FY21 Budget Plan Focuses on Digitization, Decarbonization

The Yomiuri Shimbun
Finance Minister Taro Aso speaks at a press conference after a fiscal 2021 budget proposal was approved at a Cabinet meeting on Monday.

The government’s fiscal 2021 budget proposal reflects Prime Minister Yoshihide Suga’s emphasis on his signature policies including digitization, decarbonization and rectifying the overconcentration of population and government functions in Tokyo. While the prime minister calls for breaking down bureaucratic sectionalism, some ministries and agencies reacted with discontent against giving up their vested interests. With the novel coronavirus still not under control, the question is whether the government can proceed with the reforms.

■ More spending

At a press conference after a Cabinet meeting on Monday, Finance Minister Taro Aso said about the fiscal 2021 budget, “While taking all possible measures to prevent the spread of infections, it also firmly addresses medium- to long-term issues such as the realization of a digital society and a green society.”

One item the prime minister focused on was popularizing the My Number card, the core element of digitization of administrative procedures for citizens. The government earmarked over ¥190 billion for it in the fiscal 2021 budget proposal and the third supplementary budget for fiscal 2020, an increase of about 30% compared to the same period a year ago.

In keeping with the prime minister’s emphasis on regional areas, the budget proposal also included funding to support teleworking in regional areas.

Suga also showed his commitment to projects related to the government’s goal of net-zero carbon emissions by 2050. In the third supplementary budget for fiscal 2020, prepared together with the fiscal 2021 budget proposal, the government established a fund to support the development of environmental technologies. Although the initial assumption within the government was to allocate about ¥1 trillion, it was doubled to ¥2 trillion with the strong intentions of the prime minister.

“The environment is the pillar of Japan’s future. I had been thinking Japan must make a statement [on the government’s target],” Suga is said to have told a close Diet member in a meeting in early December.

■Vested interests

However, there have been some moves of resistance. About ¥300 billion, out of a total information systems budget of about ¥800 billion, was consolidated into a digital agency scheduled to be established next September. The ministries and agencies that are giving up their existing budgets have complained about this.

The consolidation of budgets is aimed at reducing wasteful spending and increasing convenience for the public by integrating system maintenance and management.

But bureaucrats are reacting with instinctive defensiveness as budget reductions affect the influence of their ministries and agencies.

Some ministries that lost part of their budgets are already pledging to fight back, but a senior official of the Finance Ministry said: “Things will not just happen by simply consolidating the budget to the digital agency. The key is how to manage and improve efficiency.”

■Steep road ahead

It remains to be seen whether the government can scale back the extraordinary measures it has taken to support residents and businesses affected by the novel coronavirus. The government has indicated that after next spring it will review the special measures of virtually interest-free and uncollateralized loans as well as employment adjustment subsidies. However, if the pandemic is prolonged, calls to continue these measures may grow within the ruling parties, conscious of the impact on the next House of Representatives election.

In recent years, the budget for small and midsized enterprises has been less than ¥1 trillion, but it exceeded ¥20 trillion in fiscal 2020 due to a series of supplementary budgets.

The prime minister envisions strengthening the economy of regional areas and raising wages through expanding the size of small and midsized enterprises and changing their business models. However, there are fears that this may become a distant prospect if the unusual life-support measures continue.