Detailed, realistic planning necessary to avoid endless ballooning budgets

It is proper to spend large budgets on important measures, but the limitless ballooning of national finances must be avoided. Ministries and agencies need to scrutinize whether projects are really necessary from the budgetary request stage.

At a Cabinet meeting, the government has decided on budgetary request ceilings that will serve as the general framework for each ministry and agency to make its budgetary request for fiscal 2023. Ministries and agencies will submit their requests by the end of August in accordance with the ceilings, and budget compilation will begin in earnest.

The original purpose of budgetary request ceilings is to set a cap on the amount requested by ministries and agencies to prevent unchecked fiscal expansion. This time, too, a limit was set to curtail the amount of budgetary requests for discretionary spending, including for public works projects, by 10% from the fiscal 2022 budget.

On the other hand, the government made exceptions for measures to deal with defense, the low birth rate and decarbonization, as well as the coronavirus pandemic and rising prices. It deemed these areas to be important enough that ministries and agencies are allowed to make budgetary requests without specifying yen figures, requiring them only to list separate areas of expenditure. There is concern that the ceilings will come to exist in name only and requested amounts will effectively become limitless.

The government said it also will set a special quota for budgets related to a “new form of capitalism,” a signature policy of the Cabinet of Prime Minister Fumio Kishida, to ensure budgetary requests of around ¥4.4 trillion.

There is no objection to generous budget allocations for these measures. But it is necessary, as a prerequisite, that the budgets must be effectively used.

In the budgetary request ceilings last year, too, coronavirus control measures were included among those for which ministries and agencies were allowed to make budgetary requests without specifying yen figures, requiring them only to list separate areas of expenditure. As a result, the budget in this regard significantly expanded.

However, it is hard to say that the government has produced sufficient results in securing hospital beds for COVID-19 patients and improving and expanding medical service systems, among other measures, in addition to the conspicuous funds left unspent. Also, there were a number of projects that had little to do with the pandemic.

Relevant ministries and agencies should check the effectiveness of their past budgets and strictly refrain from including nonurgent, nonessential projects in the name of important measures.

In its manifestos for the latest House of Councillors election, the ruling Liberal Democratic Party set a target of a defense budget equivalent to at least 2% of gross domestic product. Pressure to expand budgetary spending is expected to increase, but the nation’s fiscal situation is severe.

It is essential to consider specific equipment and other preparations to deal with contingencies, rather than prioritizing setting an overall budgetary framework for that purpose.

The government’s Basic Policy on Economic and Fiscal Management and Reform this year included a statement that the government “should not limit its options for important measures,” while aiming to restore fiscal health. This was the result of demands from LDP lawmakers who support an aggressive fiscal policy.

To focus on important measures, it is inevitable to discuss how to secure financial resources for them, but the LDP has yet to go into deeper discussions. Relying too easily on the issuance of government bonds will only increase public anxiety. It is time to start a national discussion on what kind of burdens, including a tax hike, should be shouldered.

(From The Yomiuri Shimbun, Aug. 5, 2022)