Economic, fiscal policies should be how-to manuals, not mere wish lists

The Yomiuri Shimbun

9:58 JST, June 19, 2021

There is no point in merely arranging themes and goals. A long-term strategy to restore vitality to the Japanese economy should be presented clearly in anticipation of the day when the novel coronavirus pandemic is brought under control.

The government has adopted a Basic Policy on Economic and Fiscal Management and Reform at a Cabinet meeting. This is the first time that such a policy has been decided under the Cabinet of Prime Minister Yoshihide Suga. In the economic and fiscal policy, the reduction of greenhouse gas emissions through decarbonization, and digitization in the public and private sectors, have been positioned as the main driving forces for post-coronavirus economic growth.

The direction of the policy is appropriate, but the content is only a mishmash of conventional measures taken by each government ministry and agency. It must be said that it lacks the substance.

As for climate change measures, the policy emphasizes that renewable energy should be introduced to the maximum extent possible, calling for steady implementation of investment in necessary transmission and distribution networks and electric power sources.

However, the policy does not clearly state how to encourage utility companies to invest when they lack surplus management capabilities due to the deregulation of the electricity sector, nor does it address the government’s role in restarting nuclear power plants, which do not emit carbon dioxide.

In the digital field, the policy calls for most administrative procedures to be conducted online within five years. The digital agency, which has been touted as one of Suga’s signature projects, will be launched this autumn, but how to drastically deal with the longstanding challenge of a lack of cooperation between government ministries and agencies and local governments in promoting administrative procedures online remains to be seen.

As for dealing with COVID-19, Japan has repeatedly experienced situations in which the medical care system has been under strain, despite having more hospital beds and fewer coronavirus cases per capita than Western countries.

Reflecting on this, the policy stipulates the need to consider strengthening the authority of the central and local governments to secure hospital beds and medical workers in the event of an emergency, but it does not include clear details about how this can be achieved. Concrete measures for that purpose should be presented as soon as possible.

How can the government rebuild its finances, which have deteriorated rapidly due to massive spending related to coronavirus measures? The strategy, whose direction should have been presented in the policy, is more ambiguous.

The policy maintains the conventional goal of achieving a surplus in the primary balance of the central and local governments in fiscal 2025. At the same time, however, it stipulates that the government will reconfirm when the goal can be achieved by the end of this fiscal year.

This will inevitably be seen as a move by the government to try to postpone discussions on a revision of the goal in anticipation of the House of Representatives election to be held by autumn this year, even though it is clear that the goal is impossible to achieve.

From 2022, the baby-boom generation will be aged 75 or older, and the growth of social security expenses is expected to accelerate. It is necessary to redraw the course for fiscal reconstruction.

It has been pointed out that while Suga is working hard on specific measures that are close to people’s lives, such as lowering mobile phone charges, he has not presented a concrete, clear vision for the nation. It is hoped that the prime minister’s vision for Japan will be conveyed sufficiently to the public in the economic and fiscal policy.

— The original Japanese article appeared in The Yomiuri Shimbun on June 19, 2021.