The Knesset has deferred debate on Prime Minister Benjamin Netanyahu´s flagship housing reform due to a dispute over some of the provisions between two of his coalition partners, Shas and Yisrael Beiteinu.

Political sources said Tuesday that the delay could doom the legislation. Knesset elections must be held by the fall of next year, they explained, and the closer the elections get, the harder it will be for Netanyahu to get his coalition partners to come to a consensus.

Knesset members said Netanyahu has acknowledged in recent weeks that if the special Knesset committee set up to approve the bill did not complete its work by the Knesset´s spring recess, which begins tomorrow, he would have trouble garnering a majority. The prime minister initially aimed to have the plenum pass the legislation in final reading today, but now he will apparently have to give up even on his fallback position: that the committee approve the bill before the recess begins, so the plenum could vote as soon as parliament reconvenes in May.

The bill is designed to streamline approval of small construction projects, but would also provide subsidies for the construction of affordable housing. The dispute is over eligibility criteria for obtaining this housing: Shas wants criteria that favor its ultra- Orthodox constituents, while Yisrael Beiteinu is pushing for measures that it says would favor members of the middle class.

Shas inserted a provision requiring the criteria to be approved by the prime minister, finance minister and housing and construction minister. The housing minister, Ariel Atias, is a Shas MK.

But Yisrael Beiteinu wants the subsidized housing to be limited to people who have "exhausted their earning potential" but still can´t afford a house. To make this more likely, it is demanding that the criteria require approval by the full cabinet.

The special committee considering the bill convened repeatedly to debate its 650 clauses, but opposition from Yisrael Beiteinu MKs prevented it from approving the legislation.

In an effort to get Yisrael Beiteinu´s support, Netanyahu recently proposed bringing the matter to the full cabinet. But before the cabinet could convene, Finance Minister Yuval Steinitz signed off on the criteria proposed by Atias and the Israel Lands Administration.

Another attempt at compromise, which would have had Tourism Minister Stas Misezhnikov of Yisrael Beiteinu joining the prime minister, finance minister and housing minister in approving the criteria, also failed.

MK Dov Khenin (Hadash ), who has been leading the parliamentary fight against the proposed housing reform, said yesterday that quite aside from the Shas-Yisrael Beiteinu dispute, there is a growing realization among MKs that it would be a mistake to pass the bill. Though the legislation´s goal is to streamline approval of minor construction such as the enclosure of balconies, and thereby also to lower costs, Khenin said it would "create extreme chaos" in the planning process and would thus actually increase housing costs.

MK Faina Kirshenbaum, who represented her Yisrael Beiteinu party in negotiations over the bill, said that failing to include "exhaustion of earning potential" among the criteria for affordable housing hurts the middle class, which "works, pays taxes, serves in the army and does reserve duty, and effectively bears all of the country´s burdens on its shoulders." She urged the prime minister to support this criterion.

MK Amnon Cohen of Shas, who chairs the committee that has been entrusted with approving the bill, said yesterday, "I regret that the work that has been carried out for two years has not been concluded for reasons that do not relate at all to the reform." He said his committee has served the public´s interests and would continue to do so when the Knesset reconvenes. (© Copyright 2012 Ha´aretz 03/21/12)