The leaders of nine political parties held heated debate on the effects of the postponement of the consumption tax hike on the country's social security services on June 21, one day before the start of official campaigning for the House of Councillors election.
Prime Minister Shinzo Abe said, "We can't to everything." But Democratic Party (DP) leader Katsuya Okada and Komeito leader Natsuo Yamaguchi called for measures to improve and expand social security services. Abe's decision to push back a second-stage hike in the consumption tax, from April next year to October of 2019, has made it unclear whether the government will be able to secure enough tax revenue for improved social security services.
The government had planned to set aside 2.8 trillion yen for measures to improve social security services when the consumption tax was to be raised to 10 percent in April 2017. The government has secured about 1.5 trillion yen for such measures, about 1.3 trillion yen short of the target. The debate at the Japan National Press Club in Tokyo did not go so far as to clarify to what extent the government would have to cut down on measures to improve and expand the country's social security services. As for measures to improve and expand social security services, Prime Minister Abe said, "We can't do everything. I must honestly tell you this." He then emphasized that his government would place "priority" on measures to expand child care and nursing care facilities and improve working conditions and wages for workers there.
Of the measures related to child care and nursing care services, the government had planned to use about 100 billion yen from revenue from the planned consumption tax hike to build extra facilities for 500,000 children. But due to the postponement of the sales tax hike, the government would use other tax revenue sources to build the extra child care facilities. The government is trying to defuse public anxiety by moving ahead with original plans to carry out measures of voter interest that could affect the outcome of the upper house election.
Nonetheless, subtle differences emerged between the ruling parties during the debate, making it difficult for Abe to fully defuse public concern over the future of social security services. Komeito, the junior coalition partner of Abe's Liberal Democratic Party (LDP), had insisted on raising the consumption tax as scheduled in order to improve and expand the country's social security services. Because of this, Komeito leader Yamaguchi told Abe during the debate that the government should shorten the minimum payment period for premiums in the national pension system as part of measures to help those "pensioners" who have not received the benefits of "Abenomics" -- the economic policy mix pursued by the Abe government. Yamaguchi urged Abe not to put off measures for low-income earners which his party places priority on.
The government had planned to set aside about 560 billion yen for monthly cash stipends of up to 5,000 yen each in addition to pension benefits for low-income people and spend 30 billion yen on measures to shorten the minimum premium-payment period for the national pension system from 25 years to 10 years. But because of the postponement of the consumption tax hike, it is unclear whether the government will in fact be able to carry out those measures. In consideration of Komeito's Yamaguchi, Prime Minister Abe said, "The issue of people with no pension benefits you have just pointed out is a grave and serious problem. I would like to consider it positively." But he stopped short of promising to carry out the measures. During the debate, Prime Minister Abe was unexpectedly told by the leader of his party's coalition partner that the government is not taking sufficient measures for voters who have not been positively affected by Abenomics.
DP leader Okada said, "The government should firmly deliver on its promise to improve social security services. That's what real economic policy means." Apparently keeping in step with Yamaguchi, Okada touched on the issue of a monthly cash stipend for low-income pensioners and said, "It will cost 560 billion yen, but you should do it instead of compiling a questionable supplementary budget."
On revenue sources for those measures, Prime Minister Abe simply expressed his intention of using increased tax revenue, saying, that his government would certainly use "the fruits of Abenomics" whenever made available. Toranosuke Katayama, co-leader of Initiatives from Osaka, lashed out at Abe, saying that tax revenue could drop although the prime minster was emphasizing revenue increases. "Do you think you can continue (with Abenomics) indefinitely?" Katayama told Abe.
DP leader Okada, too, had said during a one-on-one debate with Abe in the Diet that the government should issue deficit-financing bonds to cover revenue shortfalls. Prime Minister Abe picked up Okada's argument and hit back by saying, "I have no reason to be told what to do by the Democratic Party, which called for issuance of deficit-covering bonds to make up for a shortage of funds."
None of the political leaders insisted on raising the consumption tax during the June 21 debate. Both ruling and opposition parties will come under pressure to clearly explain how to secure revenue sources for the country's social security services during the upper house election.