Distinguished Guests,
Shalom everyone,

I am pleased to be here, as with every year. Three years ago, I stood here and said that I hoped that no one in the audience was losing their optimism. I admit, I saw many concerned faces then. I believe that today there are many more smiles and a greater optimism here.

All in all, it is good to be optimistic, and this year, we have many good reasons to be optimistic.

Three years ago we witnessed negative growth per capita, not recession, but rather economic shrinkage. This year ends with real growth of some 5% – the highest in the western world.

Three years ago, the interest rates reached heights which threatened to suffocate economic activity. Today, the interest rate is almost equal to that of America, encouraging greater growth and investment in production.

Less than two years ago, the unemployment rate was 10.9%. This year, it stands at 8.9%. The pace of decline in unemployment is one percent p.a., which means that each year, 25,000 families leave the cycle of unemployment and join the workforce.

All this has been achieved through very hard work. Throughout this difficult period which we have undergone, there were numerous populist suggestions from various circles to intervene artificially in the economy. These suggestions sound good, and create juicy newspaper headlines, but they cause great damage. Unfortunately, there are still those who have not abandoned the habit of waving slogans, as though economic difficulties can be miraculously overcome overnight. We are familiar with this phenomenon.

It is particularly true during an election period, but I do not intend to capitulate to any such pressure. There will be no election economics or election promises. I see that it worries the people sitting here. What the Israeli economy needs is patience, responsibility, sensible action, with the planning and inspection of the short-term and long-term effects of each step. No slogans or magical solutions.

We have set a number of clear goals for progress for the Israeli economy: an average annual growth of 4%-5% in the coming decade, a reduction of unemployment to a standard level, an increase in the participation in the workforce to a level customary in western countries, and a reduction of social gaps.

These goals are achievable, if we can only take advantage of the great national opportunity facing us today, once we have extricated ourselves from the economic and security crisis.

The Disengagement Plan, which I initiated and carried out, created a great window of opportunity for us and the Palestinians. Everyone understands today that Israel is sincere when it speaks of painful concessions. Moreover, everyone can see that when the State of Israel makes a commitment, it can also take very difficult steps. Today there is comprehensive international consensus demanding that the Palestinians fulfil their obligations to abandon the path of terrorism and incitement, and embark on the path of peace.

Our political plan, the Roadmap, is the only plan which enables us to utilize this opportunity. This is the way to achieve calm, political progress and ultimately a process toward stable peace between two nation states, a Jewish nation state and a Palestinian nation state, living side by side with respect, and in tranquility and peace.

We must not give in to the illusions of the radical left, as though we can forfeit our demand of the Palestinians to cease and fight terrorism, and wait for terrorism to disappear on its own. At the same time, we must not be caught in the illusions of the radical right, as though we can avoid painful concessions and keep everything in our hands. It will not work.

Neither excessive activity nor complete passiveness can save us. Only responsible, firm and determined progress will lead us to true peace.

The Disengagement also created important economic opportunities for the State of Israel. All the economic reforms and steps we have taken would not have been successful without the Disengagement creating the right atmosphere. It is important to remember this. Now, after the Disengagement, the economic recovery which we have achieved places Israel at a much better starting point for greater integration in the global economy.

In order to utilize the economic opportunities, my government began the process of multi-annual planning on numerous issues. I consider this very important to deviate from the ongoing budgetary planning for one year and set long-term goals and plans of action.

Last week, the government approved the National Contour Plan  following 10 years of deliberations. It is a 15-year plan, which enables positive development and preserves a balance between the various interests.

We have approved comprehensive infrastructure plans for the next 5 years. The new road and interchange plan, at a scope of 19 billion NIS, is under way. Additionally, a long-term plan for the development of the Israel Railways is already in operation, at a similar scope of 20 billion NIS. Investment in transportation infrastructure is necessary to close the gaps between the center and the periphery.

We have formulated a new investment plan for the Negev, at an unprecedented scope of NIS 17 billion in the coming decade. Furthermore, we are currently working, in conjunction with the Manufacturers Association of Israel, to transfer 60 factories to the Negev. Each Negev resident will sense the implications of these investments with regard to infrastructures, employment, education, service and recreational centers. I have already asked Shimon Peres, who spearheaded this plan, to prepare a similar plan for the Galilee, and we will invest the necessary resources in this one as well.

These are real, serious plans, which we began impelmenting over a year ago, in conjunction with all government offices. These plans will be implemented in full, because, as you know me, I care less about the decisions, and mainly about their implementation.

Simultaneously with the investment, which will bring real growth during the coming decade, we must make certain that the fruits of growth will reach every citizen in the country. We must not forget the weaker ones among us, those who have been most affected, because when times are hard, it is the weaker ones who suffer more.

We had to make cutbacks, and despite our constant efforts and actions to minimize the damage, many people were adversely affected. Now, with the renewal of growth, we can give more. From these fruits of growth we succeeded this year in adding the largest supplement ever to the health basket, and a substantial amount for senior citizens in income guarantee. However, our most important step was the nourishment enterprise for school children. Each day, 200,000 children receive a hot meal in the framework of this project. Now it is our intention — my intention during the next year — to increase this project to 400,000 children. There is no reason for children in Israel to be hungry. There is no reason for it, and it will not happen!

We must give more to those who cannot work, those who, with a little help, can be raised above the poverty line and live in dignity. The elderly, the disabled, single-parent families, children at risk, new immigrants. I am pleased that everyone remembers them now. It is unfortunate that we have been prevented from approving the budget for 2006, including the plan which we intend to introduce, with clear designated budgets for the weaker sectors.

It is not too late, even during an election period, to approve the budget. It is preferable over the current situation, even if there are those who criticize it. If any of these critics are elected — and I assume that it will not happen, because I intend to be the one elected — they can always make amendments after the elections. Let us not hold the budget hostage to political intrigue.

In any event, whether we pass the budget now or after the elections, we will continue to work with the same determination with which we have led the political and economic steps thus far. I am confident that thanks to this determination, we will meet the goals which we set for ourselves and lead the State of Israel forward toward a future of security, growth and prosperity.

Thank you.