Japan unveils fresh childcare plan, but funding remains unclear
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THE Japanese government laid out a fresh plan on Friday (Mar 31) to boost childcare over the coming three years, a move that may lead to another big spending package and strain the country’s already-tattered finances.
Under the plan, the government will take steps such as expanding child allowances so that they are given without income limits.
The move comes as Japan faces a relentless drop in its birth rate. While the government has earmarked 6.1 trillion yen (S$60.9 billion) for steps to arrest the decline, a senior ruling party lawmaker was quoted by the media as demanding an additional eight trillion yen to fund the new measures.
“A boost to child allowances alone could cost two trillion to three trillion yen. It sounds like the same old spending spree, which did not necessarily help turn around the birth rate,” said Takahide Kiuchi, a former central bank board member, who is now an economist at Nomura Research Institute.
“The government may end up issuing extra bonds, arguing that education-oriented bonds help future generations.”
Prime Minister Fumio Kishida has repeatedly vowed to double childcare-related spending. But he has steered clear of elaborating on details, which he said will firm up in June when the government decides on a mid-year key policy roadmap.
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Finance Minister Shunichi Suzuki said on Friday that Japan must come up with a “permanent source of revenue” to fund childcare policies, but voiced caution over the idea of issuing extra debt.
Ranil Salgado, the International Monetary Fund’s Japan mission chief, urged Tokyo to target such financial incentives towards low-income households.
“Everyone acknowledges childcare support is important, given Japan’s need to boost the growth rate. But we still believe those measures could be, or any support, should be targeted,” he said.
Japan is among the world’s fastest-ageing societies, with the number of newborns falling below 800,000 for the first time in 2022, having peaked at 2.09 million in 1973 during the second baby boom.
The declining trend has been blamed for intensifying labour shortages and pushing down Japan’s long-term growth potential.
Some analysts see the latest plan as a sign that Kishida is shoring up support and gearing up to call a snap election in coming months to solidify his standing within the ruling party.
Political analyst Atsuo Ito said that Japan’s opposition parties “also have no objection to boost childcare spending”.
“Both sides appear to join in a race to boost reckless spending.” REUTERS
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