The Economic Arrangements Law, the supplementary legislation to the State Budget Law, incorporates government bills and legislative amendments that are needed in order for the government to fulfill its economic policy.

The law is a unique instrument used by the government to initiate legislation, complete legislative acts and stall or eliminate private members` bills already legislated. Through the law, the government can overcome parliamentary obstacles, as it relies on its majority among coalition members. The main argument used to justify the law is that the cost of ratified bills will exceed budgetary limits. The law is presented to the Knesset towards the beginning of each fiscal year – in October – and discussion surrounding it usually lasts until the end of December.

The Arrangements Law is different than other bills in both its context and its legislative procedure. Ordinary bills deal with specific issues, while the Arrangements Law gathers various bills on different subjects. Ordinary bills are debated in various Knesset Committees, while the Arrangements Law is passed as a unified bloc to the Finance Committee, which debates its contents for a short period of time before approving it towards second and third readings with the Budget Law. The Budget Law in itself is presented as if all articles of the Arrangements Law have been approved. In recent years, at the government`s request, some of the law`s contents are debated in different committees prior to their final ratification by the Finance Committee. The committee`s draft of the law is presented as a single bill towards its approval.

The narrowest definition stipulates that one should put in the Arrangements Law only articles that are connected to specific articles in the Budget Bill, and affect the expenditures or revenue for the given budget year only. The broadest definition stipulates that anything involving a budgetary expenditure, anything connected with the Ministry of Finance`s budgetary goals, and anything connected with the economic policy of the Government, is suitable to be included in the law.

The Arrangements Law was first legislated in 1985 by Prime Minister Shimon Peres and Minister of Finance Yitzhak Moday. It was presented as an emergency regulation, supplementing the economic stabilization program, in order to contend with the grave economic crisis in which the Israeli economy was immersed at that time.

According to Dr. Susan Hattis Rolef, former Head of the International Desk at the Knesset Research and Information Center, in retrospect it became apparent that it would have been possible to pass the Arrangements Law without emergency regulations, since there is no legal hindrance to the enactment of such laws. The utilization of the regulations was apparently important for psychological reasons – in order to emphasize the gravity of the state of the economy, and to convince the ministers to approve the draconian measures that the Minister of Finance and his advisors believed to be necessary in order to save the economy.

According to former MK Moshe Shahal (Labor), who claims to be the father of the Arrangements Law, the decision to combine all the legislative amendments connected with the budget in a single law also resulted from a psychological reason. ”There was a problem”, he explained while appearing before the Finance Committee in January 1999, ”a Minister of Finance from one party automatically leads to the other side voting against him, so we discussed how to convince the members of the coalition to vote together. We said – if we shall bring the laws that derive from the budget all at once in a vote on the Budget Law, we shall oblige them, within the framework of the arrangement that enforces coalition discipline, to vote together. But the connection and link were to the Budget Law itself – nothing else, and not for the attainment of other economic goals.”

The Arrangements Law has been subject to fierce criticism within the Knesset and among the public. Its critics claim that it is not concerned with the budget; rather, it contains extensive reforms in the state economy and unnecessary legislation. It is also claimed that the law makes poor use of the legislative process within the Knesset committees, as it is processed rapidly and does not allow Knesset Members to examine thoroughly its contents and take a stand on its issues. Furthermore, the time spent on the Arrangements Law – some two months – seems unreasonable to discuss and/or amend legislation that had already been passed following months or years of effort – sometimes under professional guidance. Lastly, the coalition`s and opposition`s parliamentary discipline does not allow their members to vote independently on the law`s various fields of interest.

In her background paper, Rolef notes that one of the main arguments against the Arrangements Law is that it is passed in a procedure that ”circumvents democracy”. In debates in the Knesset plenum since 1986 concerning the Arrangements Law as a phenomenon, dozens of statements in this spirit were made by Members of the Knesset from all sections of the House. This is what MK Maxim Levy (Gesher) said on December 23, 1997: ”For many years this law turned into an anti-democratic law, which empties the Knesset Committees of any content… The Government cancels laws that were legislated in the Knesset Committees after much toil – they heard various publics listened to them, initiated by means of this House laws that gave solace to thousands of people, and here comes the Government one night and asks this coalition machine to erase and run over laws…”

Former Supreme Court President Dorit Beinisch said in the past that resorting to the Arrangements Law mechanism ”raises a sleuth of problems in terms of appropriate democratic procedure.”

”There is no doubt,” Rolef writes, ”that the problem is especially grave when we are dealing with the Arrangements Law, and laws similar to it. But there is a general problem with the legislative process in all the democratic states, which is connected to the greater speed of life, and the vast number of issues in which the society is engaged at any given moment of time. The parliaments, which continue to function in accordance with procedures that were laid down dozens of years ago, and sometimes even more than a century ago, are simply unable to keep up with the pace.”

In a ruling by the Israeli High Court of Justice on an appeal by the Organization of Poultry Raisers against the Government of Israel, issued on November 27, 2004, that dealt with the 2003 Arrangements Law, the Court criticized the inappropriate legislative procedure, which lacks a thorough and exhaustive deliberation on a complex and essential issue. However, it found no legal grounds to reject the law, and did not intervene.

In early August 2015, the Knesset’s legal adviser Eyal Yinon wrote to the parliament’s speaker Yuli-Yoel Edelstein that the latest Arrangements Bill was simply too extensive to be read by lawmakers and contains too many reforms unconnected to the budget — constituting a violation of the speaker’s own rules for minimizing the scope and length of the Arrangements Bill. In response to Yinon`s legal opinion, Edelstein said the Arrangements Bill ”can’t pass in its current form.”

Attempts to deal with the problem by means of clear criteria that determine what belongs and what does not belongs to the Arrangements Law, were no more successful. The problem in this case is that there is no agreement among the various bodies regarding the criteria, and even though various bodies have prepared tables that state – with regards to specific Arrangements Bills – what belongs and what does not belong in their opinion to the Bill, they did not enumerate the exact criteria for their decision.

Itzhak Galnoor, a professor of political science, stated that 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.”

A report published by the Israel Democracy Institute and Save Israeli Democracy argued that the Arrangements Law ”embodies a serious risk because it expresses impatience with organized and reasoned legislative procedures that constitute a substantive component of the democratic system.”

Nevertheless, Rolef says in her study, in Israel there are those who reject the claim that the Arrangements Law is undemocratic, or that it is anti-parliamentary. The law is democratic, they argue, and the problem is the reaction of the Knesset.

According to a study published by the OECD in 2011, the law has produced ”important reforms, such as liberalization of international trade and restructuring telecommunications and cable TV.” But repetitious use, lack of transparency, and criticism by the Knesset have gradually reduced its utility.”