980s, public management reforms have burgeoned worldwide, primarily due to public pressure for better services in return for high taxes, as well as increased demand for high-quality and transparent governmental policymaking (Barzelay, 1992; Osborne and Gaebler, 1993; Campbell and Wilson, 1995; Pollit and Bouckaert, 2000; “New Public Management,” 2001: 12,510–3). Virtually all western democracies have instituted public management reforms since the 1990s. These reforms emphasize the management of public institutions as part of the capacity building necessary to maintain stability and democracy (Fukuyama, 2004: 122). Although such public demand has emerged in Israel as well, all attempts to institute an overall reform in public management have failed, for a variety of reasons (Galnoor et al., 1998). Israel is a technologically developed country with an educated population and a modern economy. However, the level of its public management lags behind that of many other democracies and, despite the attempts at innovation described below, this necessary tool – the machinery of public management – has not been adapted to modern needs. I open with a discussion of privatization – one highly important reform that has been instituted. Although privatization was the result of many factors other than

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the desire to improve the civil service, it has had extensive structural and substantive repercussions. I then briefly review some attempts at reform, and end with a presentation of what a comprehensive reform in the civil service should entail.

Privatization1 Privatization in its narrow, technical sense is the transfer of assets, services, and goods from responsibility and/or management of government organizations to market organizations or to organizations of the third, voluntary sector (often referred to as “civil society”). This definition highlights the issue of responsibility. From an ideological perspective, privatization aims at reducing the role and responsibility of the state, particularly the intervention of the executive branch, in economic and social affairs. This motivation goes beyond our discussion of public management, and relates to the decline of the state as an institution and the global economic and societal transformations taking place in many countries. Israel’s privatization policy is consistent, if rather disorganized. The premise behind this policy is that goods and services are produced more efficiently and with less opportunity for corruption by private organizations. On this assumption, a wide range of public services in Israel have been privatized over the past 20 years, regardless of which party has been in power. These changes have led to increasing ambiguity about the boundaries of responsibility between the private and public sectors, as well as to some cooperation between the two, at times productive and at other times not. Another outcome has been the growth of a powerful third sector, one that has appropriated, either willingly or out of necessity, many areas traditionally considered the responsibility of the state. The results of these processes were resolutely obvious during the Second Lebanon War (July–August 2006), when government ministries and local authorities in the northern region of Israel virtually ceased functioning, while over 200 voluntary organizations operated in their stead. Hence the impact of privatization on nonmeasurable social goods, such as solidarity, should also be examined. The broader context is society’s transitions from one based on a civil orientation that places heavy obligations on the state, to one based on a consumer orientation that perceives its citizens as clients, thereby boosting the demand for privatization. As we saw in chapter five, increased regulation is one method proposed to bridge these two extremes. Privatization in Israel may be perceived as a shift in the boundaries separating public and private, or market, allocation. Accordingly, areas of privatization can be categorized as follows. •

Privatization of private goods. This involves the government’s exit from activities such as road-building, mining, and communications. The assumption is that privatization will lead to increased competition and thus greater efficiency and improved services. Some examples of this type of privatization are the sale of government-owned corporations, such as the Oil Refineries Ltd (BAZAN), Israel Chemicals (ICL), and the Israel Ports Authority.

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•

•

Nonetheless, even justifiable privatizations such as these evoke significant questions about the appropriate compensation for assets transferred, the transparency of the privatization process, the balance between beneficiaries and losers, the violation of labor rights and agreements, and how much postprivatization regulation is required. Additionally, experience has shown that privatization sometimes leads to the creation of private monopolies that take advantage of consumers, rather than increased competition. Privatization of public services. Some examples of this in Israel are to be found in health services (the supplementary insurance offered by the national health funds and private medical services offered by public hospitals); education (private schools and “enrichment” classes); and welfare (institutions for foster care, retraining programs for the unemployed, and pension plans). This type of privatization is not always introduced directly by the government, but comes about as a result of a gradual reduction in services, creating gaps often filled by private service providers (on “privatization by omission,” see Barak-Erez, 2008: 416–515). For example, cutbacks in the funding of law enforcement have led well-to-do homeowners to install security cameras and employ private security firms. Privatization of the prison service, discussed below, also belongs in this category. Privatization of operations (outsourcing). This type of privatization may be full or partial, involving either the acquisition of private services by the government, or the transfer of operations to the private or voluntary sector. The responsibility for the product or service remains in the hands of the state. Some examples include outsourcing, partnerships, franchises, subcontracting, voucher distribution, and the like. These arrangements, prevalent in the business sector, are often motivated by a desire to scale down the public sector or increase flexibility in decision making. Privatization of operations can lead, however, to the violation of workers’ rights, as may occur when work is outsourced to private agencies or service contractors. If outsourcing involves the transfer of decision making to for-profit institutions – for instance, in job retraining for the unemployed or nursing – one must consider the potential injury to helpless clients.

Thus privatization has been a profound reform in the structure and function of the civil service, raising the many questions about regulation presented in chapter five. In the survey below, I discuss only the general significance of privatization, not its many formats. Another critical issue noted in passing is to whom the responsibility is passed: to the business organization (as in the privatization of television channels); to the social organization (as in institutions for disabled children); or to a combination of the three sectors. Privatization in Israel: the broad context The broad context of privatization in Israel is the involvement of the government in economic development. The motivations for such involvement are usually

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assumed to be ideological, power-driven, or bureaucratic (Aharoni, 1991). David Levi-Faur, however, suggested that the involvement of the state combined ideological and economic elements, and he reached a surprising conclusion about the “unhidden hand” of politics in the development of private industry in Israel: The conclusion of this study is that the sectoral structure of Israeli industry, characterized by the dominance of the private sector, was shaped by the state. The state had a critical influence on determining the boundaries and fields of activity of the various sectors…The [state’s] energetic encouragement of private enterprise – the building of Israeli capitalism – can therefore be understood not as a goal in itself, but as an instrument in the realization of Zionism. This is an alternative to the view that emphasizes the role of the state in expanding the Histadrut and the governmental sector, and minimizes its role in shaping the private sector. (Levi-Faur, 2001: 262) In later years, the public sector gradually separated itself from the business sector, particularly from industry. Initially, however, the goal had been to provide improved services to the public. Thus, as early as the 1960s, the Bureau for Vehicle Testing was privatized; the Israel Association of Community Centers was established in 1969; and in 1986 the Center for Office Technology was removed from the Finance Ministry and reorganized as a government corporation (MALAM Systems). The public sector in Israel, including the Histadrut Labor Federation and other national institutions, which in the 1960s was responsible for nearly 50 per cent of the net domestic product (Barkai, 1964: 25), was bound to diminish in any case due to economic and societal changes in Israel, the influence of neoliberalism, and globalization. The success of the right-wing Likud Party in the 1977 election accelerated this process, introducing policies aimed at reducing government involvement in the economy. A poignant illustration is provided by the transition in the kibbutzim (communal agricultural villages) and moshavim (cooperative villages) – communities whose ideology was totally antithetical to capitalist and later neoconservative economics. In the 1960s, Israel had 269 kibbutzim and 454 moshavim, all based on the ideals of communal cooperation and joint ownership of the means of production.2 Although the kibbutzim comprised a small minority of the Israeli population (3.5 per cent in the 1960s), their unique impact was felt in all spheres of life, including agriculture and industry. This began to change in the 1980s, when the kibbutzim and, to a lesser extent, the moshavim, were faced with a series of crises, both ideological and economic. With diminishing government support, the economic crisis deepened in many kibbutzim, and grew even worse following the government’s economic stabilization program of 1985. When the kibbutzim became incapable of repaying their burgeoning loans, the Israeli government, banks, and kibbutz movements signed agreements in 1989 and 1996 to restructure the debt. In many kibbutzim, the crisis served to accelerate already existing dynamics of ideological, social, and economic changes.

Public management reforms 153 Different kibbutzim underwent different changes: some were completely privatized and their assets were transferred to their members, others were partially privatized, introducing salaried labor, payment for services, etc. By 2006, kibbutz members represented only 1.8 per cent of Israel’s population, and only about 40 per cent of the kibbutzim had retained their communal framework. Another example that reflects the change in Israeli society is the transformation of the Histadrut Labor Federation, founded in 1920 as a voluntary collective of workers and salaried employees. By the time the state of Israel was founded, most adult Israelis were card-carrying members of the Histadrut, which continued to play a powerful role in the social and economic life of the state. The Histadrut retained its power for decades, evidenced by the fact that 60 per cent of the population held Histadrut membership in the 1960s (Galnoor, 1985: 107). But membership dropped rather precipitously in the 1990s, when the institution collapsed under the weight of its huge debts, retaining only 38 per cent of the population (www.histadrut.org.il). In 1994, the “New Histadrut Labor Federation” was established, which completed the process of selling off all its economic enterprises (Hevrat HaOvdim), separated itself from the Health Fund, and remained a labor union only. One of the goals of this labor union is to prevent privatization policies by the government. In 2006, some 20 per cent of Israeli wage earners were members of the Histadrut (approximately 7.5 per cent of the population). It was not only members of kibbutzim, moshavim, cooperatives, and the Histadrut who took part in various forms of collective life in Israel. Some 60 per cent of urban Jewish families owned condominium apartments in the 1960s, legally bound together collectively with the other residents. Even this proportion dropped sharply in the twenty-first century:3 more evidence of the growth of the individualistic economic worldview in Israeli society. As these views gained acceptance in Israel, support for privatization and a reduced public sector intensified across the political spectrum, not only on the right and center, but also within the previously dominant socialist Labor Party. In fact, relatively little privatization took place in the period immediately following the Likud’s rise to power in 1977, other than the telephone service, which was removed from the Communications Ministry in 1984 to form Bezeq, a new governmental company (sold to private investors in 2005); and the creation of the Postal Authority within the Communications Ministry in 1987 (and subsequent founding of the Israel Post Ltd, a governmental company, in 2006). Since 1985, however, the unity government at that time adopted an active privatization policy as part of its economic stabilization program, mainly the transfer of government corporations to the private sector (Katz, 1997: 165–82; Ekstein et al., 1998; Shalev, 2004: 20–5). Amendment of the Government Corporations Law in 1993, and the subsequent creation of the Ministers Committee for Privatization, provided additional impetus to this trend. Under Benjamin Netanyahu as Finance Minister (2003–05), privatization was emphasized ideologically and not only was it applied to government corporations, but outright attempts were made to curtail the welfare state and the public sector.

