Making education free of charge was a key campaign promise of Prime Minister Shinzo Abe’s ruling coalition in last month’s election. Abe floated the idea of diverting some of the increased revenue from the next consumption tax hike in 2019 to help cut the household burden of education costs. Questions persist, however, as the government and Liberal Democratic Party try to work out concrete details, including doubts over providing free preschool education for children irrespective of parents’ income. A decision should not be rushed. Whether the proposed measures are truly necessary or fiscally reasonable must be weighed.
The Abe administration aims to spend ¥2 trillion — ¥1.7 trillion for free preschool education and reducing the financial burden for families whose children go on to higher education, along with ¥300 billion to increase the number of nursery schools. The government plans to secure ¥1.7 trillion of that total by using revenue from the tax hike originally intended to pay down the government debt incurred to cover social security costs. It seeks to set aside the remaining ¥300 billion by having firms contribute funds in the form of increased contributions to social insurance programs.
While the plan is touted as a key pillar of the administration’s agenda for developing human resources, it entails deferring the cost of government debt to future generations. While Keidanren has indicated its support for contributions from the business sector, small and medium-size firms are reportedly unhappy.
The government is thinking of making preschool education free for children aged 3 to 5 irrespective of their parents’ income level, starting with 5-year-olds beginning in fiscal 2019. However, preschool education for children from low-income and single-parent families is already free, and the government’s plan would benefit high-income households, effectively widening the disparity between rich and poor. There is criticism that the measure would merely allow wealthy families to use the money they save to pay for extra education, thereby expanding the rich-poor gap in terms of education opportunities. Policymakers should think again whether the measure is necessary and worth the cost.
Making child day care centers free of charge would also likely increase the number of parents who want utilize them, possibly exacerbating the shortage of such schools and their staff. Children on admission waiting lists are on the increase, with the number reaching 26,100 as of the end of April. Priority should be given to boosting the number of and working conditions at day care centers.
As for reducing the household burden of higher education, the LDP wants the government to shoulder university admission fees and tuition — regardless of parental income — and have students repay the amount in installments based on income after they start working. For a student at a national university, for example, the amount would come to ¥840,000 in the first year — ¥540,000 in tuition and some ¥280,000 in admission fees. The student would repay this sum over some 20 years after his or her annual income has reached ¥2.5 million or ¥3 million.
One problem with this idea is that the program would require ¥2 trillion in addition to the proposed funding package. Another is the difficulty in accurately assessing the income of each of the recipients after they are employed. As in the scheme for free preschool for children, it is high-income households that will benefit the most. As a precondition for introducing the scheme, the LDP is reportedly considering requiring universities to demonstrate in numerical terms what educational benefits such a program will have — but that is easier said than done. The Finance Ministry is said to be opposed to the idea.
The government meanwhile has a plan to increase the amount of grants provided to university students from low-income families in a scheme launched this year — from up to ¥480,000 now to around ¥1 million per student — and expand a reduced tuition fee program. It reportedly plans to cover only selected students from selected universities. Setting the criteria for the selection will be another issue.
Given its tight fiscal conditions, the government must ensure efficient and equitable use of taxpayer money. Increasing public spending on education is desirable, but how this is done must be scrutinized against the costs and benefits. Education-for-free programs should be closely examined from that perspective.