Child allowance system unsustainable
Deliberations on a bill to expand child-rearing allowances paid to families in fiscal 2011 have started in the House of Representatives.
Not only the Liberal Democratic Party but also New Komeito have made clear their stances against the bill. In the current divided Diet, even if the bill passed the lower house, it would almost surely be voted down in the House of Councillors, where opposition parties hold the majority. Therefore, there is only a marginal possibility that the bill will become law within the current fiscal year.
The current child-rearing benefit system, for families with children of middle school age or younger, is based on a temporary statute valid for one year. If the bill on a new law does not pass the Diet, the current system will revert to the former system of dependent child allowances from April.
City, town and village governments actually in charge of handing out the child-rearing allowances changed their computer programs to fit the current system.
Therefore, it would be difficult for them to switch back to the old system so soon, as the old dependent child allowance system is quite different from the current system.
Major confusion expected
However, the local governments cannot prepare for the next fiscal year on the premise that the bill will not become law. If the situation goes on as it is, clerical work on issuing the benefits at municipal government offices will fall into major confusion. The ruling and opposition parties should immediately begin discussions to avoid such an outcome.
To do so, the government and the Democratic Party of Japan have to drop the child-rearing allowance system, at least for now. The government should declare a stance of returning to the old dependent child allowance system, created when the LDP and New Komeito were in power, and ask both parties for cooperation.
The new bill for the second year of the child-rearing allowance system is designed to raise the current monthly handout of 13,000 yen per child to 20,000 yen for children younger than 3.
The LDP and New Komeito have been arguing that improvements to child-related services, such as solving the problem of children waiting to be enrolled at certified nursery schools, should be given priority rather than maintaining a system to dole out cash.
The child-rearing allowance system has been impossible from the beginning. It would require a hefty 5.5 trillion yen annually to fund the full monthly amount of 26,000 yen per child that the DPJ has pledged to eventually provide, but there was no prospect for securing stable revenue sources.
Kan: Surprised at 26,000 yen
Prime Minister Naoto Kan himself has admitted as much.
During recent deliberations on the bill at the Diet, he said, "I was little bit surprised to hear the monthly amount of 26,000 yen when Mr. [Ichiro] Ozawa was party president," recalling the time when the DPJ was deciding the amount.
As Kaoru Yosano, state minister in charge of economic and fiscal policy, described it, this remark is "quite honest."
If Kan still thinks so, his administration should not adhere to the child-rearing allowance bill any more and, instead, both the ruling and opposition parties should cooperate to design a new system as soon as possible, with improvement of the old dependent child benefit system as the basic starting point.
If they follow the right steps, it may be possible to return to the framework of the former system of dependent child benefits backed by revenue sources, while avoiding confusion at the same time.
To finance the current child-rearing allowance system, the tax exemption system for families with children up to 15 years old was abolished, for instance. If that system is not revived, families will face significant tax increases. The government and the DPJ should analyze the situation carefully once again.
There will be resistance within the DPJ to withdrawing such a high-profile plank of the party's 2009 general election manifesto, which helped propel the party to power.
However, the government and the DPJ should not just wait for major confusion to arise without taking measures to avoid it.
We hope Kan will show his leadership in remedying the situation.
(From The Yomiuri Shimbun, Feb. 27, 2011)