National Funds Swelling: Thoroughly Examine Whether Spending Is Truly Necessary

National funds, through which the government secures money for projects over multiple fiscal years, have continued to swell in size. These funds are financed by taxpayers’ money, so it is essential to thoroughly examine whether they are being used effectively.

Prime Minister Fumio Kishida has instructed relevant officials to comprehensively review the national funds. This move came after a large amount of money was earmarked for the funds, mainly through supplementary budgets, but much of it was not used, leaving the balances to accumulate. Money that is not expected to be used should be returned to state coffers as soon as possible.

National funds are pooled from government finances and take such forms as subsidies and loans. In principle, national budgets must be presented to the Diet each fiscal year for approval of how the money in them will be used, but national funds are not subject to Diet approval.

This is intended to counter the adverse effects of the so-called “single fiscal year approach to budgets,” whereby government bodies try to use up their entire budget within a fiscal year. However, because a Diet vote is not required for specific expenditures of national funds, it is difficult to monitor them.

Before the COVID-19 pandemic, spending for these funds was about ¥1 trillion a year. Due to the pandemic, however, the figure ballooned as a result of various measures, such as one to financially support small and midsize companies, and ¥29 trillion was allocated for the funds from fiscal 2020 to fiscal 2023.

As of the end of March this year, the total balance of these funds had reached ¥16.6 trillion.

Another problem is that in many cases, the funds have been handled without establishing such specifics as a clear time frame for their operation or a target period for achieving goals, even though massive amounts of taxpayer money have been poured into the funds.

According to national rules, the fiscal year in which the operation of a national fund will end must be specified, with the period not exceeding 10 years, in principle. However, of 186 government projects conducted by 13 ministries and agencies, the fiscal year for the end of operation remains undecided for 65 projects.

For example, ¥206 billion was set aside for a fund to promote innovation by small and midsize companies, which is intended to support research and development by such companies, in a supplementary budget for fiscal 2022. However, the ending fiscal year was not given and a target for achieving goals was also unclear.

An ending year also has not been determined for a fund to support agricultural production areas that is intended to encourage farmers to introduce agricultural machinery and other equipment.

In many cases, even the specific goals to be achieved with the national funds have reportedly not been set.

These funds incur management costs, such as personnel expenses, simply to maintain them. The operation period and goals must be specified, and funds that are not sufficiently effective or necessary should be abolished as soon as possible.

The funds were expanded partly to prepare for unforeseen circumstances amid the pandemic, but this practice should not be allowed to continue in a haphazard manner.

A supplementary budget for fiscal 2023 that has been submitted to the Diet includes a total of ¥4.3 trillion for national funds, including additional financing for existing funds. Whether such spending is appropriate needs to be discussed fully.

(From The Yomiuri Shimbun, Nov. 26, 2023)