PM Olmert presented his economic vision of the enhancement of growth, simultaneously with the reduction of social gaps, and emphasized educational reform.

My Colleagues,
Members of the Government,
Distinguished Guests,
Participants of the Caesarea Forum, which has become well-known in our public, economic lives

By the way, on my way here, it occurred to me that it is time to call the Caesarea Forum by its rightful name, the “Jerusalem Forum”. I hope this will happen.

I wish to thank you for the interesting survey I heard – and I noted everything that was said for future discussions – and I welcome the fact that the topic of the opening lecture of this conference is dedicated to the connection between poverty and economic growth. This is an issue that troubles me, and discussing it at the opening lecture is an indication of its centrality and importance.

From a macro-economic viewpoint, the Israeli economy is currently on the right track. We have a surplus in the ongoing account of balance payments. We have satisfactory foreign currency reserves, inflation is low, and within the limits of the target set by the government, the tax burden is much lower than in the past and the state budget deficit is lower than in many developed countries. The challenge in this field, and it is real and extremely important – as you well-know, is to keep the engine of the economy on the right track.

In 2005, real investment in the Israeli economy reached an unprecedented record of over $6 billion. These are investments from all over the world. During the past year, the overall investment – including financial investment in the Israeli economy – reached over $11 billion.

Two days ago, at the venture capital funds conference, I noted with great satisfaction that in the 13 years since the venture capital industry in Israel began operating, it acquired a leading status in the world – second only to the American venture capital industry, raising a capital of over $10 billion. These funds’ experts, primarily foreign investors in Israeli venture capital funds, are no gamblers. They know very well what they are doing when they invest in Israel, and we are glad to see them here, and want even more to come. And they will.

These investments are, of course, a salute to the spirit of Israeli entrepreneurship and to the quality and ingenuity of our hi-tech industry, but it is also a vote of confidence in the strength, stability and future of Israeli economy. It is no less a decisive answer to and a crushing defeat of terror – which is attempting to sow fear and incite panic. The international economic community says it in a clear voice – we are not afraid to invest in Israel.

There is no better testimony to the manner in which the Israeli economy is perceived in the world today than Intel’s decision to invest $5 billion in the establishment of a new factory in Israel and improve the existing factories, or Warren Buffet’s decision to purchase 80% of Yiskar stocks for $4 billion, based solely on a review of the company’s performance, without even visiting Israel.

It is impossible to think of this stream of investment removed from the general picture of the Israeli economy, an economy with relatively high growth rates, of which there are few like it among developed nations. Last year, we achieved a growth rate of over 5.2%. The updated forecast for this year is 5.3%, after incredible growth of 6.6% in the first quarter of 2006.

These impressive data should be a source of pride – but not complacency. They were achieved after many years of struggle and difficulty, hardships which struck especially hard at a significant portion of Israeli society, specifically the weaker sectors. It is our duty to continue in the efforts to achieve growth, in order to make certain that the fruits of growth are felt everywhere, and not only by specific sectors of Israeli society. I will not cease my efforts in this regard. We must persist in the effort to correct the structural problems which the economy still suffers from, and continue the reforms which greatly contributed to the growth rate. This is the only way to ensure sustainable growth.

The Government of Israel’s economic vision is the enhancement of growth, simultaneously with the reduction of social gaps, and I believe that this vision could be realized if we achieve the following goals:

– Stable and viable growth, economic independence, continued transformation of the Israeli economy into a modern and competitive economy which appropriately grapples with the challenges of a world which is becoming more global and competitive every day. In the economic field, we must not, nor do we wish to, be “a people who dwell alone”.

– Enhancement of Israel’s economic standing in the international arena, transforming it into a source of attraction for foreign investment, while advancing and improving Israeli competitiveness in both the industry and services fields.

– Reduction of the tax burden in the framework of the multi-year plan.