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The privatization of government corporations As evident in Figure 11.1, there were 155 government corporations (including subsidiaries) in Israel in the late 1960s. This rose to 159 in the 1980s, and fell dramatically to 94 in 2007. The privatization process encompasses not only the transfer of government corporations to the private sector, but also the reorganization of ministerial departments and units as statutory authorities, government corporations, or private corporations. Several government corporations were reorganized as nonprofits (such as the Bezalel Academy of Art and Design, in 1987). Another exceptional case was the gradual sale of Israel’s banks, which had been nationalized in the wake of the bank shares crisis of 1983.4 The privatization of government corporations generated revolutionary structural changes throughout the public sector in Israel, as did the decline of public ownership in the industrial sector (including the Histadrut and the kibbutzim), which dropped over the course of two decades from 34 to just 18 per cent (Zeira, 2004: 55–6). The list of companies that remained under government control reveals that the government did not divorce itself entirely from even one of the key areas presented in Table 2.1 (chapter two).5 Privatization and how it is carried out are influenced above all by political considerations, and then by economic ones. For this reason, many big government corporations were not privatized, and the ten largest still hold about 80 per cent of the total assets and 90 per cent of the sales of

180 160 140 120 100

83 104

80

38

60 40 20

76 56

51

0 1969

1989

2007

Commercial government corporations Non-commercial government corporations

Figure 11.1 Number of government-owned corporations (1969–2007). Source: Israel, Government Corporations Authority (2007) Report of Government Corporations for 2007. [Online http://www.gcagov.il/GCA/HomePage/UpperNevigationBar/ CompaniesStatement (accessed 12 January 2010)] (in Hebrew).

Public management reforms 155 all government companies (Katz, 1997: 185, 215), principally in military products and services, energy and oil prospecting, electricity, and water. Political considerations are legitimate – such as the desire to preserve the character of the service as a public good – but often the motivation is the self-interest of ministers and board members to retain their power. Certain government corporations have extremely powerful labor unions, such as the Israel Electric Corporation, which remains a government-held company to this day, despite the fact that several governments agreed to partially privatize it (Katz, 1997: 225–39). The Government Corporations Law states that the founding of new governmental corporations or the sale of existing ones is the sole prerogative of the government. The Knesset is not part of the process and its Finance Committee is informed, but is not required to ratify these decisions. There is general consensus that the broad scope of government involvement in economic affairs since the founding of Israel, and the misuse of mechanisms such as government corporations (and statutory authorities), raise the need for reduction and reform. However, in addition to the objective technical difficulties of carrying this out, past cases of privatization have been rife with random or controversial decisions – cronyism, lack of real competition, privatization intended primarily to harm the labor union, and the replacement of governmental with private centralization. Most of the privatized government corporations in Israel were sold to private investors, rather than through the stock market, and in several cases a public monopoly was converted into a private one. Certain privatizations came about without proper legislation, while others seem to be the outcome of a desire to privatize at any cost, regardless of the consequences. Some privatizations carried out in the name of efficiency relinquished functions the state ought to retain, not just for security reasons, but in order to preserve its authority and responsibility, and to ensure fairness and human rights (Wilson, 1989: 349). The recent attempt to privatize the prison service is a case in point. The attempt to privatize prisons6 Israeli prisons operate within the framework of the civil service; their correctional officers, much like police officers, are representatives of the state who operate under the jurisdiction of the Minister for Internal Security. In 2004, the Finance Ministry initiated an amendment to the law that would allow for establishment of an experimental private prison. Although the Knesset procedures surrounding this legislation were far from thorough and transparent – similar to the decision-making process described in the preceding chapter – the bill passed. ALA Management and Operations, controlled by diamond magnate Lev Leviev, won the tender and was awarded the contract for construction and operation of the first private prison in Israel. The principal arguments cited by advocates of prison privatization were efficiency and the saving of public resources. It was also claimed that private prisons would offer some relief from the extreme overcrowding in Israel’s prisons: while the average area per inmate in a public Israeli prison is 3.4 square meters, ALA’s private prison planned to provide 5.28 square meters

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per inmate. As to the fear of violations of prisoners’ rights, the promoters claimed to the High Court of Justice that the “supervisory environment” they would provide for the private corrections officers would exceed the supervision in public prisons, preventing the violation of prisoner rights. They further claimed that Israel should follow the examples of democratic nations such as Britain, Australia, New Zealand, and Canada, all of which had privatized some prisons. This approach distinguishes between the authority to punish, which remains with the state courts, and the “management of punishment” carried out by prisons, which may be privatized. In 2005, there were approximately 200 privatized prisons worldwide, nearly 80 per cent of these in the USA (Ben-David and Truan, 2006). Opponents pointed out that very few countries had introduced full privatization of prisons, such as what was proposed in Israel, a model based primarily on the prison system in the state of Texas (ALA had consulted with Emerald, a firm that operates five incarceration facilities there). The opponents also argued that, even though this model had been implemented in other countries, it represented a conceptual misunderstanding of the responsibilities of the state by advocates of a market economy. They noted that several governments, including the USA, were re-evaluating their prison privatization policies (Culp, 2005). In New Zealand, for example, the Parliament decreed in 2004 that prison privatization had failed, and passed legislation preventing future attempts; in Australia, the women’s prison of Victoria was renationalized four years after being privatized. Moreover, as noted, most countries have refrained from total privatization, which would entail financing, planning, construction, and management, preferring partially privatized, outsourced services such as medical care, catering, maintenance, security, etc., with the state retaining all correctional authority having to do with guard duty or punishment of the inmates. Opponents further contend that even staunch supporters of privatization ought to recognize its inapplicability to certain fields, and that responsibility for the prison system must be prevented from passing into the private sector. The state must retain exclusive responsibility, even if public service is more expensive and less efficient. Incidentally, it has yet to be proven that private prisons are more cost-effective in the long run, when precise calculations of the regulation costs are included (Pratt and Maahs, 1999). Incarceration of prisoners constitutes a unique public service, with deterrence as its primary objective; when deterrence fails, the system implements courtordered penalties; and when offenders are imprisoned, the correctional institutions are responsible for rehabilitation. The objective of business-motivated, privately owned prisons, on the other hand, is the opposite – they have an interest in longterm, full-capacity incarceration. Moreover, privatization is based on the premise that the market is more effective than the government due to competition. The privatization of prisons does not create competition, however, unless competition is instituted between public and private prisons, or unless the “consumers” – the prisoners themselves – are permitted to choose (and pay?) among various private prisons. In short, the entire concept is flawed, as prisoners are not the sole consumers, and the needs of society at large as well as human and civil rights must be taken into account. As to prisoners’ rights, these are not guaranteed in private

Public management reforms 157 prisons. With higher profits in mind, contracting companies might hire lowquality staff, cut back on food, or increase the number of prisoners per cell,7 requiring the state to maintain high-cost, full-time supervisory staff to prevent violations. In other words, adequate supervision denotes increased regulation – which proponents of privatization are likely to oppose. While instrumental arguments against privatizing prisons are important, they are secondary. More to the point is that the dark days of authoritarian-style prisons are long gone. Incarceration, even in neoliberal states, is the responsibility of the state, and its transfer to the private sector poses a threat to the very tenets of democracy. In extension of the logic behind privatizing prisons, the state could revert to feudal practices and hire private tax collectors – if they promise to reduce tax evasion. Similarly, “private courts” could ease the backlog of court cases – shortening due process and expediting those convicted to privatized prisons. Regulating profit interests in these cases would be virtually impossible, because contracts stipulating how the judges, tax collectors, or correctional officers are expected to perform and use professional judgment are inconceivable. Furthermore, privatization of this sort opens the door to corruption, as the government creates private, for-profit entities with a financial interest in the penal system. Indeed, scholars have noted the emergence of a private prison lobby that promotes deregulation, reduced supervision, and longer prison terms (Timor, 2006). The sole consolation is that a lobby like this would probably oppose capital punishment. The possibility of a “prison industry” became a reality in one region of the USA, in the so-called “kids for cash” scandal, which erupted in 2008. The story began in 2002 in Luzerne County, Pennsylvania, when two public detention facilities for juvenile offenders were shut down on the grounds that they were unsafe, and a contract was signed to send all juvenile offenders to two private facilities. Payment to the private prison operator was based on the number of juveniles incarcerated, and the authorities carefully monitored the financial accounts. Very soon, however, penalties for minor infractions became harsher, as offenders were being punished with incarceration rather than community service or a suspended sentence. Some youths were told to plead guilty or waive legal counsel in exchange for avoiding prison time, but these agreements were not kept by the court. Trials were hasty, sometimes lasting only two or three minutes, and were closed to the media to protect the identity of the minors. The two private facilities filled up with youth offenders, and the spillover were sent to prisons in nearby counties. Following an FBI investigation, two judges confessed to having received $2.6 million for their services from the prison authorities – a payment for each youth they had imprisoned.8 By the way, the state of Pennsylvania claimed that regulation had been in place. In November 2009, Israel’s High Court of Justice overturned the amendment to the law allowing for the privatization of prisons in Israel because of its disproportionate infringement of the rights of prisoners. The ruling, with eight of the expanded panel of nine justices in agreement, makes a clear statement against private prisons: The arrangements made in Amendment 28 lead to the transfer of the fundamental law-enforcement powers of the state – the power to incarcerate – which

