Lavish budgetary handouts will not solve nation’s various problems
What is the purpose of a supplementary budget? The compilation of the envisaged budget must include efforts to fully examine its objective and its effectiveness.
The government is working to draw up a supplementary budget for fiscal 2015, under instructions from Prime Minister Shinzo Abe. The size of the budget will likely be somewhere in the first half of the ¥3 trillion range. The government will seek to shepherd the budget through the Diet after submitting it to an ordinary session of the legislature to be convened early in January.
The main pillars of the budget include emergency measures to realize “a society that will promote the dynamic engagement of all its citizens,” as well as steps aimed at addressing problems affecting the agricultural sector due to a broad agreement reached in multilateral talks over the Trans-Pacific Partnership free trade pact.
Another main feature of the budget is a plan to establish more nursing facilities for elderly people, in pursuit of the goal touted by the Abe administration to ensure that no one has to quit their job to provide nursing care for a relative. It can be hoped that the plan, if translated into action at an early date, will produce even greater results.
The budget is also likely to include allocations for such policies as antiterrorism measures to be taken in preparation for the Ise-Shima summit of Group of Seven nations in May next year, and rehabilitation work to be carried out in areas that were struck by natural disasters. They can be understood as urgent budgetary appropriations.
However, the budgetary content currently being studied by the government entails a considerable number of items open to question. Doubts can be raised about whether they truly need to be funded by the supplementary budget.
There are concerns that the budget may include policies that could be viewed as lavish government handouts, in the guise of trying to improve the quality of social security services and addressing problems arising from the TPP accord. Such policies may serve as a means of responding to requests from elderly people and regional communities in preparation for next summer’s House of Councillors election. Each item included in the budget must be rigorously assessed by closely examining its cost-effectiveness.
Why limited to elderly?
One typical example of such lavishness is a plan to pay about ¥30,000 in benefits per person to elderly people who receive low pension payments. The plan has been described as a measure to address the increasing burden felt by ordinary households as a result of a rise in the consumption tax rate and rising prices due to the depreciation of the yen.
The number of elderly people eligible for such government benefits will likely surpass about 10 million, with the necessary budgetary funding expected to total as much as ¥300 billion. However, such a one-time benefit program may prove to be limited in producing good results.
First of all, it is difficult to understand why the persons covered by the benefit program will be limited to pension recipients at a time when a large number of young people who are working in non-regular jobs for low salaries are experiencing financial hardships.
We believe the government should thoroughly discuss measures to aid low-income members of the population within the social security policy framework — not just try to address pertinent issues on an ad hoc basis with the supplementary budget.
The budget is also expected to incorporate such TPP-related measures as plans to build and improve farm roads and carry out other land improvement projects. We doubt that our nation’s agricultural competitiveness will be increased only through efforts to add such conventional agricultural civil engineering projects to the existing ones. The boost to the economy will also be limited.
We believe importance should be attached to implementing measures aimed at supporting farmers who are willing to adopt a proactive stance regarding their agricultural operations. Specific steps include cultivating channels for overseas sales conducive to bolstering agricultural exports and developing new high value-added products.
Fiscal resources necessary for the supplementary budget will be raised by using appropriations left unused under the fiscal 2014 budget and extra gains accrued from greater-than-expected tax revenue due to an economic recovery in fiscal 2015.
We find it reasonable to avoid issuing new government bonds under the budget. In consideration of the nation’s critical fiscal condition, however, it should not be forgotten that the reasonable option for utilizing an unused portion of budgetary allocations is to set it aside to repay debts.
(From The Yomiuri Shimbun, Dec. 7, 2015)