Don’t Turn Subsidies into Easy Way to Attract Votes before Elections

While it is important to ease the pain of household budgets caused by high prices, haven’t government measures become easy spending for election purposes? The hope is that the government and ruling parties will carefully examine the effects of the specified use of the national budget.

The government has decided on a ¥2.2 trillion package of measures to deal with high prices at a Cabinet meeting. The main pillar of the measures is to increase by ¥1.2 trillion “extraordinary subsidies for regional revitalization,” which local governments will be able to decide how to use at their own discretion.

Of the increased amount, ¥500 billion will be used to provide benefits to low-income earners, including households that are exempt from paying residential tax. The central government has set a target of ¥30,000 per household, but local governments can deal with the subsidies flexibly. For example, at their discretion they can reduce the amount provided but expand the scope of who is eligible for support.

In addition to the subsidies, the government has also allocated in the budget ¥50,000 per child of low-income, child-rearing households. The rise in prices of food and other daily necessities is a major blow to low-income families. It is understandable that the government intends to intensively focus its support on this area.

The central government has recommended that local governments use the remaining ¥700 billion of the extraordinary regional subsidies to reduce the burden on LPG users, who are not covered by the central government’s measures to subsidize electricity and city gas expenses, and factories that consume large amounts of electricity, among others. The amount can also be used for subsidizing school lunches or issuing shopping vouchers.

These subsidies were originally established to deal with the novel coronavirus, and from this fiscal year they are also being used to combat high prices. In the past, there were local governments that used the subsidies to create a giant squid monument or renew their official vehicles.

It is important for local governments to devise ways for their revitalization according to their actual conditions, but it is unacceptable to use the funds for purposes other than those for which they were originally intended. Efforts must be made to appropriately spend the funds.

The financial resources for the measures against soaring prices this time will come from the about ¥5 trillion that remains unused out of the about ¥10 trillion in reserve funds appropriated in the current fiscal year’s budget to address the coronavirus and soaring prices.

Unlike supplementary budgets, reserve funds do not require Diet deliberations in deciding how to use them, which can easily lead to wasteful spending. They are originally intended for emergencies, such as disaster response.

Why is it necessary at this time of the year to use reserve funds to take measures against high prices? Before the end of this fiscal year, it is undesirable for reserve funds to be seen as an easy way to attract votes for the upcoming unified local elections. The government should provide a thorough explanation.

Since Russia’s invasion of Ukraine, the Japanese government has allocated a cumulative budget of over ¥15 trillion for measures to deal with high prices, including subsidies for gasoline, electricity and natural gas expenses. It is difficult for Japan, which is in a critical fiscal situation, to continue such massive spending at this rate.

It is vital to make efforts toward structural reforms, such as promoting energy-saving steps and making concentrated investment in decarbonization, so that the nation can withstand rising resource prices, which are the main cause of high prices.

(From The Yomiuri Shimbun, March 29, 2023)