EDITORIAL: Kishida must tackle the daunting task of regaining fiscal health
Budget requests from government departments and agencies for fiscal year 2023 have reached an all-time high.
Securing the necessary funding for policy measures to respond to social and economic changes is taken for granted, but this should not justify disregard for fiscal discipline.
We urge the government to rigorously assess the cost-effectiveness of the proposed measures and to secure sources of revenue for the budget increase.
Total budget requests submitted to the Ministry of Finance exceeded 110 trillion yen ($784 billion) by the August 31 deadline.
The Ministry of Health, Labor and Welfare has requested 634 billion yen more than it originally requested for the current fiscal year, reflecting natural increases in social security spending due to an aging population. and other demographic factors.
Many other departments and agencies have also requested an increase in appropriations.
The total is slightly lower than the 111.656 billion yen requested for the current fiscal year, but this is due to lower budget requests worth about 3 trillion yen related to remaining funds from the previous fiscal year.
As a result, total expenditures requested by departments and agencies are effectively at an all-time high.
It is important to note that apart from the total sum, many ministries and agencies submitted a series of “jiko yokyu” item requests without specifying the amount.
The demands covered a wide range of policy measures, such as advocacy, decarbonization, support for childcare, food and economic security, infrastructure resilience and the restructuring of local rail lines.
The flood of demands is the result of heavy belt-tightening rhetoric in the “Basic Policy on Economic and Fiscal Management and Reform”.
The government downplayed the significance of the spending cuts in the key policy document in response to calls from big-spending supporters within the ruling Liberal Democratic Party.
The dismal health of the country’s public finances has deteriorated further in the face of massive spending to cushion the impact of the novel coronavirus pandemic.
Certainly, the government had good reasons to spend money to deal with the health crisis, but there is also an urgent need to start taking measures to improve fiscal health now that the economic impact of the pandemic is fading. .
It seems certain that the inflated budget demands will place the government under increased pressure from the ruling party and branches of government to increase public spending as the Ministry of Finance formulates the draft budget towards the end of the year. .
Three key areas of the budget compilation will revolve around improving national security, addressing low fertility rates and reducing the country’s carbon footprint.
Prime Minister Fumio Kishida is keen to strengthen political efforts in these three areas.
Over the past three decades or so, the government has prioritized funding to keep pace with natural increases in social security spending due to aging populations while keeping spending largely unchanged in other areas.
If the Kishida administration decides to significantly increase the initial funding levels for all three policy areas, it will mark a major policy shift.
We have no objection to increased spending to reduce Japan’s carbon emissions and reverse its population decline, as both are significant challenges.
We also understand the need to discuss the future of national defense policy in response to the changing security environment.
But the fact is that Japan cannot expect strong economic growth while its population continues to shrink.
It is irresponsible of the government to rely heavily on debt financing by betting on future growth in tax revenues.
We urge the government to ensure stable sources of revenue by increasing primary tax rates and reducing low priority programs and projects.
Kishida must realize that Japan’s fiscal approach has reached a major turning point and face the enormity of this challenge.
Any attempt to gain public support for political decisions aimed at increasing the burden on taxpayers cannot succeed without public confidence in politics.
Kishida cannot hope to win the public’s trust unless he can dispel doubts about his decision to hold a state funeral for slain former Prime Minister Shinzo Abe as well as the LDP’s relationship with the Church of Unificationnow officially called the Family Federation for World Peace and Unification.
–The Asahi Shimbun, September 3