Guidelines covering ministries' requests for budget allocations for fiscal 2019, allowing for additional spending on social security and the prospects of economic growth, clearly run counter to the government's policy of restoring fiscal health.
The government's approval of such guidelines represents an important starting point for the basic direction in which the next fiscal year's state budget is headed.
The government is due to raise the nation's 8 percent consumption tax to 10 percent in October 2019. As long as it is asking taxpayers to bear an extra financial burden, it needs to thoroughly eliminate waste. Yet the latest guidelines only erode fiscal discipline.
Symbolic of such erosion is the fact that the government has failed to present an upper limit for outlays for the sixth consecutive year since the current government of Prime Minister Shinzo Abe was launched.
Budgetary request guidelines are designed to put the brakes on the swelling of the state budget. Previously collectively referred to as a "ceiling," such guidelines have hitherto played a role in helping maintain fiscal health.
Prime Minister Abe, however, has attempted to rely on an increase in tax revenue through economic growth while sacrificing spending restraints, which would involve pain. However, tax revenue has not increased as he expected, and Japan continues to rely on debt for revenue, forcing the government to review its plan to restore fiscal health.
It has become obvious that the restraint of outlays is vital. This is why the budgetary request guidelines are of growing importance.
In spite of this, the prime minister is continuing to lean on an increase in tax revenue for support. Total budget allocation requests for fiscal 2019 are expected to surpass 100 trillion yen for the fifth consecutive year. It appears as if the government is recommending that ministries and agencies ratchet up their spending.
Trimming social security spending that has been snowballing because of the aging of the population remains a focal point in compiling the state budget. However, the government has not presented any numerical targets for reducing such outlays. Unless the government does all it can to slash such spending, future generations will be forced to shoulder more debt.
What is more worrisome is that the government is considering using financial resources separate from the current budgetary framework to implement economic stimulus measures when the consumption tax is raised. This would allow spending to surge without limit. Basically, the government is giving the green light to a large-scale economic stimulus package ahead of the House of Councillors election next year.
Additional revenue from tax increases should be used to repay state debts. Using a revenue increase for pork-barreling is preposterous.
Moreover, the government's projections for the economic growth rate in fiscal 2019 top estimates by private think tanks even without taking economic stimulus measures into account. If the government is so confident that it can achieve high economic growth, it should not have to use taxpayers' money to implement economic stimulus measures.
Even though torrential rains that recently hit western Japan have reminded the public of the importance of disaster prevention and management efforts, a sharp increase in public works spending is not justifiable without examining the efficacy of the projects. It has become increasingly necessary to secure enough funds for truly necessary policy measures while thoroughly eliminating any waste of taxpayers' money. The prime minister should move to drastically reform government spending before the government compiles its fiscal 2019 budget draft at the end of this year.