Gov't having second thoughts on key child allowance pledge

Thursday 19th November, 07:09 AM JST

TOKYO —

The government will review a plan to offer allowances to families with children starting in fiscal 2010—a signature pledge of the Democratic Party of Japan’s election campaign—cabinet members said Wednesday.

Finance Minister Hirohisa Fujii told a news conference that whether to set an income limitation for the allowance program ‘‘could be a point of argument’’ among cabinet members, at a time when the two-month-old government is struggling with budget constraints for the year starting April.

During the election campaign, the DPJ promised to provide monthly allowances of 13,000 yen in fiscal 2010 and 26,000 yen from fiscal 2011 for each child of junior high school age or younger, regardless of income levels.

The review is partly due to differences of opinion within the ruling coalition over the framework for the allowance program.

Fujii said policies mapped out in the DPJ’s campaign platform are ‘‘important’’ but added, ‘‘We still have to think about the amount of money’’ for each of them.

He also said that whether to ask local governments and companies to shoulder some of the funds for the allowance program would be on the agenda during the review.

The DPJ’s junior coalition partners—the Social Democratic Party and the People’s New Party—have called for an income cap to be applied to the program, which would require 2.7 trillion yen for fiscal 2010 if monthly cash payments of 13,000 yen are given to all families with children of junior high school age or younger.

Deputy Prime Minister Naoto Kan also said that the allowance program and the planned abolition of provisional gasoline and other automobile-related taxes will be the subjects of the cabinet’s budget reexamination.

Prime Minister Yukio Hatoyama, however, signaled that the government would stick to its initial plan, telling reporters not setting an income limit is ‘‘a fundamental principle’’ and he wants to continue to discuss the matter along this line.

The remarks came a day after the cabinet outlined a basic policy for a planned second extra budget for fiscal 2009 and the budget for fiscal 2010.

Amid a shortfall in tax revenue, the cabinet on Wednesday initiated the process of sorting out economic policy priorities for fiscal 2010 under the leadership of Kan, also state minister for national strategy, and economic and fiscal affairs.

Yoshito Sengoku, state minister in charge of administrative reform, said Wednesday at a House of Representatives Cabinet Committee session that Japan’s tax revenue is likely to fall to around 38 trillion yen or even lower in the current fiscal year to March 31, far below the initially estimated 46.1 trillion yen.

The government is trying to pare down expenses as much as possible, while tax revenue for fiscal 2010 is expected to slump to around the same level as this fiscal year.

Hatoyama and Fujii have said the government would not issue government bonds beyond the 44 trillion yen planned by the previous government for fiscal 2009.

But how exactly the government will finance the next fiscal year’s budget without further deterioration in the nation’s fiscal health has not been clarified.

On a request basis, the budget for fiscal 2010 has swelled to a record 95 trillion yen, despite the DPJ-led government’s resolve to cut wasteful outlays.

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Latest 15 of 37 Total Comments Show All

Dubya at 11:24 AM JST - 19th November

It is absolutely none of the government's business giving out money like this. Gimmme, Gimmme, Gimmme.... is all I hear at this site. After confiscating money from the rich, some posters here want to exclude from receiving benefits the very people who would pay the most into the system. WTF? Theft is theft. You people just want totalitarianism.
Dubya at 11:26 AM JST - 19th November

Why is the government redistributing wealth? It is not their business.
kirakira25 at 11:26 AM JST - 19th November

Not a parent then, huh Dubya??!
cleo at 11:41 AM JST - 19th November

Why is the government redistributing wealth? It is not their business.

If it's what the country as a whole needs to get back on its feet and achieve nationally-held goals, then Yes it is the government's business to redistribute wealth
5SpeedRacer5 at 01:05 PM JST - 19th November

"It does not make sense economically, socially or politically to give everyone with a child money."

Yes it does. It makes sense in all three respects. It prevents social division if you give it to everyone. If you take away benefits to "rich" people, you save probably 2% of the total cost of the program and pick up stigma, class struggle, etc. Giving benefits to everyone also emphasizes that this money is for CHILDREN not for spending cash, no matter who it is given to. It also avoids... well... this is hard to explain... if there is something Darwinian going on where stupid poor people are having more kids and rich intelligent people are having fewer, you do not want to hurry that along, right? Best to avoid that discussion altogether by giving disbursements to everyone. Moreover, rich people are taxed progressively, but receive regressively... they pay more and get back the same amount as you do.... and that is not good enough for you?

You will argue that the marginal propensity to consume of rich people is not as high as that of poor people, and you are correct, but this is not primarily for STIMULUS. This is a safety net. Nobody gets a medal for having kids, but it is clear that society should be helping parents somehow.

Cleo is very correct in her interpretation. I am just guessing, but I bet she has worked hard to raise her children as she sees fit, and it has raised her income. Now she sees her relative income reduced by this plan compared to stay at home moms. Is it because she is a bad citizen, bad worker, or bad mother? No. She should not be "penalized."

