Japan’s 2024 Budget Plan Focuses on Boosting Birth Rate; Details on Paying for Related Measures Remain Unclear

The Yomiuri Shimbun
Prime Minister Fumio Kishida, second from left, addresses on Friday a joint meeting of the council for the promotion of child-related measures and the headquarters for building social security for all generations.

In the compilation of the fiscal 2024 budget that was adopted by the Cabinet on Friday, the key issue was specific measures to address Japan’s chronically low birth rate, which Prime Minister Fumio Kishida has called “the greatest crisis our country faces,” and the financial resources to implement them.

But discussions on how to cover the increasing related expenses remain half-done, with many of potential measures to secure financial resources carried over for further discussion to next year or even later.

‘Sustainable social security’

“To make social security sustainable, we will build a system in which all generations should support each other fairly according to their ability to bear the burden,” Kishida said at a joint meeting of the council for the promotion of child-related measures and the headquarters for building social security for all generations. The meeting was held before the Cabinet’s decision on the budget was made.

Calling for “measures to address the declining birth rate with a different dimension,” Kishida has positioned the coming three years as a period of intensive efforts to address the issue.

To implement the measures, the government and ruling parties are working on both the details of the measures themselves and the ways to secure financial resources for them, turning the process of budget compilation into one of discussing mostly children, as a senior Finance Ministry official put it.

The central and local governments together will increase by approximately ¥1.3 trillion their total spending on measures to cope with the declining birth rate in fiscal 2024.

Included are measures to increase benefits, such as scrapping the income cap for child-rearing allowances, and measures to enhance the quality of childcare services by revising the minimum ratio of childcare workers to children.

However, measures to make college tuition free for households with three or more children have been arranged so that they will cease to be applicable when such households come to have two or fewer dependent children, for reasons such as one or more of them finding a job. Some within the ruling Liberal Democratic Party criticized this as sloppy policymaking, saying, “This would end up deceiving the people.”

Deficit-financing bonds

The government is focusing on measures against the low birth rate because if the decline in births is not halted, the number of working-age people will continue to shrink, making it difficult to maintain the social security system and other aspects of society.

The number of babies born in Japan in 2022 totaled just over 770,000, falling below 800,000 for the first time and marking the lowest number since records began 1899. Births are dropping at a pace that outstrips the estimates made by the National Institute of Population and Social Security Research.

At the same time, the financial resources to support measures against the declining birth rate have not been fully secured.

In fiscal 2028, the central and local governments combined will need stable financial resources for the measures totaling approximately ¥3.6 trillion. Social security spending will account for a third of the government’s overall expenditure, meaning their fiscal situation will remain tight.

In fiscal 2024, the government will issue special government bonds worth ¥221.9 billion, earmarked for childcare support, to make up for the revenue shortfall.

Kishida’s signature policy of addressing the declining birth rate will start with funds secured through new debt, with the issued amount of the special bonds to increase further in fiscal 2025.