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This ruling fortunately seems to close the door to the possible privatization of prisons in Israel. The prison system, as well as other essential services, must remain beyond privatization, thereby preventing the violation of basic constitutional rights and society’s collective goals. Reforms must clearly demarcate areas of governmental authority suitable for privatization, and those that should not be privatized, such as the state monopoly on the legitimate use of force. One of the most extreme sanctions the state has against the individual is imprisonment, and this should not be entrusted to private companies. *** The issue of privatization is not limited to the diminishing public sector and the sale of government-owned corporations. It includes the question of the boundaries of the institution of state, and how those boundaries have shifted in the twentyfirst century. For example, even patterns of interpersonal conflict resolution have undergone change as the modern state largely removed such conflict resolution from community institutions (the family head, the rabbi, or the sheikh) and transferred it to the courts. But because of the great burden on the courts, and the discomfort of solving such problems by formal litigation, civil disputes have begun to return to their previous settings of arbitration, compromise, and mediation. In any case, the only significant reform carried out in the Israeli civil service was privatization, which led to structural change in the public sector and downsizing of the civil service. All other efforts were only experiments that did not succeed, as described briefly below.

Attempts to reform the civil service9 In 1974, a group of Israeli scholars and practitioners published recommendations for improving Israel’s public administration (“Improving Governmental Administration,” 1974). More than 30 years later, these recommendations are sadly still relevant. Although many changes and improvements have been implemented, most of these were incidental and limited in scope. Since Israel’s founding, no comprehensive, planned, and systematic reform has taken place in its civil service. The broad goals of such reform would be as follows: •

to assist elected political leaders in policy design and decision making, including budget-related issues, through professional analysis, staff work, and a more organized and transparent decision-making process;

Public management reforms 159 • • • •

to enhance the ability to provide efficient and high-quality services to the public; to establish a framework for effective and well defined regulation; to establish cooperative mechanisms for coordinating the work of ministries, statutory authorities, and government corporations in contending with multi-faceted policy issues; to develop and instill an administrative culture based on professionalism, impartiality, and integrity aimed at restoring public trust in the civil service.

Before 1980, several attempts had been made to restructure the salary system in the civil service, improve the budgeting process, redefine the respective roles of central and local government, reduce the number of government ministries, and institute other reforms.10 Following the privatization initiatives and other changes, the government established the Kubersky Commission, cited previously in this book, to examine issues of reform in the public sector. The Kubersky Commission Report (Israel, 1989a) recommended a comprehensive reform of Israel’s public sector, which was unanimously endorsed by the Cabinet in 1990. Implementation of the Commission’s recommendations was delegated to the Civil Service Commissioner, and several committees were formed to execute them. However, no substantive reforms were carried out over the ensuing four years. The next, and actually the only, attempt to implement reforms in Israel’s civil service was a program known as “Change-Generating Steps,” introduced under Yitzhak Rabin’s premiership in 1994–96 (Galnoor et al., 1998). Although this reform originated within the civil service, it was discontinued by the subsequent government in 1996. Additional efforts originating from the Office of the Prime Minister had similar results, suggesting that these failures reflect more fundamental structural reasons.11 What have been the main obstacles to these reforms? Some specific causes include insufficient political will; the absence of public pressure; consistent and powerful resistance from the Finance Ministry; opposition from the unions (whose decline made them resistant to any change in the status of civil service employees); the inability to implement reform through legislation; and the inadequate power of the Civil Service Commission. In addition, a more general cause is the political instability and the frequent changes of government in Israel, which prevent the implementation of long-range public management reforms. The administrative system in other countries that experienced political upheavals, such as France’s Fourth Republic, maintained continuity until political stability was restored. In Israel, the interdependent nature of the political and administrative systems and the absence of a professionally autonomous civil service have led to a situation in which political instability also drags down the civil service.

Restructuring the civil service This book has looked at possibilities for reform in several areas pertaining to the civil service in Israel. The following proposal brings together the measures for comprehensive public management reform.12 Based on past failures, the crucial

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problem is not what has to be done (the substance is familiar from previous proposals and reports, as well as the experience of other countries), but how to do it and maintain ongoing support for effective reform. Core to this proposal is creation of a focal center with political and administrative power within the executive branch. This unit would be responsible for governmental public management, but would also have the authority to implement and maintain reform for the requisite duration – approximately ten years. The necessary legislation requires broad, multi-party endorsement to ensure long-term support. The following are the specific measures proposed in order to bring about reform. Legislation In extension of what was written in chapter three, a Basic Law: The Civil Service should be enacted for two purposes. First, it would constitutionally enshrine the civil service within the executive branch and create a cohesive infrastructure for its operation; second, based on the general principles set in the Basic Law, a new civil service law must be enacted to integrate all the existing laws and fill in the gaps. This law should also legislate the authority for carrying out the comprehensive reform. Structural changes The goal is to redefine the basic structure and ministerial responsibilities within the executive branch – in government ministries, statutory authorities, and government corporations. These reforms would include the following. • •

•

•

•

Limiting the number of government ministries to 15 by amending the Basic Law: The Government. Creating professional capacity for policymaking that will deal with regulation, supervision, and follow-up. Creating autonomous executive agencies within ministries that will provide direct service to the public, rather than privatizing governmental services. All other subsidiary units would be disbanded and integrated into the executive agencies under the authority of the ministers. Drastically reducing the number of statutory authorities (currently 45, with approximately 20,000 employees). Setting clear guidelines for creating new authorities with advanced management systems, including wage supervision and oversight, and ensuring the continued autonomy of these authorities. Placing the burden of proof for demonstrating the socioeconomic advantages of privatization upon the privatizer. Privatization will be selective and prudent – essential public goods will not be privatized. Application of transparent criteria that take into consideration state, social, and economic needs. Controlled transfer of functions and services to the private sector, local authorities, and civil organizations. Dissolution or merging of existing government corporations and their subsidiaries. Policies for control, coordination, and monitoring of senior salaries.

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•

Absolute depoliticization of appointments to management positions and boards of government corporations. Setting clear guidelines for regulation and deregulation, and creating a functional division of labor between regulators in the ministries and specific regulatory agencies.

Budgeting Thoroughgoing changes in the perceptions, processes, and tasks related to the budget process would include the following. • • • •

• • •

Ending the monopoly over the budgeting process held by the Budget Division of the Finance Ministry. Increasing transparency at all stages of the process, including advance publication of a user-friendly version of the budget proposal to encourage public discussion and media debate.13 Fostering extensive discussion in the government about alternative options to the socioeconomic policies embodied in the budget proposal. Increasing the professional contributions of the ministries to the budget process through their work plans and programs; creating commitment to outputs and outcomes, not just inputs, within the approved budget; preventing budget overruns by internal ministerial control over its own budget lines. Introducing an additional document to the line-item budget proposal that would analyze outputs and outcomes. Significantly changing the format of the parliamentary debate about the budget proposal and introducing control mechanisms over the budget. Abolishment of the Arrangements Law. Any new taxation will become part of the Budget Law proposal.

Delegation of authority •

•

Decentralizing the current structure and mode of operation, moving to a system of delegating authority from Finance Ministry divisions (the Budget Division, the Civil Service Commission, and the Accountant General) to other ministries, and from these ministries to executive agencies and the local authorities. Reducing the waste of resources by decentralizing, sounder ministerial planning, and increased incentives for creativity in policymaking and public management.

The civil service •

Reducing the governmental public sector based on a comprehensive policy to be implemented gradually over a ten-year period, and to include structural redefinitions, separation of functions, and a redefined privatization policy.