Osakadaz, congratulations. You are a lucky guy. Remember that in about three years, hahaa.
dolphingirl at 02:05 PM JST - 19th November

First of all, the government should have thought this through before making promises to people. I think they need to prioritize, decide on a few things that really need their attention and go from there. If they are not focused, they won't achieve anything worthwhile. And, yes, taxing cigarettes and alcohol is a marvellous way to increase revenue.

As cleo and kirakira pointed out, wouldn't it be better to put this money towards more affordable daycares, subsidies for families sending kids to preschool/kindergartens, improvements to public schools, food stamps, free used clothing, etc?

Maybe this was their way of trying to encourage people to have more children but I don't think giving 12,000 per child is much of an incentive. If you are really poor, it wouldn't help at all. If you are middle class, you likely have enough money to provide the basics so 12,000 would just be bonus money and if you are upper class or rich, you don't need the money at all. The only people who would see this as real incentive are the stupid ones.

Better services are needed to support families and to make having children easier and more affordable. I think for a lot of young people these days, the idea of supporting children just seems impossible so the government needs to put the dream of having a family within their reach.
dolphingirl at 02:06 PM JST - 19th November

sorry, that's 13,000 yen
elbudamexicano at 07:17 PM JST - 19th November

Maybe Hatoyama and his DPJ have math problems. You can not cut taxes here and there then also make the highways free, give money handouts to the entire country, and hope that the country's financial situation will just presto magico, be completely solved. I do feel 13,000 yen to NEEDY families is a great idea, but now we must define who is NEEDY, surely those in Ginza, Azabu etc..do not care about 13,000 yen for their kids and they should be taxed more their in Ginza, Minato ku etc..
Junnama at 07:29 PM JST - 19th November

Japan has far too many benefit programs for the elderly and not enough for children. It would be sad to see this promise broken. Chop some welfare for the elderly instead.
Stranger_in_a_Strange_Land at 08:12 PM JST - 19th November

When the campaign was going on I swear I read in the Yomiuri something like 25,000 per child monthly. Am I mistaken or did the figure change?

Anyways, I would "settle" for free daycare as I'm currently paying 65,000 a month for two kids. :(
kirakira25 at 08:26 PM JST - 19th November

No, you are not mistaken, I think the figure did change down to 13k next year, and THEN 26k, and now - whadd`ya know - changed again!

I think Japanese daycare is actually cheaper than a lot of daycares overseas, say in Canada, the US and the UK (from what I hear), but yeah, definitely anything that can help with the cost would be most welcome!
ashika1009 at 09:42 PM JST - 19th November

Can`t keep promises due to lack of funds.

This is reality.

To promise what you cannot deliver is ever the ploy of the Left.

Sounds good at the time, but a thinking person realizes that what is being promised is just not possible.

Money does not grow on trees.

Of course taxes can be increased to provide these funds but this is self-defeating, isn`t it?

The government takes your money in increased taxes, "spreads the wealth around" and merely manages to hurt the very people it promised to help.

Okay, fool me once shame on you. Fool me twice, shame on me.

Same thing happening in the US, I believe.

This is reality.

How can a government increase benefits when wage-earners are in decline and will continue to decline in future with 1.2 birthrate?

Less wage earners more taxes?

Does not compute and does go right downhill.

Demographics is not only interesting, it teaches stark realities.

And we are getting a big dose of reality right now across the West and in all democratic industrialized nations in the East.

We need more kids, not less.

The math is that simple.

Population does count.

Big time.
usaexpat at 12:39 AM JST - 20th November

I think the second thoughts might have something to do with the fact that the government doesn't have the money
5SpeedRacer5 at 02:40 AM JST - 20th November

kirakira

I think that the difference is ONE TIME vs. EVERY MONTH. I think that there was a disbursement that went out about the time of the election. DPJ wants to now do it monthly. Not sure about details. So the amount is lower because it goes out regularly.

dolphingirl

I am all for payments because the government does not know what my child needs, period. I do. It is easy and cheap to disburse the money. In contrast, building or renting daycare centers, hiring teachers, training them, getting equipment... ugh...that could take forever, it is likely to compete with existing services, etc.

The money is not an INCENTIVE or STIMULUS at all. It is intended to compensate people for costs that they already face. 12000 can go a long long way in so many ways. Food, clothing, books, checkups, vaccinations, better transportation, better heating. You could easily finance a computer, internet service, tutoring, or other things. Kids need many different things to have a rich period of development. I do not want to overstate the case, but it might be possible, if cleverly used, to allay all costs with that money, given free education, that is. I think I could do it. Healthy cooking, used clothing, used books and libraries, etc. We should help parents to have the healthiest, happiest, smartest kids possible. The payback will extend out 80 years or so. Cancer treatment for a retired old lady effectively earns no payback at all. Even a highway will only last 40 years or so.
societymike at 01:24 PM JST - 25th November

So on a very basic level, it's a "welfare" system.

Look how awesome it works in the US!! Maybe the Japanese work ethic will ensure it doesn't become a crutch for the poor and lazy? lol