JERUSALEM — An agreement to set up a government committee to help strengthen Jerusalem's Jewish demographics was reached last week at a meeting of Prime Minister Benjamin Netanyahu, Mayor Ehud Olmert and Finance Minister Ya'acov Ne'eman.

The three met following a study released last week showing that Arabs will make up 38 to 40 percent of the capital's population by 2020, up from the present 29 percent.

The committee, which is expected to make its recommendations next month, will focus on ways to help Jerusalem strengthen its economic base by attracting more residents and businesses.

"This government always says it is for Jerusalem," said City Hall spokesman Hagai Elias. "But we can't just rely on words, we have to see action, which in this case is to give preference to Jerusalem.

"For example, if every company will get a 15 percent [tax] incentive to open in Jerusalem, then companies will come running to open here. If students will get discounts on tuition, then students will come here to study. And third, if you have students, and workers and companies, then the only thing you need is to give them good mortgage rates and then they'll stay and live here. And the Jews will remain the majority for the next 20 or 30 or 50 years."

City Councilwoman Anat Hoffman (Meretz), questioned the timing of this initiative, though she said she'd be happy for residents to receive benefits.

"It sounds like an initiative of an election year," Hoffman said. "We're 10 months before [municipal] elections and the mayor is giving large populations all sorts of benefits. Show me lots of benefits and I'll show you an election year."

Hoffman said that predictions of an increase in the Arab population are not new, and had appeared in previous studies.

"Ten months before the elections is a good time for the mayor to start worrying about the Judaization of the city," she said. "The timing is suspect."