- At the cabinet meeting held on December 25, the Japanese government adopted its budget plan for FY1999. It is a large-scale program, envisioning ¥81 trillion in general-account outlays and the first rise in three years in the Fiscal Investment and Loan Program. It thus represents a major about-face from the FY1998 budget, which was compiled under the rigid constraints of the Fiscal Structure Reform Law. The plan is to issue government bonds amounting to ¥31 trillion to cover the recession-induced decline in tax revenues, implement tax reductions in excess of ¥9 trillion, and disburse just under ¥10 trillion for public works projects. All told, the FY1999 budget has been billed as a budget "compiled from the government's stance of doing all it can toward an early economic recovery."
In RENGO's view, however, the government budget is inadequate, in terms of both quality and quantity of spending, to turn the Japanese economy around toward positive growth in FY1999. The proposed volume of spending is ¥6 trillion less than the FY1998 budget following three supplementary budgets for the year. In particular, the planned tax cuts and employment measures are a far cry from anything that could be claimed to be an initiative, which gives priority to the security of life and employment.
- In order to avoid negative growth for a third consecutive year, it is essential for the Japanese government to take aggressive stimulus steps, including bold measures to sustain employment and revitalize regional economies. However, the government's budget plan totally lacks concrete measures to create new jobs in order to realize the goal of "creating one million jobs." The ¥700 billion in outlays for employment measures, which RENGO has demanded, should have been included as a component of the general-account budget. In the area of public works, we believe it necessary to provide for the security and revitalization of community life through improvements to life-supporting social capital such as nursing care and childcare facilities, and housing and public parks.
However, the FY1999 budget, as in the past, puts a disproportionate emphasis on projects related to so-called basic production facilities, such as the construction of international hub airports, improvement of foundations for agriculture, embankments and other conventional public works. It has failed to break away from the old pattern of balancing the vested interests of the government ministries. Another major problem with the budget is the extraordinary prominence of miscellaneous expenses with no particular strings attached.
RENGO also rejects the over ¥9 trillion in tax cuts, because they unfairly favor the rich and the big corporations by lowering the top rate on individual income tax and cutting corporate taxes. What is needed rather to encourage a rebound in personal consumption is a combination of income tax cuts and increased payoffs of benefits that will favorably affect people in the low- and middle-income brackets.
- In terms of measures to help secure stable livelihood, in order to cope with the aging society with a declining number of births, the government must work to improve the foundation for welfare and better living conditions, establish a stronger social security system, and strengthen environment-preservation measures.
The government's FY1999 budget has, it is true, increased outlays for nursing care and childcare measures from the levels of budget requests last summer. However, projects to prepare for the introduction of the insurance system for the public nursing care in the year 2000 are so far totally inadequate. With regard to the public pension system, the government has put a planned increase in premium rates on hold. However, the government has implemented cuts in benefits while avoiding any drastic reform of the crumbling old-age basic pension scheme or an increase in the portion of basic pension benefits financed by tax revenues. The budget thus fails to offer a social security safety net that will provide Japanese people with a sense of security and confidence. RENGO cannot accept the government's plan to offer health insurance-covered drugs to the elderly free of charge without a drastic reform of the elderly health insurance scheme. The idea was pushed through by the Japan Medical Association to protect its own interests. RENGO believes the government's environmental measures are still insufficient, despite an increase in outlays in this area, including a budget for research into measures to deal with dioxin contamination. Increased efforts should also be made, particularly in the area of industrial waste disposal and recycling.
- Amid the deepening recession that has brought about high unemployment, declining income and a stagnation of production activities, the government ought to take the following four specific actions to help dispel anxieties over life and jobs and pave the way for an early economic recovery: (1) promptly implement employment-creating policy measures, including the joint proposal by RENGO and the Japan Federation of Employers' Associations (Nikkeiren) for the "creation of one million jobs"; (2) establish a social security system that can provide Japanese people with a sense of security and confidence, (3) implement income tax reductions starting from January 1999 for people in low and middle income brackets; and (4) implement higher allowances for dependent children and benefits to the elderly. RENGO strongly urges the government to materialize policies and schemes to get rid of anxieties over people's livelihoods at the next ordinary session of the Diet, focusing on drastically strengthened employment measures and other steps included in the aforementioned four specific actions.
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