– Continuation of the revolution currently taking place in Israel in the field of infrastructures, with the goal of achieving an infrastructure which is worthy of a modern economy within five years – a widespread rail and road network of global quality; energy based on natural gas; desalination facilities and so forth.

– Reduction of gaps, introduction of equal opportunity – giving each and every one the option of enjoying the fruits of economic recovery.

I know these are ambitious goals, but they are all attainable through a multi-year process.

However, at this point I wish to deviate from the data presentation and openly ask a number of questions pertaining to the human capital in the systems in question.

When I sit alone, I am repeatedly amazed by how the most simple, well-known, basic and almost axiomatic things, agreed upon by all sensible people, do not exist in our society as they should.

Can anyone argue with the fundamental assumption that education is the key to social mobility and to the fulfillment of individual potential? Can anyone argue with the fact that some of the children in Israel meet the education system for the first time only at the age of 5 because their parents cannot finance educational frameworks prior to this age? And here, we must emphasize empirical truths, which again are not new, that the age which determines the crucial development of a person is between birth and age 3. Up until the age of 6 is the most critical phase. We must not ignore it.

In other words, by the stage at which the child reaches the formal education system, certain facts have already been set, which will determine his character, personality, his chances and his ability to function in society.

Can anyone argue with the fact that this child’s parents who we are discussing, and who are busy with physical survival, are not always available to nurture their child’s basic living qualifications and provide her with the "tool box" necessary for entering a normative educational system?

Can anyone argue with the fact that these children’s starting point in relation to other children who are raised in an environment which is aware of the need to realize their developmental potential from infancy, will be lower?

Can anyone argue with the fact that a child who joins the education system in a situation of relative disadvantage is a child sentenced to a path of obstacles, which are often too overwhelming for him to bear?

Can anyone argue with the unfortunate assumption that only when this child is a hindrance in class – a class which is a reflection of the society in which he lives – will someone notice and acquire professional help for him?

When will we acknowledge the gap this child faced from infancy? When will we categorize him as different? When he becomes a hindrance? When he threatens to bring down the school’s average? When we are forced to bear the costs of special education?

And then we will ask ourselves, "what do we do with the child"? And we will not always have a ready reply. Then, suddenly, our heart’s desire would be to rehabilitate him, but the finances will not always be available to us. The psychological service will try to confront his problematic self-esteem and the education counselor will try to "reinstate him in class" and the expert on learning disabilities will not understand why the impairments were not traced at the age of 2, and an entire system of experts will mobilize to analyze the reasons, minimize the damage and maybe – and I emphasize maybe – correct it.

Let us put aside the costs for a minute. Let us address our duty towards this child from the human aspect – his birthright under the Convention on the Rights of the Child, to which Israel is a signatory, and our duties as parents, educators, professionals in the fields of social and educational sciences, to provide him with the best tools at a critical age when his mind is being developed and his personality is being shaped, to prepare him from the beginning for the challenges faced by those born into a western, achievement-oriented, technological society.

I, like many of you, am a father and grandfather of children and grandchildren. I have seen my children go through every stage, and my small grandchildren develop skills and abilities from the day they were born. When I am with my grandchildren, when each one of you are with your small children or grandchildren, when they gaze and smile at us, only then are we reminded of how this treasure is the center of our lives.

Our knowledge as leaders obligates us. What it carries with it is responsibility.

With regard to the costs, as this is an economic conference, we know that we will eventually have to allocate resources which are always limited, and do so in accordance with our list of priorities, with forethought and responsibility:

A child who is defined, according to the parameters of the Welfare Ministry, as a high-risk child, costs the State of Israel between 1,000 and 2,000 dollars a month. An overall investment in the developmental skills of an infant, including the cost of diagnosis, treatment, ongoing developmental monitoring, parents’ training and raising awareness, amounts to 1,000 dollars per annum.

