Review of National Funds: Monitoring of Management Should be Strengthened

Editorial

14:30 JST, April 30, 2024

National funds are devices for pooling state money for specific projects and providing subsidies and loans. However, the huge amount of state money is not being properly managed.

The government must strictly check the actual situation of national funds.

In principle, plans for the use of the national budget must be presented to and approved by the Diet each year. However, national funds are intended for projects that span multiple fiscal years. Once a lump-sum spending decision is made in the first fiscal year for a national fund, approval by the Diet is not required thereafter.

This system was created to overcome the adverse effects of the “single-year approach to a budget,” in which the budget is spent within a single fiscal year. The advantage of this system is that funds can be used flexibly for long-term projects.

National funds have recently been used to support decarbonization efforts by companies and to attract semiconductor factories to Japan.

However, the government has inspected the management and expenditure of 200 projects implemented under 152 national funds since last autumn, and it found that the funds were not being used effectively in several cases.

As a result, it has been decided to eliminate 15 projects, including one to promote development of next-generation vehicle charging infrastructure under the jurisdiction of the Economy, Trade and Industry Ministry.

In particular, 11 of these projects continued to incur personnel and other expenses for the independent administrative agencies that manage the funds, even though they had finished the task of providing subsidies. It is difficult to understand why money was spent on projects that had finished their roles. The decision to abolish these projects was made too late.

In addition, many funds have been found that will not be used in the future, for projects related to COVID-19. About ¥540 billion will be returned to the national coffers. It would be unacceptable if large amounts of state money were simply left in national funds.

Although projects financed by national funds were originally set to expire within 10 years, there were many cases in which this rule was not observed. The government has once again decided, among other items, to set a deadline for all projects implemented using national funds to be completed within 10 years of their establishment, in principle.

Since fiscal 2020, the government has compiled large supplementary budgets each year for items such as measures against COVID-19 and others against inflation, and it created a number of national funds along with those budgets. As of the end of fiscal 2022, the outstanding balance of the national funds amounted to ¥16.6 trillion, a sharp increase from ¥2.4 trillion in fiscal 2019.

The government must continue to thoroughly inspect the funds to ensure they are being properly managed.

It should also consider introducing external auditing and having the audit committees of both chambers of the Diet annually check each national fund’s expenditures.

(From The Yomiuri Shimbun, April 30, 2024)