財政健全化 来年度予算の編成が試金石だ

The Yomiuri Shimbun (Jul. 20, 2010)
Drawing up next year's budget a touchstone
財政健全化 来年度予算の編成が試金石だ(7月19日付・読売社説)

The Cabinet of Prime Minister Naoto Kan faces difficulty managing policy due to his party's debilitating defeat in the House of Councillors election. Whatever the effects of the poll, the fact that Japan faces a serious fiscal crisis remains unchanged.

The fiscal 2011 budget, compilation of which will start soon, must be the first step Kan takes toward putting state finances back on sound footing.

Of the 92 trillion yen in spending in the fiscal 2010 budget, a mere 37 trillion yen can be covered by tax revenue. After including nontax revenue, the 44 trillion yen shortfall must be made up for by issuing government bonds.

Moreover, the combined long-term debt of the central and local governments adds up to a staggering 862 trillion yen, the worst among industrialized nations.

Because of the concern that Japan will follow Greece on a path of fiscal meltdown, Kan called for raising the consumption tax rate and restraining government spending.


Spending-cut framework

The government has already established a framework for curbing spending.

In the fiscal management strategy approved by the Cabinet last month, the government decided to cap expenditures, which consist of general-account spending and tax grants allocated to local governments, at 71 trillion yen, the figure for fiscal 2010, in the fiscal 2011 to fiscal 2013 budgets. Government bond issuance was set at no more than 44 trillion yen for fiscal 2011.

However, the proposed plan to cut government spending is insufficient because what was used as a reference, the fiscal 2010 budget, was a typical example of a bloated budget.

The government must seriously reexamine the handout policies based on the Democratic Party of Japan's manifesto for last summer's House of Representatives election.

The budget for the current fiscal year includes a large portion of allocations to cover child-rearing allowances, for income compensation for farming households, and to make some expressway portions toll-free.

In its campaign platform for the recent upper house poll, the DPJ pledged to maintain and expand these handout policies, raising the fear that government spending will increase further. Given the dire fiscal situation, the government cannot afford to continue such spending policies.

With this in mind, a ceiling on budgetary requests made by government ministries and agencies becomes indispensable.


Secure revenue sources first

In compiling the current fiscal budget, the administration of former Prime Minister Yukio Hatoyama eliminated the ceiling established by the previous government formed by the Liberal Democratic Party and its coalition partner New Komeito. This led to government offices making unlimited budgetary requests and eventually to bloated government spending.

Reflecting on this, the Kan Cabinet was scheduled to reinstate the ceiling by approving it at a Cabinet meeting Friday.

However, discussions on the reinstatement of the ceiling have not made any headway because some Cabinet ministers raised objections. Given the deadlock, it looks less likely that the Kan administration will be able to halt the increase in government spending.

The government's fiscal management strategy incorporates the principle that a revenue source must be secured before a new policy is implemented. Cabinet ministers must comply with this principle when making budgetary requests for fiscal 2011.

(From The Yomiuri Shimbun, July 19, 2010)
(2010年7月19日01時32分 読売新聞)

by kiyoshimat | 2010-07-20 05:54 | 英字新聞

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