162 •

•

• • • •

Public management reforms Streamlining the civil service into a high-quality, professional body with no more than 30,000 employees – divisions will be eliminated or merged, ministries will be transformed into professional policy units, and services will be transferred to executive agencies (e.g. the governmental hospital system will become an executive agency). Redefining the Civil Service Commission from a supervisory body to the “management office” of the executive branch. New functions will include staff recruitment and development, upholding professional standards and ethics, and improving public services. The redesigned commission will encourage the adoption of advanced managerial methods, professional staff work, longrange budgetary and work plans, transition from control to monitoring, and management based on transparency, disclosure, and public accountability. Raising the wages of civil servants to attract more qualified staff; preparation of long-range remuneration policies; and institution of career tracks for promotion, retraining programs, and benefits plans. Enforcement of the Mandatory Tender Law; elimination of internal tenders and long-term “temporary” civil service appointments. Full compliance with the equal opportunity laws, including the advancement of women, Arab citizens, Ethiopian immigrants, and people with special needs. Implementing the public sector disciplinary recommendations proposed by the Kremnitzer Committee (Israel, 1998).

Senior civil servants • • • • •

Creating a professional, inter-ministerial corps of approximately 1000 positions comprising the three or four highest civil service grades, including the directors general and directors of the statutory authorities. To reduce turf issues, senior civil servants will be in the employ of the Civil Service Commission rather than the individual ministries. Instituting a Civil Service Academy for members of the corps, to be focused on policy design, advanced management techniques, and public ethics. Establishing training tracks for advancement, and continuing education programs. Employment of corps members by personal contracts, including compensation and benefits, with measures to protect them from arbitrary dismissal or intervention in hiring and promotion by the political echelon.

Political appointments • •

Through legislation, the entire civil service, including statutory authorities and government corporations, will be legally removed from the political arena, precluding all political appointments in these governmental organizations. A legal barrier will be created between political and administrative posts, ensuring that appointments will be based solely on professional qualifications.

Public management reforms 163 Employees will be hired by public tender and search committees to be supervised by an independent Appointments Committee. Supervision and control • •

• •

Clearly defined and transparent regulation policies (see “Structural Changes” above). Following the delegation of authority, increased internal supervision to ensure the transfer of responsibilities to the ministries. In tandem, increased postfactum evaluation mechanisms to be administered by external supervisory boards, which will also have the authority to impose sanctions if necessary. Enhanced supervision and control mechanisms operated by parliamentary committees. Legitimization for the positive watchdog functions exercised by civil organizations and the mass media.

Service to the public • • •

Instituting programs in all the government ministries to enhance the quality of services provided to the public by a change in orientation – from wrestling over input to indicators of citizens’ satisfaction. Placing quality control mechanisms in all units – employee compensation linked to service indicators, satisfaction surveys, decentralized service, and freely available online information. Introducing “citizen charters” throughout the public sector, including the local authorities, in all units that provide public services. These charters will describe all available services and provide detailed criteria for quality assessment (such as accessibility) and qualitative indicators (such as customer satisfaction indices).

Civil society organizations • •

The state will recognize the social, economic, and democratic contribution to society made by civil society organizations. Together with representatives of these organizations, the state will modify the supervisory and regulatory functions currently in place, and replace them with a coherent, consistent, and unified approach to all third sector organizations. Enhanced support will be based on fully transparent criteria (Israeli Center for Third Sector Research, 2003).

Local government Implementation of comprehensive reform based on a redefinition of the interrelationship between the two tiers of democracy in Israel – national and local. The reform will stipulate ways and means of delegating authority to the elected local authorities and increasing accountability of the local political and administrative

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echelons. The aim is to transform the local authority into a true partner and delegate to it relevant services now given centrally by the ministries. Administrative culture The measures for reform presented above should lead to the regeneration of an administrative culture in Israel, with an emphasis on the following elements. • •

• • • •

The development and internalization of a culture of ethics, based on the assumption that civil servants are honest unless proven otherwise, including efforts to enhance the public credibility of government employees. The development of screening mechanisms to identify qualified and conscientious civil servants and implement corruption-discouraging training programs. The goal is to dispense with rigid supervision and rely on the integrity of employees, so that the fight against corruption and the fostering of integrity will become part and parcel of the public service ethic. Replacement of the superfluous and wasteful culture of secrecy that prevails in the civil service and the ministries. Full implementation of the Freedom of Information Law. Replacement of the culture of improvisation with creative, analysis-based processes of policymaking and decision making. Efforts to renew citizens’ trust in the civil service as a basis for its legitimacy.

Laying the groundwork for reform The main prerequisite for implementing such reform is the formation of an agency within the executive branch that would have the power and authority to launch and sustain reform over the course of approximately ten years. Given Israel’s political situation, this entails establishment of a Public Management Department, preferably within the Office of the Prime Minister, and under the auspices of a special minister with extensive authority who operates simultaneously on two levels: • •

the minister will have authority over all elements associated with the civil service and the division of function between the central and local authorities; the minister will be in charge of implementing the reforms in the public sector.

Past failures have led to doubts regarding the feasibility of such broad reform. Following the Change-Generating Steps of 1996, “the heavily loaded civil service train has finally started to move, but the wheels are creaking and the going is slow. Once it stops, it will be very difficult to restart again” (Galnoor, 2003c). In retrospect, this prognosis has proven true, and the additional obstacle of an unstable political system in Israel has further diminished the prospects of

Public management reforms 165 implementing a long-range and broadly supported civil service reform. Thus a vicious circle has been created – an unstable political system leads to controversial political decisions causing frequent changes of ministers and directors general, which in turn contributes to lowered moral standards and diminished public trust in both politicians and administrators – which itself contributes to the decline in the political system’s governing capabilities. Implementation of a comprehensive reform is essential, for this is not an inconsequential matter. What is at stake here is not only the quality of services offered to Israeli citizens, but the contribution of the civil service to policymaking at all levels – social, economic, and defense-related.

Notes

1

Civil service: a comparative perspective 1 According to Raphaeli (1970: 261–4), civil servants act as gatekeepers for public demands, sometimes allowing them through and often blocking them, thereby performing a political function. 2 The term “civil service” first appeared during British rule over India, and later in Britain (in 1854) to refer to civilian (not military or judicial) government employees (Galnoor, 2001: 1886–91). 3 For example, in keeping with the Council for Higher Education Law (1958), the institutions of higher learning in Israel are all incorporated – some as public service companies and others as nonprofits – making them hard to categorize. 4 Another option is to divide the organizations into the categories of private, for-profit organizations versus all the nonprofits. This is an important distinction, but it groups government ministries together with nonprofits that are sustained by the sale of their services. 5 A subsidiary unit is a unit within a government ministry that is semi-independent in matters of budget, human resources, accounting, legal matters, and more. The unit head usually reports directly to the minister. Governmental hospitals are special subsidiary units within the Ministry of Health, with even greater administrative autonomy. 6 On the state as a unity “analogous to a living organism with its own laws of survival, distinct ‘personality’, self-consciousness, and even separate will,” see Galnoor, 1995.

2

The public sector in Israel broadly defined 1 In a survey conducted in the late 1970s, Knesset Members ranked government ministries according to their perceived influence. Ministries ranked most influential were the Prime Minister’s Office, Defense, Finance, Foreign Affairs, and Education. Those perceived as having moderate influence were the Ministries of Health, Housing, Industry, Labor and Welfare, and Justice. Ranked least influential were the Ministries of Religious Affairs, Energy, Communications, Police, Transportation, Tourism, Science, Economics and Planning, Agriculture, and Immigrant Absorption (Mahler, 1981). 2 The laws establishing authorities generally empower the ministers to appoint the directors without publicizing a job vacancy. Much of the criticism about inappropriate political appointments is in reference to these appointments. 3 Established by the Council for Higher Education Law (1958). Although the Minister of Education is formally the chair, the Council is an independent entity responsible for all matters related to higher education in Israel (Israel, Council for Higher Education, 2006). 4 On government corporations in Israel, see Aharoni (1979); Katz (1997); Ekstein et al. (1998).

Notes

167

5 We do not include the judges of secular or religious courts in Israel, who are not part of the executive branch, but are accountable to either the Chief Justice of the Supreme Court, the President of the Rabbinical High Court, the head of the Shari’a Appeals Court, or the head of the Druze Court of Appeal. These court employees are civil servants in all respects and report to the Ministry of Justice. 6 According to a bill passed in 2010, the Bank of Israel budget would need approval from the Board of Trustees of the Bank. This is the result of a public outcry following exposure of the excessive salaries paid for years to Bank of Israel employees. See Israel, State Comptroller (2006a). 7 Council for Higher Education Law (1958); National Health Insurance Law (1994). 8 For example, the National He alth Insurance Law (1994) states, “The national health insurance as defined by this law shall be based on the principles of justice, equality, and mutual aid” (para. 1) and “every resident is entitled to health services” (para. 3a). 9 Even if we add to Table 2.3 all those in the military and other security services, as well as wage-earners in nonprofits (approximately a quarter of a million people), the total will still not reach half the wage-earners in the labor force. 3

