Photo/Illutration Chief Cabinet Secretary Hirokazu Matsuno, second from left, speaks on behalf of Prime Minister Fumio Kishida at a March 22 meeting to approve measures to deal with surging consumer prices. Kishida was returning to Japan from a visit to Ukraine. (Asahi Shimbun file photo)

The government is again riding roughshod over the most basic constitutional principle of financial democracy, which says how to use the national budget must be decided by the Diet.

This cannot be overlooked.

The administration of Prime Minister Fumio Kishida has decided on an additional spending package to cushion the impact of rising prices. The package, worth more than 2 trillion yen ($15.3 billion), will be financed by contingency reserve funds in the fiscal 2022 budget.

To support low-income families with young children, 50,000 yen of cash per child will be provided to such households. In addition, a newly created emergency subsidy program to promote local regeneration will be expanded by 1.2 trillion yen to help local governments deal with the challenge of surging prices.

As the uptick in prices continues, many large Japanese companies are offering certain levels of wage hikes to their employees during the annual “shunto” spring negotiations between labor and management.

It is, however, unclear whether the wage trend will also benefit employees of small and midsize companies and nonregular workers such as part-timers.

We can understand the need for additional government spending to support needy households and smaller businesses struggling with higher material costs.

But the wisdom of using state subsidies that local governments can use mostly at will as the principal channel of financial support for this purpose is open to question.

While it says local administrations will be advised to use the money to reduce the burden of rising food and fuel-related expenses, such as expenditures to provide school lunches and pay for consumption of liquefied petroleum gas (LPG), the government has said the money can also be spent for other purposes.

In explaining the aims of the financial support, Chief Cabinet Secretary Hirokazu Matsuno said the administration will “enhance further well-thought-out support tailored to the specific needs of individual areas.”

But it is difficult not to suspect that this is a political claptrap with an eye to unified local elections this spring.

The money provided through this special subsidy program, launched as a measure to deal with the economic impacts of the COVID-19 pandemic, has been used for such questionable purposes as building a huge monument as a tourist attraction or purchasing an official vehicle.

It is vital to prevent local governments from using the money for purposes other than combatting inflation.

The most serious problem with the package is that the Kishida administration is using the reserve fund that can be tapped without gaining Diet approval to finance the spending plan. Only Cabinet approval is required to spend money from the fund.

Shigeyuki Goto, state minister in charge of economic revitalization, has defended this approach, saying the measure is in line with the purpose of the contingency reserve fund, which is to deal with unexpected spending needs. But his argument is far from convincing.

Commodity and currency markets have regained some stability after months of a steep rise in the international prices of crude oil and other commodities and the yen’s rapid weakening. The domestic price trend is within the scope of the government's expectation.

The government should have earmarked funds to finance expenses that will be needed in April or later under the fiscal 2023 budget. Even if there have been some factors that were not anticipated when the fiscal 2023 budget was formulated, revisions to the draft budget during the Diet deliberations on the spending blueprint should be enough.

What the administration is doing is another example of earmarking a huge amount from the reserve fund, a practice that began in response to the pandemic. The scope of the uses of the fund has been significantly widened to cover outlays to deal with inflation.

Under this approach, the government has been shelling out massive funds without seeking Diet approval. The fiscal 2023 budget bill includes 5 trillion yen from the contingency reserve fund. This approach is effectively eroding the Diet’s role of scrutinizing and endorsing state budgets.

Lawmakers of both the ruling and opposition camps should realize that financial democracy is in danger of becoming a dead letter and stop the government from abusing the reserve fund.

We strongly demand that the massive reserve fund should be removed from the draft budget.

--The Asahi Shimbun, March 24