(Sankei: October 16, 2015 – p. 11)
The government decided on Oct. 15 to formulate a FY2015 supplementary budget before the end of this year. This budget will focus on remedial measures for agriculture in light of the basic TPP agreement.
However, there are two schools of thought in the ruling parties – one favoring “offensive” measures to improve the competitiveness of agriculture, the other focusing on “defensive” pork-barrel type of spending, such as compensation for farmers’ loss of income. The two opinions are in a tug-of-war inside the ruling parties. The issue is how to strike a balance between TPP measures as a centerpiece of the growth strategy and fiscal restructuring.
The government plans to plunge into full-fledged budget formulation after looking at the GDP figures for the July-September quarter to be released on Nov. 16. The proposed budget will be submitted to the regular Diet session in January for integrated fiscal management with the FY2016 budget.
The supplementary budget will not only be a pump-priming package dominated by public work projects, but will aim at investment in the growth strategy, such as the third Abe cabinet’s high-profile policy of promoting a “society that empowers all citizens.”
Revenue source for the budget allocations will consist of the surplus from the FY2014 budget (some 1.58 trillion yen) and extra revenue income from the last fiscal year. One consideration for the FY2015 supplementary budget in terms of fiscal restructuring requirements is whether it can be capped at the level of the FY2014 extra budget (3.1 trillion yen).
The key issue is how much spending should be devoted for TPP measures.
Discussions have begun on measures to expand the scale of farms or improve breeding techniques in the livestock industry based on the thinking that TPP measures should be “offensive,” according to TPP Minister Akira Amari.
However, there is also a growing opinion in the Liberal Democratic Party in favor of increasing direct support to farmers, such as by increasing the purchase of rice reserves or giving income compensation to livestock farmers, to dispel the concern of farmers worried about income loss resulting from the increase in imports of agricultural products.
The government plans to list the high priority policies to be included in the supplementary budget in its outline of TPP measures to be compiled in November. The question is how to balance policies to contain producers’ income loss and policies to improve competitiveness. (Slightly abridged)