The legal framework of the civil service

1 In late 1947 at the request of the Situation Committee, Edwin Samuel prepared one of the first proposals for structuring government ministries (Fein, 2005: 47–8). 2 For surveys from that period that examined public attitudes toward governmental bureaucracy, see Blander (2004). 3 In the application forms for civil service jobs in the 1950s, candidates were required to give details about their membership in youth movements, the Histadrut, and health funds – details that made it fairly easy to deduce party affiliation (Fein, 2005: 253). 4 David Arian spoke about this with restraint in 1955: “In comparison with the great achievements of the state of Israel in the first five years of its existence…the setting up and organization of the State services have not progressed commensurately, and there are even aspects in which we are further from the goal than at the time of the establishment of the State” (Arian, 1955: 376). 5 On the French bureaucracy during the Fourth Republic, see Ridley and Blondel (1964); on states where the bureaucracy dominates the political system, see Heady (1979: 283–331). 6 The constitutions of Sweden, the Netherlands, Denmark, Finland, Italy, and Spain contain passages about the civil service and public administration (Wilson, 1989: 376–77). The new constitution of South Africa deals with it in detail. 7 On the current validity of the law and its connection to the Freedom of Information Law, see Attorney General Directive No. 3.1004 (1 September 2002). 8 Section 15a, which stipulates appropriate representation of women and men, disabled people, and Arab citizens (including Druze and Circassians) among civil service employees. 9 This law applies to approximately 200,000 public servants, including employees of other statutory authorities, and teachers who are not employees of the Ministry of Education. 10 There are also bylaws issued by the Accountant General of the Finance Ministry on matters related to the management of money and equipment in the civil service. 11 The honor of being the first to grasp the importance of setting budget principles goes to the first State Comptroller, Dr Siegfried Moses (Israel, State Comptroller, 1961: 57–72). 12 From 1950 to 2000, 559 suspected cases of bribery were investigated against elected officials and public servants (110 of them ending in a conviction), and 100 cases of receipt of favors (ending in nine convictions). Data from Matzkin (2006: 80–1). 13 On the attempt to legislate a Basic Law: Civil Service in Israel, see Galnoor (2003c: 76; 478–9).

168 4

Notes

The Functioning of The Israeli Civil Service 1 New immigrants to Israel receive an “absorption grant,” intended to help the immigrant during the initial period of adjustment. The support is given during the first period, and includes rent for the first 12 months in Israel, and Hebrew study in special classes. In the past, the absorption grant was given to immigrants from developing countries, but since 2002, every new immigrant is entitled to it. 2 Detailed documentation of relations between government ministries and representatives of Israeli settlers in the Occupied Territories appears in a report by Talia Sasson (2005); see chapter ten. 3 For Canada, see the publications of the Institute for Citizen-Centred Service (www. iccs-isac.org). 4 The Kubersky Commission (the Professional Public Committee for Comprehensive Examination of the Civil Service and Entities Supported by the State Budget) was established in June 1986 by then Prime Minister Shimon Peres and Finance Minister Moshe Nissim. The letter of appointment, which lists 11 subjects for investigation, states that the Commission was created “to improve services to the citizen, contribute to promoting the goals of the state of Israel, and improve the quality of the civil service.” The Commission’s report, presented to Prime Minister Yitzhak Shamir and Finance Minister Shimon Peres in June 1989, was discussed in two meetings of the Unity Government in January 1990 and unanimously adopted (Israel, 1989a: 5–12).

5

Regulation 1 The American journal Regulation has appeared since 1977, primarily promoting the policies of deregulation; also see Majone (1990). The journal Regulation & Governance began appearing in early 2007 to address issues of governance and regulation. 2 Enron, an American energy corporation based in Houston, Texas, had over 20,000 employees and reported turnover of more than $111 billion. In late 2001, the accountant’s corporate reports were found to be fraudulent at an unprecedented scale. 3 The Electricity Market Law (1996) was intended “to regulate the activity of the electricity market for the benefit of the public, while ensuring the reliability, accessibility, quality, and efficiency, and creating conditions for competition and reducing costs.” 4 For a succinct summary of the arguments against regulation, see Niskanen (2002: 4–5); for support of regulation, see Dunleavy (1991).

6

Civil servants 1 This economic plan, designed to slash inflation (then raging at 400 per cent) and to reduce the budget deficit, was set in motion in the summer of 1985. The main tools were lowering wages, prices, and credit, and stabilizing the foreign currency exchange rate. The main goal was achieved: inflation gradually declined to 20 per cent annually, and was in single digits a decade later. This program was also considered a milestone in the transition from social-democratic policies to a liberal market economy. 2 The system of direct elections was adopted in 1992 and used in the three elections between 1996 and early 2003. In this system, voters submitted two ballots, one for prime minister and the other for a party. Having two ballots allowed citizens to vote for a persona (the prime minister) and an ideology or special interest (the Knesset), making it possible for citizens to split their vote. For more about this, see Kenig et al. (2005). 3 In the field of wages, this meant conducting negotiations as a zero-sum game – in win–lose terms – with each side failing to consider the needs of the other.

Notes 7

169

The senior echelons 1 Interestingly, since the 1980s it has no longer been acceptable to say that political or personal ties with the minister were behind the appointment, and the number of directors general who admitted this declined sharply. The reason seems to be the frequent changes of government since 1977 (Frankenburg, 1999: 138). 2 In subsequent amendments, Article 15A was expanded as follows: “Among employees of the Civil Service at all grades and professions, in every ministry and subsidiary unit, expression shall be given, taking the circumstances into consideration, to the appropriate representation of members of both genders, people with disabilities, Arab members of the population, including Druze, Circassians, and anyone who was, or whose parents were, born in Ethiopia.”

8

The budget process 1 The expenditures on the settlements located in the areas occupied in 1967 are a good example of both obscure line-items in the state budget and the channeling of some outlays through other organizations. 2 The Supreme Court did not take this position. Petitions to Israel’s High Court of Justice to revoke the Arrangements Law, or some portions of it, were rejected on the grounds of nonintervention in the legislative process. See, for example, HCJ 7116/97, Histadrut Federation of Labor v. The Knesset. 3 For issues included in the Arrangements Law in 1985–99, see Nachmias and Klein (1999: 75–94). 4 The Budget Division, for example, bears greater responsibility than the relevant ministries for the ongoing failure to develop the water economy since completion of the National Water Carrier in 1964 (Menachem, 2002). A similar debate is currently taking place about the Budget Division’s responsibility for Israel not having sufficiently developed a railway transit system. 5 As Yossi Bachar, former director general of the Finance Ministry, noted, “I too think the Finance Ministry is too powerful. They saddle us with the whole thing” (Yediot Aharonot, 5 January 2007). That remark could have been phrased more accurately as, “We led them to saddle us with the whole thing.” 6 For an approach that advocates participatory budgeting successfully applied in local government, see www.participatorybudgeting.org.uk.

9

Oversight and control of the civil service 1 For a comprehensive global comparison that includes Israel, see Dery and Naor (1997: 70). 2 It is left to the discretion of the Comptroller and the Knesset Finance Committee which bodies to audit among those the state subsidizes or has a role in managing. 3 For a succinct review of these, see Friedberg (1998). 4 This power is derived from the Knesset and Local Authorities Election (Financing, Spending Limitations, and Control) Law (1969) (Tsur, 1990: 323–42). 5 The first was a chain of events surrounding the conviction of Izzat Nafsu, an Israeli– Circassian intelligence officer, on charges of treason and collaborating with the enemy. After Nafsu spent seven and a half years in prison, evidence emerged that the conviction had been based on false evidence and perjury by senior GSS officers, including Ginossar, and Nafsu was exonerated of all charges. The second was the “Bus #300 affair” in April 1984: Israeli troops stormed a bus that had been hijacked by four Palestinian terrorists, killing two and capturing two. The New York Times reported that the two captured terrorists were later executed by Israeli security officers, but Israel denied that any terrorists had left the bus alive. A photograph published several days later in an Israeli newspaper

170

6 7 8 9

Notes

showed one of the terrorists being led away from the scene. Through a commission of inquiry, it became clear that the GSS, including Ginossar, had given false information. Great efforts were made to keep the matter from the public, including firing the Attorney General and obtaining a presidential pardon for the head of the GSS and his three deputies, including Ginossar, even before an indictment was filed against them. For a discussion see Hofnung (1997: 220–2); Gavison et al. (2000: 145–9, 208–14). In the early days of the state, the media rarely served as a monitoring agency, except for exceptional newspapers not beholden to political parties such as Ha’Olam HaZeh (Galnoor, 1985: 172, 230). See, for example, www.tluna.co.il. On institution of the Quality Service Charter in the Israeli civil service, inspired by the Citizens’ Charter in Britain, see Galnoor et al. (1998: 393–420). In a survey conducted by the Ministry of Transportation in 2003, it was found that over 90 per cent of Israeli drivers and the passengers beside them wear safety belts (Ovadia, 2003).