This year, approximately 150,000 children will be born in Israel (and my facts are similar to those of David Brodet). 50,000 of them will be born into a life below the poverty line. Life below the poverty line is not necessarily a platform for raising children at risk. Some will cope successfully, despite the difficulties. However, a childhood below the poverty line is a basis for the development of a lack of equal opportunity, the erosion of human potential and that of the right to childhood, which is something that we, as a society, must not tolerate.

What, therefore, is the unequivocal conclusion we reach from what I have said so far?

For a relatively low investment, we will establish support systems for infants. My vision is that in every community in Israel, a universal, professional and updated service will be established for the benefit of children and parents; that children will enter the formal education system equipped with the tools to do so; that the earliest possible response will be given to developmental needs; that parents will learn to acquire services for their children from the beginning. We will have more happy children, and more smiling children, and you will, of course, agree that this is worth everything.

I believe that if 88% of the budget which we are currently investing in children at risk is for correction, and the remaining 12% is for prevention, then this pyramid can and should be reversed. We will greatly benefit from this.

I believe that the formative effects begin long before the age of 3 – the age which is currently under discussion as the starting age for formal education. There is consensus among experts that ages 0-3 are the most crucial in the development of a child. I wish to announce here that in the framework of the comprehensive change which we will introduce in the education system in Israel, the 2007 budget will already include resources for improving the nation’s approach towards children from the age of 0-3.

The "infancy revolution" will be a fundamental pillar of my government’s policy over the next four years. The fruits of this policy, and the strategic decisions behind it, will be reaped by us, as a society, in the more distant future. In this field, like the other fields the government and I deal with, patience and planning are the keys to success.

Reform is, of course, also needed in the elementary and high schools. I have recently been holding talks and discussions with Education Minister, Prof. Yuli Tamir, and with senior officials at the Ministries of Finance and Education and the Prime Minister’s Office, and soon we will formulate a comprehensive plan for a substantial improvement in the education system in the State of Israel.

We will improve the status and qualifications of the teacher and educator and act to ensure excellence among high school principals. On this issue I wish to emphasize: in the decade that I served as Mayor of Jerusalem, I visited dozens of schools and maintained close and continuous contact with school principals. I realized that a school principal is the central axis of the education system. There is no excellent school with a bad principal, and there is no bad school with an excellent principal. We must set a target, according to which only the most excellent will be worthy of managing our children’s schools.

We will create a more respectable and proper learning environment; we will transform the curricula into a more relevant, interesting and challenging one; we will support the weaker ones and give them the tools to allow them to successfully tackle their school assignments.

Dealing with education is our job, but first and foremost, it is our mission. I know that the business sector has been following not only the government policies and measures but also its makers and executors. The country’s economic leadership at this time -Avraham Hirchson as Minister of Finance and Stanley Fisher as the Governor of the Israel Bank, and I as Prime Minister – is united, cohesive and decisive. We have an excellent Finance Minister, and I trust him implicitly. My friend Stanley Fisher enhanced the standing and prestige of the central bank immeasurably, and I thank him for that.

At the same time, I wish to tell you that we have a united and responsible educational leadership, which views education as a sacred mission.

Education Minister, Prof. Yuli Tamir, brings with her the experience of many years, and comprehensive knowledge. Since she assumed office she has been highly motivated to succeed in this position and has rallied to this mission with all her strength. Together with her, I assure you that we will make every effort, with the help of the Ministry of Finance, to generate the sought-after change in the education system, and I call upon all those relevant bodies – teachers’ organizations, parents’ organizations, student organizations – and to my friend Chairman of the Histadrut, Ofer Ayni, who has, and will continue to play a crucial role in shaping the atmosphere for working relations, and the ability to create an infrastructure for economic and social reforms, and I thank him with all my heart, and all those who have the good of the nation in their hearts – to join forces and efforts for the sacred goal of improving education in the State of Israel.

With your permission, I wish to conclude by returning to the socio-economic issues:

Socio-economic issues at a national level are crucial issues – and therefore the decision-makers must receive the best counsel, not only from the administrative level in government offices – as talented as they are – but also from experts, who have a broad and long-term view.

