The Diet on May 2 enacted the first supplementary budget for fiscal 2011. Worth ¥4.015 trillion, the extra budget is aimed at pushing reconstruction measures in the Tohoku-Pacific region, which was devastated by the March 11 earthquake and tsunami. The Kan administration now faces the more difficult task of getting a second, and much larger, supplementary budget passed.
The first extra budget earmarks ¥1.2 trillion for public works projects to restore damaged roads, ports and agricultural fields; ¥362.6 billion for temporary housing; and ¥351.9 billion for removal of debris. No bonds will be issued.
The government transferred ¥2.489 trillion, originally set aside to pay for the government’s share of the nation’s basic pension plan, to the supplementary budget. Because this move could reduce the perceived reliability of the pension system, the government must act quickly to make up for the loss in the pension-related fund.
The first extra budget was passed unanimously by both houses of the Diet after the Democratic Party of Japan agreed to talk with the Liberal Democratic Party and Komeito on possible changes to the DPJ’s main election promises, such as the child allowance and expressway fare discounts.
Now that the first extra budget has cleared the Diet, opposition forces may take a hard stance against the DPJ. But the DPJ should not relinquish the basic idea behind the adoption of the child allowance — which was to provide it irrespective of household income as an expression of all of society’s support for families who rear children.
To impose an income cap, as called for by Komeito, would only complicate the work of local governments. It also must not be forgotten that child-rearing families in the devastated areas will also receive benefits from the allowance.
Compilation of the second supplementary budget will take into account proposals by the Reconstruction Design Council as well as proposals for tax and social welfare reform.
The government should not propose raising the consumption tax rate without first seeking other ways to bring in more revenue, as a consumption tax hike will further weaken an economy already affected by the March 11 disasters, thus exacerbating the burdens on people.
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