10 The culture of administration in Israel 1 For a similar approach, see Zamir (1990: 21); for a different one, see Dery (1993). 2 Since the 1980s, the British civil service is open to outside appointments, some even political (Campbell and Wilson, 1995). 3 According to Shevach Weiss (1973: 98), until 1971 about a quarter of ministers came from public sector executive positions. 4 Leonard Fein (1967: 189) writes, “In time, certain ministries became hardly distinguishable from party cells – especially the several ministries traditionally controlled by the NRP and Ahduth Avodah.” Also see Nachmias and Rosenbloom (1978: 5); for a general discussion, see Caiden (1970). 5 For direct testimony of how the two major parties agreed to political appointments for the two levels below director general, see an interview with Moshe Shahal in Ha’aretz, 28 January 1985. 6 HCJ 154/98, Histadrut Labor Federation v. State of Israel et al., PD 52(5), p. 111 (“the Einstein case”); Government Decision, Official Publication 4826, p. 1459, 1999 and Amended Decision, Official Publication 5126, p. 400, 2002. 7 HCJ 6949/97 Knesset Member Poraz v. Government of Israel et al. Also see Israel, State Comptroller, 1998: 373. 8 See, for example, HCJ 144/98, Histadrut Labor Federation v. State of Israel, PD 52(5), 111, 122; and HCJ 932/99, Movement for Quality Government v. Chair of the Appointments Committee et al., PD 53(3), 769, 784. 9 HCJ 454/94, Israel Women’s Network v. Government of Israel, PD 48(5), 501. 10 HCJ 313/67 Axelrod et al. v. Minister of the Interior, PD 22(1), 80, 85. 11 HCJ 606/86 Muhammad Abdul Hai v. Director General, Ministry of Education, PD 41(1) 795. 12 HCJ 313/67 Axelrod et al. v. Minister of the Interior; HCJ 703/87 Yaakov Crown v. Civil Service Commissioner et al.; HCJ 4586/90 Dekel v. Minister of Finance; HCJ 4446/96 Movement for Quality Government and Prof. Itzhak Galnoor v. Government of Israel; HCJ 154/98 Histadrut Labor Federation v. State of Israel; HCJ 7428/98 Jam’ah Salam et al. v. Minister of the Interior; HCJ 932/99 Movement for Quality Government v. Chair of the Appointments Committee; Administrative Appeal (Tel Aviv-Jaffa) 2171/05 Ziyon Ashwal et al. v. Minister of the Interior et al. The State Comptroller reports were as follows: Annual Report 39, 1989; Annual Report 41, 1991; Annual Report 43, 1993; Annual Report 47, 1997; and Annual Report 52A, 2001. 13 Civil Service Commission, 1995. Despite Prime Minister Rabin’s initial inclination to adopt the US model of federal governance and expand political appointments to the entire senior echelon of the Israeli civil service, he was persuaded to establish this

Notes

14 15

16 17 18 19 20

21

22 23

171

committee to make recommendations to the government about political appointments, and ultimately supported its conclusions. HCJ 4446/96 Movement for Quality Government and Prof. Itzhak Galnoor v. Government of Israel, Prime Minister Benjamin Netanyahu et al., Takdin-Elyon 96(3), 1996. This bill, proposed by Knesset members Gideon Sa’ar, Gilad Erdan, and Gila Gamliel, earned the nickname “the Jobs Law”. See “Civil Service (Appointments) Bill (Amendment – Positions of Trust) (2004)” P/2986, 13 December 2004. The bill passed its preliminary reading in July 2005 in the Sixteenth Knesset, and thereafter was shelved. Several proposals were made in 2009 to make illegal appointments a criminal offence. See Lederman et al., 2005: 9, who view these correlations with caution, as they may also be biased. A state bureaucrat convicted of bribery in the former Soviet Union could face execution: in 1982, the Deputy Minister for Fishing was executed for bribe-taking (Ball and Peters, 2000: 232). For a more balanced analysis, see Levi-Faur (2001: 260). The “Row of Volunteers” was a group of young academics who volunteered to educate new immigrants. Over time, some members of the group also began to look at the work ethic and to fight corruption and bureaucracy. In 1954–57 they were involved in several legal suits against a deputy minister and a senior police officer. The weekly magazine Ha’Olam HaZeh, edited by Uri Avnery and Shalom Cohen, became well known in the 1950s, and continued to appear for another 40 years, until 1993. Ha’Olam HaZeh was an opposition publication, which mounted scathing political attacks while boosting circulation by the techniques of yellow journalism – sensationalist revelations, sex scandals, gossip, and nude pictures – rare in Israel in those early years. It took a highly critical view of the establishment, and of Mapai politicians in particular. In 1969, a decision was made to construct fortifications along the Suez Canal, called the Bar-Lev Line after the IDF Chief of Staff Haim Bar-Lev. Because of the urgency, it was said, no tenders were issued for the contractors who built it. Avraham Ofer: in 1976, suspicions surfaced that Ofer, then Housing Minister, had taken bribes and engaged in corrupt activities while heading the Shikun Ovdim Housing Company several years earlier. Ofer’s appeal to Attorney General Aharon Barak to close the case was denied, and Ofer took his own life several days later. Legal proceedings were discontinued. Yaakov Levinson, CEO of Bank Hapoalim, committed suicide in 1984 in the wake of investigations about financial irregularities during the period when he served as bank chair. Joshua Bension was convicted of stealing $47 million from the Israel–British Bank, which he served as CEO. Sentenced to 12 years in prison, Bension served only two after being pardoned by Israeli President Ephraim Katzir on the grounds of precarious health. Asher Yadlin of the Labor Movement held very senior positions in the public sector and was the leading candidate for Governor of the Bank of Israel in 1976. Two days before announcement of his appointment, Yadlin was arrested and later convicted by his own admission of taking bribes and favors. Sentenced to five years in prison, Yadlin was released in 1981 and published Testimony, arguing that he had fallen victim to a corrupt system that sacrificed him to save itself. Michael Tzur, CEO of The Israel Corp., was convicted in 1974 of fraud and bribery – taking advantage of his position and professional connections with various financial bodies, including the International Credit Bank in Geneva. He was sentenced to 15 years in prison.

172

24 25 26

27 28 29 30 31 32 33

34

35

Notes

Leah Rabin: in 1977, Ha’aretz reported that the wife of the Prime Minister had held a foreign currency account in the USA from the period when Yitzhak Rabin had been Israel’s ambassador there, in contravention of the foreign currency regulations then in place. Aharon Barak, Attorney General, opposed a fine and announced his intention of putting her on trial. Yitzhak Rabin took leave of his post (he then headed a transition government), and Shimon Peres led the Labor Alignment list into the next election in 1977. Rafael Levi, Jerusalem District Inspector in the Ministry of the Interior, was convicted in 1987 of bribery and graft. The Supreme Court ratified the sentence – three and a half years in prison (HCJ, Criminal Appeal 355/88 Rafael Levi v. State of Israel, PD 43). In Britain, the Propriety and Ethics team advises on a range of issues related to standards of conduct for the civil service. See www.cabinetoffice.gov.uk/propriety_and_ethics. Transparency International, www.transparency.org/policy_research/surveys_indices/ cpi/2007/regional_highlights_factsheets. In the example of Enron, the American energy conglomerate, corruption was manifest not just in concealing information from shareholders and the tax authorities, but also in making contributions to the two political parties and both presidential candidates to ensure the long-term company interests regardless of who was elected (see Kelman, 1981; Barzelay, 1992; Behn, 2000; Sparrow, 2000; Skrzycky, 2003; Levi-Faur, 2006: 363–6). After revelations in late 2006 about senior police and customs officials, the ranking of these institutions would presumably also decline. On the link between decentralized anti-corruption mechanisms (as in Israel), funding, and results, see Maor (2004). Retired Judge Amnon Strashnov wrote in Ha’aretz (29 December 2005), “Politics is a dirty, power-driven business with a pinch of moral decadence. I guess it’s built in.” To this can be added the centralized ownership of the media, and also the information that 18 families in Israel control half the private-sector product (Goldstein, 2006). For a similar conclusion, see Lederman et al., 2005: 27. This is a matter in dispute, with marked differences among countries (Rose-Ackerman, 2000). This description refers primarily to new initiatives. The portrayal of bypassing the political echelon creates an exaggerated impression of an omnipotent bureaucracy, which is not usually the case, as explained in the discussion of political appointments. Real confrontation is unusual, and happens only when there is a strong opponent on the inside, as in the decision to halt development of the Lavi aircraft – an Israeli attempt to manufacture a new and better combat plane that would be less expensive. The Ministers’ Committee for Security Affairs approved the project in early 1980. In August 1986, after more than seven years of development, the government voted by a slim majority to cancel it because of soaring costs and the fact that Israel could not finance its manufacture without US aid – a prohibited use of foreign aid by the Americans. In addition, the USA objected to Israel’s manufacturing an aircraft that would compete with its own. The plan was to dig a canal between the Mediterranean and the Dead Sea, exploiting the altitude differences to generate hydraulic power. In March 1981, the government decided to adopt the proposal, confirming that the project was sound in engineering and economically feasible. To finance the project, Israel Bonds raised $100 million. Questions of economic feasibility continued to come up, however, and the project was finally abandoned in 1985 on the grounds of exorbitant costs. In 1994, after Israel signed a peace treaty with Jordan, a new version of the idea was proposed: a canal from the Red Sea to the Dead Sea – to generate electricity, prevent the drying up of the Dead Sea, and desalinate water. This plan is still under review.

