Israel’s new government is in the process of being formed. When you read this, it may already be in place. In a talk in Jerusalem last month, Toronto-born veteran journalist Jim Lederman suggested three priorities for the prime minister: next year’s budget, electoral reform and conscription for haredim and Arabs.

First, the reason why Prime Minister Benjamin Netanyahu advanced the elections was probably because he knew the next budget would entail punishing cuts in public spending. By going to the polls before bringing the bad news, he may have hoped to save his political skin.

Though he’s still at the helm, the elections cost him dearly. Of the 31 mandates for the combined list of Likud and Yisrael Beiteinu, only 20 belong to the former, one more than newcomer Yair Lapid’s Yesh Atid party and seven less than Netanyahu’s Likud had before the vote.

Finance ministers court unpopularity in hard times. Former Labor cabinet member Ophir Paz Pines, writing in Ha’aretz soon after the election, urged Lapid not to take the portfolio. His stated reason was Lapid’s inexperience, but he may also have had in mind the pitfalls.

Someone will have to bite the bullet, which will be particularly difficult after the unexpected resignation of Stanley Fisher, the universally admired governor of the Bank of Israel.

 Second, there’s a growing realization in Israel that something must be done to bring about electoral reform. Until now, most parties have resisted changing the present system, fearing it will work against them. The influence now gained by Lapid and his apparent embrace of bold ideas may nevertheless force a change.

Though Canada’s first-past-the-post system disenfranchises many voters, it makes for stable government. By contrast, Israel’s proportional representation system is probably more democratic, but it makes governing much more difficult. Hence the protracted and tortuous coalition negotiations, with their concomitant horse trading.

A combination of the two systems may be the answer. Israel could be divided into 60 ridings. The candidate with the most votes in each would represent it in the Knesset. The other 60 would be chosen by proportional representation.

Whether or not the parties in power would support electoral reform for the good of the country, rather than protect their own interests, will depend on the persistence of “the new kid on the block,” Lapid.

Finally, although Lapid’s campaign stressed the imperative for Israel’s haredi and Arab citizens to serve in the army or do community service like everybody else, I understood Lederman to say that, despite the urgency, it should only come third on the government’s agenda.

Army service for everybody is complicated, due to potential security risks in allowing all Arabs to serve as the Bedouin and the Druze do now, and because integrating those who now claim to be yeshiva students entails many practical obstacles.

The broad coalition Netanyahu envisages is likely to include the two haredi parties, Shas and Yahadut Hatorah. Both vehemently oppose army service for their boys and are determined to resist such legislation. The question is if Shas, always anxious to be in the government – and thus have easier access to public funds – will cave in.

However, the IDF itself may not be too keen to have to provide special facilities for haredi soldiers. Though a small number already serve, to conscript many more may cause headaches for army commanders.

Significantly, Lederman’s order of priorities didn’t include peace negotiations with the Palestinians. Although about two-thirds of Israelis are said to favour a two-state solution, most politicians have so far maintained that Israel has no Palestinian partner. The strong support for the settlements, reflected not only in the presence of the Habayit Hayehudi party but also in ideologies espoused by other lawmakers, remains a serious obstacle.

Even the Labor Party’s election campaign concentrated on internal social issues, saying virtually nothing about peace. One of the few public figures to speak about it during the campaign was President Shimon Peres. Some saw it as deliberate criticism of the prime minister. But in his address when accepting Peres’ offer to form the next government, Netanyahu did speak of his readiness to negotiate with the Palestinians.

Yet the real push to restart negotiations will probably have to come from U.S. President Barack Obama. There are signs that it’s on the way.

Of course, because politics in general and Israeli politics in particular are fickle, the above “predictions” may turn out to be embarrassingly inaccurate.