The Democratic Party of Japan-led government withdrew a bill Wednesday to provide monthly child allowances for the fiscal year that starts Friday, including increasing payments for children under 3, amid criticism from opposition parties that the money should be used to reconstruct the March 11 disaster zone.

In response, the Liberal Democratic Party and New Komeito, the two largest opposition forces, are expected to agree to deliberate another bill in the Upper House to extend the current monthly child allowance for six months as a stopgap measure.

It is the first time since 1958 that the government has withdrawn a bill already being deliberated in the Diet. The move is expected to give momentum to discussions between the ruling and opposition parties about a supplementary budget for reconstruction.

With the current child allowance law set to expire Thursday, the end of the fiscal year, the government was pushing for a new law from April to pay a monthly allowance of ¥20,000 for those under 3 and ¥13,000 for older kids through junior high school graduation.

But without an Upper House majority or a two-thirds majority in the Lower House to override the Upper House decision, the ruling coalition faced an uphill battle to get the bill passed. The LDP and New Komeito strongly opposed the bill.

This prompted the ruling coalition to compile a stopgap bill intended to extend the current legislation for several months.

“If the law expires, it will cause confusion among households that will receive the payment and local government officials in charge of making the payments,” said Chief Cabinet Secretary Yukio Edano. “It is important to minimize the confusion as we enter the new fiscal year.”

The DPJ-Kokumin Shinto (People’s New Party) ruling bloc submitted a stopgap bill to extend the monthly child allowance for six months last week. The bill cleared the Lower House on Tuesday and was sent to the Upper House.

The Japanese Communist Party agreed to support the stopgap bill for the child allowance, thus ensuring a two-thirds majority in the Lower House. Nevertheless, the DPJ-led coalition gave up on the bill rather than face a battle in the Upper House.

This expected compromise follows an earlier commitment by the DPJ to review all expenditures, including key policies promised in past elections, to fund reconstruction.

Opposition forces have softened their stance on Diet tactics since the disaster hit, agreeing to cooperate where they can.

A stopgap bill extending tax breaks for businesses and households that were to expire at the end of this month cleared the Lower House on Tuesday after submission by the LDP and New Komeito last week.

The question now is whether a bill to allow the issuance of deficit-covering bonds will clear the Diet. If not, the government will have trouble funding the reconstruction, not to mention policies compiled in the fiscal 2011 budget.

‘Special zones’ eyed

Kyodo News

The government is eyeing designating municipalities devastated by the March 11 earthquake and tsunami as “reconstruction special zones” to facilitate their rebuilding through deregulation and preferential tax treatment.

The government is seeking to enact a new law for the creation of the special zones, which will cover a wide range of municipalities on the Pacific coast, sources said Tuesday.

Regulations that hamper reconstruction efforts will be eased in the special zones, they said.

The Diet is currently deliberating a bill to create “comprehensive special zones” aimed at revitalizing regional areas.

The government regards establishing reconstruction special zones as desirable because devastated municipalities will be able to receive expanded special treatment under a new framework.

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