Notes

173

11 Public management reforms 1 This section is based on the policy statement “The Responsibilities of the State and the Limits of Privatization” produced by a research group under my direction at the Chazan Center for Social Justice in the Van Leer Jerusalem Institute, 2007 (Hebrew). 2 Much has been written in the past about the contribution of the kibbutz movement to Israeli society and economy (e.g. Rosner, 1996; Lanir, 2004), but not enough has appeared in recent years. Presumably more balanced retrospective assessments will appear as the crisis in the kibbutz passes. 3 Data from the 1960s are from Israel, Central Bureau of Statistics (1976: 105). There are no hard data from 2000, but the estimate of the Condominium Owners’ Association is of fewer than 50 per cent of the families. 4 Between 1977 and 1983, Israeli banks artificially manipulated their share values relative to the US dollar and inflation rates by purchasing them on the stock market. These so called “adjustments” created substantial gaps between share prices and their real market value, and eventually brought Israel’s four largest banks to the brink of bankruptcy. Forcing the banks to cease this manipulation engendered a severe economic crisis, leading to nationalization of the banks. A state commission of inquiry (the Beisky Commission) investigated the affair. Interestingly, when the financial crisis affected banks globally in 2007–08, Israeli banks – which had learned the lesson 25 years earlier – were relatively immune. 5 Security, construction, housing, development, energy and oil exploration, agriculture, electricity, water, continuing education funds, transportation, communication, tourism, industry and trade. 6 See Galnoor (2006); Eretz Aheret, April–May 2006; Wasserman (2006); for a historical study, see Freely (1991). 7 For prisoners’ rights litigation in North America, see www.privateci.org. 8 The judges later retracted their confession when additional, more severe charges were added to those of fraud and tax evasion; their trial is still pending (Ecenbarger, 2009). 9 This overview is based on Dery and Naor (1997: 154–66); Galnoor et al. (1998); Kfir and Reuveni (1998a); Nachmias and Gantz (2005). 10 On wages, see chapter six; on the budget, see chapter eight; and on the local authority, see Israel (1981). 11 For example, the “Reform Unit,” created in the Office of the Prime Minister under Ehud Barak (1999–2001), failed to leave its mark. 12 Galnoor, I. (1996–2006) Creating Effective Public Management in Israel, memorandum submitted (with minor changes) to Prime Ministers Benjamin Netanyahu in 1996, Ehud Barak in 1999, Ariel Sharon in 2001, and Ehud Olmert in 2006 (Hebrew). 13 See Forum of Social Organizations, “Proposals for Reform in the Budgeting Process: Advancing Social Goals, Transparency, and Accessible Government,” submitted to the President’s Committee for the Examination of the Governance Structure in Israel, May 2006. For an approach that advocates participatory budgeting successfully applied in local government, see www.participatorybudgeting.org.uk.

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Index

accountability 7, 9, 10, 12, 111–12; see also oversight Accountant General 109, 118, 161 “actionism” 46, 138 Adalah 112 Administrative Affairs Courts Law (2000) 41 administrative culture: decision-making process 144–8; overview 113; public service ethic 128–9; public trust 142–3; reforms 164; see also appointments administrative law courts 39–41 Administrative Procedures Amendment (Decisions and Reasoning) (1958) 31, 38 administrative tribunals 39–41 Administrative Tribunals Law (1992) 40–1 affirmative action 78–82 African citizens 74t, 78, 82 Aharoni, Yair 129 ALA Management and Operations 155–6 Anonymity: of civil servants Appleby, Paul 110 appointments: civil service 121–2; government corporations 123; statutory authorities 122–3; see also political appointments Appointments Committee 118–19 Arab citizens 50, 52, 112, 143 Arab employees, in the civil service 80–2, 81t; see also affirmative action Arian, David 167n4 Arnon, Ya’akov 91 Arrangements Law in the State Economy (1985) 36–7, 90–1 Asian citizens 74t, 78, 82 Attorney General 76, 100, 109 Audit Law 37–8 audits 100, 110–11

Australian prisons, privatization 156 authorities: see statutory authorities Authority for Public Services – Electricity 59 Bachar, Yossi 169n5 Bank of Israel 19, 59 banks 154; see also stocks crisis Bar-Lev Line 130 Bar-On–Hebron affair 139–40, 141 Barak, Aharon Barnard, Chester 113 Basic Law: Civil Service 41–2, 160; Government 14, 30; Human Dignity and Liberty 157–8; Knesset and civil servants 32; State Comptroller 99; State Economy 36, 88, 89 Begin, Menachem 117–18 Beisky Commission 100, 104 Ben-Porat, Miriam 102, 105 Bracha, Baruch 98 Bribe Payers Index 131–3 Britain: civil service 1–2; mandate on Palestine; political appointments 114–15, 116; regulation 57 Budget Division 76, 91–4, 109, 161 Budget Principles Law (1985) 36–7, 44, 88 budgets: Arrangements Law 90–1; budgeting process 88–90; budgeting process reforms 94–6; expenditure 84f; overview 83–4; a political tool 84–5, 95–6; principles 85–8; reforms 161; revenues 84f; taxation methods 85t bureaucratic state 2 business licenses 141 Caiden, Gerald 144 Candidate Search Committee 119–20

Index centralization 45 Change-Generating Steps, see also civil service reform 125, 159, 164 citizen charters 163 Civil Administration in the Occupied Territories 26 civil rights civil servants: diversity 78–82; education and training 69–71; employees 24t; population and employees 25t; professional level employees 70f; profiles 63–4, 64t; recruitment and promotion 64–6, 78–82; senior civil servants 72–4; wages 35, 66–9, 66t, 69t; see also senior civil servants civil service: appointment to 121–2; background 1–2, 43; changes 8–9; directors general 74–8; external control 98–108; features 2; functions 4–8, 5t; growth 25t; inception 27–30; internal control 108–11; legal framework 31–4; organizational framework 7–8; other sectors and 6–7; patterns of behaviour 45–8; public accountability 111–12; public trust 142–3; recruitment and promotion 125; reforms 158–9, 161–3; representation 82; restructuring 159–61; scope of activity 44; sector boundaries 48–50; service levels 50–4; size of 23–6 Civil Service Academy 162 Civil Service (Appointments) Law (1959): Civil Service Commissioner 34; directors general 74; enactment 28–9; exemption list 118, 121; merit system 65; overview 31–2; tenders 115, 116; women employees 79 Civil Service Commission: background 2, 28; Change-Generating Steps 77; delegation of authority 161; legal framework 34–6; reforms 162; scrutiny 109; wages 68 Civil Service Commissioner: appointment of 32; dismissal of 126; independence of 35–6; Quality Service Charter 53 Civil Service Committee, appointment to 32, 35 Civil Service (Curtailment of Partisan Activity and Fundraising) Law (1959) 32–3 Civil Service (Discipline) Law (1963) 33, 129 Civil Service (Pensions) Law (1970) 33

187

Civil Service Regulations (Personnel Code) 34, 47, 67–8 civil society 6, 48–50, 163 commissions of inquiry 104 Committee for Formulating New Criteria and Procedures for Appointment to Civil Service Posts 125–6 communications services 5 complaints 53, 102–4, 103t confidentiality laws 9 Constituent Assembly 28 construction permits 141 control: internal control 108–11; overview 97–8; political 98–9; see also State Comptroller corruption: cases 62, 130–1, 137–40; governance culture 135–7; hazardous zones 140–2; levels 136t; measures 131–3, 132f, 133f; overview 142; petty corruption 133–4; public attitudes 140; systemic level 134–5 Council for Higher Education 22 Council for Higher Education Law (1958) 166n2, 166n3 Council for Public Corporations 15 Dahan, Momi 69 decentralization 161 decision-making process 144–8 delegation of authority 161 depoliticization 118 deputy general directors 126 Director of Educational Television 120–1 Director of the Information Administration 118 Director of Wages 35 Director of Water Affairs 118 directors general: data 75t; ethnic origins 74t; overview 74–8; political appointments 115–18; reforms 162 Directors General Forum 76 Disciplinary Unit 129 Discipline Law 33, 129 discrimination 78 dismissal of employees diversity 78–82 Dror, Yehezkel 45, 124–5 education and training 69–71 Einstein case 119, 121, 123–4 Elections: of Knesset Election Law (1969) 104 Electricity Market Law (1996) 168n3

188

Index

Eloy Martinez, Tomas 128 Emergency Economic Stabilization Pact 62 employees: civil service 24t; law enforcement agencies 63t; local authorities 24t; ministries 61–3, 62t; Ministry of Health 61, 62t; national institutions 24t; nongovernmental public management 24t; numbers of 61–3, 62t; population and employees 25t; public sector organizations 24t; reforms 162; women employees 64 Encouragement of Ethical Conduct in Public Service Law (1992) 39 Enron Corporation, USA 57 environmental protection 5 equal opportunity laws 162 Eshkol, Levi 129 Ethical Rules for Civil Servants 111 ethics: changes in 129–31; Mandate Government 28; measures of corruption 131–3, 132f; of public servants 110–11; public service 128–9; reforms 164 Ethics Law 39 Europe 1–2, 10 executive agencies 4 exemption list 118–21; see also political appointments Fein, Leonard 170n4 Felsenthal, Dan 14 fiscal policy 84 France 11, 115 Frankenburg, Robert 77 Freedom of Information Law (1999) 111, 164 Friedman, Mordechai 137–8 Fundraising Law 32–3 Gabbai, Meir 121 Gaebler, T. 50 Galnoor, Itzhak 125, 130, 145–6 GDP 44 General Security Service (Shabak) Germany 2 Gifts Law 39 Ginossar, Yossi 108 globalization 8–9 Globerson, Arye 72 GNP 11 Goldberg, Eliezer 102 governance culture 135–7 government corporations 8; appointment to 123; definition 16; examples 18t;

numbers of 154f; privatization 154–5; as public management institutions 16–19; reforms 160–1 Government Corporations Authority 17 Government Corporations Law (1975) 16, 17, 79, 123, 153, 155 Government Effectiveness Index 115 government subsidiary corporations 16 Gross, Bertram 11 Guttman Institute 50 Hanegbi, Tzachi 121–2 Ha’Olam HaZeh 130, 171n21 Health Council 22 health funds 21–2 health services 8 Hevrat HaOvdim 21; see also Histadrut High Court of Justice 107–8 higher education institutions 21–2 Histadrut General Federation of Labor 7, 21, 28, 44, 153 hospitals, public Horowitz, David 66, 67 100 Projects Law 50 IDF (Israeli Defence Forces) immigration 19, 44, 50, 52, 78, 82, 143, 168n1 improvisation 45–6 Income Tax Authority 129 Indian Constitution 30 Institute for Internal Auditors 37–8 interest groups 9 Internal Audit Law (1992) 37–8 internal audits 110–11 internal control 108–11 Israel Association of Community Centers 152 Israel Electric Corporation 155 Israel Institute for Applied Social Research 50 Israel Post Ltd 153 Jalan, Bimal 140 Jewish Agency 7, 20, 44, 129 Jewish National Fund 20 judicial review 30, 107–8 Kelsen, Hans 97 Keren Hayesod/United Israel Appeal 20 kibbutzim 152–3 Knesset 19, 32, 98–9 Knesset Committees Kraines, Oscar 143

