Japan’s Diet has enacted a second supplementary budget including an additional package to counter the coronavirus pandemic. The main pillar of the latest extra budget centers on rent payment support for small and midsize stores and expanded subsidies for employment maintenance by businesses.
Together with the first supplementary budget, the overall projected cost for Japan’s coronavirus countermeasures exceeds 200 trillion yen (about $1.86 trillion), which Prime Minister Shinzo Abe has boasted is “unprecedented.”
However, the problem is the government’s tardy response to the pandemic. The number of people laid off due to the coronavirus has topped 20,000 in Japan, at the same time as the government has been lagging far behind in dealing with the viral crisis. Numerous stores have been forced out of business after being unable to pay their rent. Though the prime minister is bragging about the scale of the coronavirus-related budget, it will become meaningless unless necessary aid is swiftly delivered to people who are struggling to make ends meet.
The government has also been very slow in implementing projects funded by the first supplementary budget, enacted more than a month ago.
The 100,000-yen cash handouts, which were introduced to great fanfare, have so far been delivered to just a little over 30% of all residents in Japan. Government subsidies for sustaining small and midsize companies whose earnings have dropped considerably as a result of the pandemic have yet to be paid to more than 10,000 businesses that applied for the program shortly after the first extra budget was enacted. While the government was flooded with more than 400,000 inquiries for employment adjustment subsidies, the aid has thus far been granted in only 80,000 cases.
In addition to the delayed responses, cumbersome aid application procedures and confusion with administrative work has aggravated the situation. Now that the grants for sustaining smaller businesses affected by coronavirus have been expanded and the rent relief has been added in the second extra budget, delivery of aid could grow even slower.
To stem the tide of bankruptcies and unemployment, no further payment delays can be tolerated. After looking at how Diet deliberations on the second extra budget transpired, however, one is left with growing concerns about the government’s stance.
The epitome of the questionable government attitude was seen regarding the Subsidy Program for Sustaining Businesses, whose operation was outsourced to the private sector. The original purpose of farming out the project to a private entity should have been facilitating quick provision of relief money. In reality, however, the government has left all the tasks in the hands of the contractor, and the project has then been subcontracted several times. One can hardly call this efficient.
In regard to the project contractor, Prime Minister Abe stated, “There is no way I can comment on it as I don’t know about it in detail.” As for the delays in the payments of relief money, he said, “Unfortunately, there may be cases where the money hasn’t been delivered yet,” sounding as if he was talking about someone else’s problem. The prime minister should not just leave everything to front-line workers, but exercise leadership to promptly resolve the situation.
There was no convincing explanation from Abe over the inclusion of 10 trillion yen (about $93.15 billion) in reserve funds in the latest extra budget with no specific use specified despite the extraordinary amount. While the prime minister said the reserve funds will allow the government to “respond to unforeseeable circumstances,” there are cases of problems coming to light only after the funds’ use is determined, as seen in the case of the Subsidy Program for Sustaining Businesses. If the need for any extra monies arises, the government essentially should compile another new supplementary budget draft and provide an explanation before the Diet.
The government and ruling parties are looking to end the current Diet session on its scheduled June 17 closing date. However, if they argue that contingencies could be on the horizon, there is no rationale for them to close up shop anytime soon.