We have therefore decided, following recommendations presented by this forum, to establish a council, at the Prime Minister’s Office, named "the National Council for Economy and Society", headed by Prof. Manuel Trachtenberg of the Tel Aviv University, who is sitting here with us.

The council will supply me and the entire government with the tools for analysis and data, not only on the most burning issues on the agenda, but also tools needed for reviewing long-term processes. This will enable us to lead economic and social steps, and not merely to respond to developments and extinguish fires.

The council will also serve as a forum for dialogue with a variety of sectors whose voices are not heard sufficiently in public discourse, such as the periphery, the ultra-orthodox, the Arab sector, working mothers, etc.

Distinguished Guests,

The implementation of the Disengagement Plan and our extensive political activity with world countries over the past few years have created the stable economic base on which we stand today. It is my intention to continue on this significant and pragmatic political path. I will abide by the principle which I have outlined since the establishment of the Government: leadership is the ability to lead change and be willing to take risks and powerfully generate processes. We want to achieve the beginning of the end to the Israeli-Palestinian conflict.

At my meetings with the Presidents of the United States, France, with the Prime Minister of Britain and with leaders in this region, I announced that we would make every effort to explore the possibility of reaching understandings with the Palestinians – of course first and foremost with Chairman Mahmoud Abbas, also known as Abu-Mazen, and not with the Hamas Government, which is supported by terror – to advance the Roadmap. I reiterated that only if we realize that we have no partner on the Palestinian side, will we take the necessary unilateral measures, which are vital for ensuring the Jewish character of the State of Israel.

These efforts to renew negotiations and reach understandings with the Palestinians, for the benefit of both parties, will be conducted regardless of our war on terror, a war which we will pursue firmly and unhesitatingly. We will target anyone who tries to carry out terror, fires Qassam rockets, prepares explosive charges and dispatches suicide terrorists. We will find them wherever they are and foil any attempts to harm Israeli citizens.

I genuinely regret the unplanned injury of innocent civilians in Gaza and Khan Yunis. Who else understands the pain of bereavement as we do and who else suffers the loss of these innocent victims? At the same time, I must say that the Government of Israel under my leadership will continue to carry out preventative strikes against planned terrorist attacks and against all those involved in the attempt to harm our citizens. I am deeply sorry for the residents of Gaza, but the lives, security and well-being of the residents of Sderot is even more important. I reject the attacks on the IDF and its commanders. No one is more dedicated or more cautious, and will continue to be so in the future.

In the field of security, as in the political and economic fields, we will continue to act with logic, responsibility, equanimity and caution, but determinedly and strongly.

Distinguished guests,

The world praises the Israeli spirit of ingenuity, which characterizes our hi-tech industry. But ingenuity is nothing new in Israel. The Jewish people, the first people to believe in one God, contributed many great innovations to civilization. The most important of all, in my opinion, is faith in the future – a better future for all nations. While other nations preferred to languish in yearning for a golden era which was lost forever, the people of Israel preferred to look ahead to a better tomorrow and to strive relentlessly to get there.

However, even for a better future we must not wait idly. The best way to guarantee that the future will look the way you want it to look is to mold it today, with your own hands.

This is what we intend to do in the coming years – create the future in which the State of Israel will remain the state we want nd love so much: an open, thriving state, living in security on its land, developing an enlightened, humane and just society, a creative society, a society of culture and quality, absorbing immigrants and constituting a magnet for all Jewish diasporas, a society which acts justly towards all the sectors which are part of it.

I wish to conclude with appreciation to the members of the forum for your willingness to help us fulfill this goal and for dedicating your time and effort to contribute to the shaping of an appropriate national economic policy.

I especially wish to thank my friend of many years, Prof. Arik Carmon, chairman of the Institute for Democracy, whose excellent reputation is proven again by this conference, as in previous conferences.

I guarantee that what I heard, and the special instructions you gave me at the end of this conference fell on attentive ears.

Thank you.