Index Kremnitzer Committee 162 Kremnitzer, Mordechai 129 Kubersky Commission: affirmative action 82; Budget Division 92; directors general 77; National Policy School 71; politicization 125; reforms 159; service levels 50 Labor Party 117, 153 land control 141 LaPalombara, Joseph 2 Lavi aircraft 101–2, 172n34 law enforcement agencies 62–3, 63t legal advisors 109 legality of public management: in general 30–1, 36–8; missing Basic Law 41–2; Norms of Conduct Laws 38–9; Levi-Faur, David 152 Leviev, Lev 155 Likud Party 78, 117, 152, 153 Lindblom, Charles. 87 Lindenstrauss, Micha 102 line-item budget 86–7 local authorities: budgets 22t; employees 24t; explanation of 6t, 7; overview 22–3; reforms 163–4; size of 23–6 MALAM Systems 152 Mandate Government for Palestine 27–8 Mandatory Tender Law (1992) 37, 162 Mapai party 27, 28, 118 Mapam party 28 market failures 10–11 Eloy Martinez, Tomas 128 Merriam, Charles 9 military government ministerial responsibility Ministers Committee for Privatization 153 ministries: employees 61–3, 62t; explanation of 7–8; influence of 166n1; reforms 160; size of 13–14, 23–6; subsidiary units 14 Ministry of Communications 59, 153 Ministry of Defense 61, 144–8 Ministry of Education 22, 59, 77 Ministry of Finance: Budget Division 76, 91–4; control 109; delegation of authority 161; directors general 76; employees 61; fiscal policy 84; importance of 62 Ministry of Health 61, 62t Ministry of Internal Security 155 Ministry of Justice 61, 62–3, 76 Ministry of Religious Affairs 21, 124

189

Ministry of the Environment 56, 59, 121–2 Ministry of the Interior 23, 118 mixed corporations 16 monopolies, natural 17 monopoly of the state 11 Moses, Siegfried 88, 167n11 moshavim 152 Movement for Quality Government 35, 112, 126 Nachmias, David 72–3, 116–17, 143 National Health Insurance Law (1994) 167n8 National Health Ordinance 91 national institutions 20, 24t National Policy School 71 National Priority Areas 91 National Unity Government 118 nationalization natural monopolies 17 Netanyahu, Benjamin 35–6, 126, 139, 153 Netivei Neft affair 131, 137–8 New Public Management 4, 110 New Zealand prisons 156 NGOs: see third sector (social organizations) nongovernmental public management: employees 24t; explanation of 20t; overview 6t, 19; sector boundaries 48–50; size of 23–6 nonprofit organizations: see third sector (social organizations) Norms of Conduct Law 38–9 Occupied Territories 138–9, 141 OECD Office of the President 19 Office of the Prime Minister 13, 63 Oggen 39 Ombudsman 53, 102–4 organizational territoriality 46–7 Orr Commission 80–1 Orthodox Jews Osborne, David 50 output/outcome-oriented budget 87–8 outsourcing 151 oversight: external control 98–108; internal control 108–11; overview 97–8; political 98–9; public accountability 111–12; see also State Comptroller Parliamentary system: in Israel Parties, see political parties Partisan Activity Law 32–3

190

Index

Party Financing Law (1973) 101–2, 104 patterns of behavior in public management, 45–8 Penal Code (1957) 47 Pension Law 33 pensions 67 Peres, Shimon 50, 126 Personnel Code Law 34, 47, 67–8 police policymaking: overview 3–4; political appointments 113–15; schematic process 4t political appointments: comparison 113–15; damage wrought 123–4; early years 115–17; exemption list 118–21; ideological identification 117t; reforms 124–8, 162–3 political culture political parties 28, 101–2, 104 politicization 113, 115–16 politics, public management and 3–4 population and employees 25t Poraz, Avraham 120–1, 126 President, State of Israel Prime Minister: direct elections 89 primaries, in political parties Prisons, privatization 155–8 private accountability 7 private (business) sector organizations 6, 9 private goods 150–1 privatization: broad concept 151–4; government corporations 154–5; operations 151; overview 11–12, 49, 141–2, 150; prisons 155–8; private goods 150–1; public services 151; reforms 160 public accountability 7, 9, 111–12 public goods public sector organizations: definition 6; employees 24t; growth 25t; population and employees 25t; sector boundaries 48–50; service levels 50–4, 52f; size of 23–6 public service ethic 128–9 Public Service (Gifts) Law (1979) 39 public service reforms 163 Public Service (Restrictions after Retirement) Law (1969) 38 public services privatization 151 public trust 142–3 quality control 163 Quality Service Charter 53 quangos 11, 21–2

Rabin, Yitzhak 125–6, 131, 144, 159 Rafael Advanced Defense Systems Ltd 144–8 Raphaeli, Nimrod 166n1 recruitment and promotion 64–6, 78–82, 117, 125 reforms: administrative culture 164; budgeting process 94–6; civil service 158–9; government corporations 160–1; groundwork 164–5; local authorities 163–4; political appointments 124–8, 162–3; privatization 160; public management 149–50; restructuring 159–61 regulation: comparison 56–7; definition 55; deregulation 60; motivations 56; overview 58–9; reforms 161, 163; regulators 57–8 Reich, Robert 127 Reinventing Government (Osborne) 50 Religious Councils 124 religious institutions 21 representation 82 residual power 30 Retirement Law 38 Right to information Rights of Tenants in Public Housing Law 91 Rosenbloom, David 143 Row of Volunteers 130 Rubinstein, Elyakim 139 Samuel, Edwin 167n1 Sasson report 138–9 Second Lebanon War 49, 151 secretiveness 47–8 sector boundaries 48–50 Selznick, Philip 113 senior civil servants: comparison 114–15; dismissal of 35, 126; exemption list 118–21; ideological identification 117t; Knesset 32; overview 72–4; recruitment and promotion 65, 117, 127; see also political appointments service levels 50–4, 52f Shabak, see General Security Service Shamir, Yitzhak 105, 117 Shani, Moshe 14 Sharon, Ariel Shas Party 102 Sherf, Ze’ev 28, 115 Shochat, Avraham 89, 125 Sikkuy 112 “Situation Committee” 27–8, 29

Index State Budget Law 44 State Comptroller: appointments 121–2; areas of oversight 102; audit of 105–6; autonomy 19; commissions of inquiry 104; constitutional and legal framework 99–101; duties 53; ethics 39; Ombudsman 102–4; party financing 104; powers 106–7; Report 2005 29; reports 101–2 State Comptroller Law 37–8, 99, 104 State Control Committee 100, 104, 106 State Prosecutor 76, 118 statutory authorities: appointment to 122–3; explanation of 8, 15–16; reforms 160 Strashnov, Amnon 172n29 subsidiary units 14 Suez Canal 130 supranational bureaucracies 9 Supreme Court 30 taxation 129–30, 141 taxation methods 84–5, 85t tenders, public 115, 116, 125, 162; exemption list 118–21 Tenders Law 37 territoriality: in government ministries 46–7 third sector (social organizations) 6, 48–50, 163 Thompson, Victor 29 de Tocqueville, Alexis 43 trade unions training 69–71 transparency 47–8 Transparency International 131

191

Tunik, Yitzhak 100 Two Seas Canal Project 147 Union of Local Authorities 22 USA: budgeting process 88; civil service 2; Constitution 30; oversight and control 99; political appointments 114; prisons 156, 157; public administration 43; regulation 56–7 veterans 78 wages 35, 66–9, 66t, 109, 162 wars Weber, Max 2, 9 Weizman, Ezer 141 welfare state Werner, Simcha 130 Wildavsky, Aaron 87 Wilson, Woodrow 3 Witkon, Alfred 137–8 women employees: in the civil service 64, 64t, 79–81; see also affirmative action Workers’ Protection Act 39 World Bank 115, 131 World Zionist Organization 20 Worldwide Governance Indicators 131–3 Wright, Vincent 10 Yadlin, Asher 131 Yishuv, pre-state period Yosef, Dov 31 Zamir, Yitzhak 130 Zussman Committee 67, 69