Japan to spend about $25 billion on families to boost births

Tribune Content Agency

Japan will spend around $25 billion on policies meant to bolster its sliding birthrate, Prime Minister Fumio Kishida said Thursday, without fully explaining how he will fund the plans.

“This will bring our country’s spending per child on families to the level of Sweden,” which is one of the highest among developed economies, Kishida said after a meeting of his children’s future strategy panel. The advisory panel released details of the extra annual spending that will include expanded handouts for families with children.

Kishida has warned the country’s population crisis threatens to undermine its ability to function as a society. He’s promised a raft of measures without specifying where the heavily indebted country will find the money for them.

Imposing new taxes would hurt government support amid speculation that Kishida may call an election in the coming months. While he need not hold the vote until 2025, renewing his mandate would help him maintain his grip over his ruling Liberal Democratic Party ahead of a party leadership election next year.

The prime minister emphasized the speedy introduction of certain measures like cash handouts and childcare provision from the financial year starting next April.

“In securing funding for birthrate policies, we must not damage the economy or reduce incomes for young people or those raising children,” Kishida said. “By reforming spending and making the maximum use of the existing budget, we will aim not to create any additional real burden.”

He added the government would issue bonds to make up initial shortfalls in funding.

“If you think about an election that may be held, this is not the time to be talking aloud about who will bear how much of a burden,” said Masato Koike, economist at Sompo Institute Plus.

Almost 30% of Japan’s population is aged 65 or over. Last year the number of children born fell under 800,000 for the first time since records began in 1899. A study by independent think-tank Recruit Works Institute published in March found Japan may face a shortage of more than 11 million workers by 2040.

The premier has also put off a decision on how to fund a pledged 60% increase in defense spending over the next five years, as polls show voters struggling with rising prices are largely opposed to tax increases to fund the new policies.