Many businesses are desperately waiting for support. Necessary funds should be swiftly provided to help revive the economy.
The second supplementary budget for fiscal 2020 has been enacted with support from all parties except the Japanese Communist Party. Measures included in the secondary supplementary budget have a total value of ¥117 trillion. When combined with the first extra budget, the scale reaches ¥234 trillion, equivalent to 40% of the gross domestic product.
With an eye on the likelihood of a prolonged outbreak of the novel coronavirus, the second supplementary budget focuses on support for maintaining employment and business operations. Various measures include setting up a rent relief program to provide up to ¥6 million to businesses facing declines in income, as well as expanding employment adjustment subsidies to support companies’ payments of allowances to workers put on leave.
Many companies have found it hard to cover rents and payrolls as they are suffering from declining sales amid business suspensions and requests to stay home, among other factors. It is reasonable that the second extra budget aims to reduce their burden of fixed expenses to prevent bankruptcies and layoffs.
The question is whether this supplementary budget will be implemented smoothly. The payment of cash benefits of ¥100,000 per person has been notably delayed. In a program to help small and midsize companies sustain operations, there were reportedly 50,000 cases in which benefits were not paid even a month after the applications were submitted. It is essential to take all possible measures to ensure the implementation of measures in the extra budget.
It is also essential to provide support to local governments that deal with front-line institutions in the fight against the coronavirus.
The second supplementary budget has added ¥2 trillion in special subsidies to local governments, which they can decide how to use on their own. Many local governments are facing financial difficulties because they have paid subsidies to local businesses for their cooperation in suspending operations. It is hoped that local governments will carefully listen to the opinions of residents and craft measures to meet their needs.
During Diet deliberations on the extra budget, the focus was placed on how clerical work has been contracted out over the rent relief program and the program to provide small and midsize businesses with benefits to help sustain operations.
Opposition parties contended that the contract fees are too high, and that management of the program for smaller firms has become unclear because it has been further subcontracted and outsourced multiple times.
It would surely be inefficient if the central and local governments were to handle all clerical work, from accepting applications from across the nation to providing benefits. It is understandable that they have entrusted some clerical work to private-sector entities with expertise.
However, fairness and transparency should be ensured. It is indispensable for the government to try to minimize costs through discussions with entities to which it has contracted some work. The government should also clarify rules on contracting to make sure that its measures will be appropriately implemented.
The second extra budget also secures ¥10 trillion in reserve funds to deal with an emergency. This is an extraordinary amount. Finance Minister Taro Aso has said that ¥5 trillion will be used for such purposes as maintaining employment, continuing business operations and beefing up the medical system.
The government is urged to check how its budget is being executed from time to time and make improvements as soon as it finds any problems.
It is necessary for the government to fulfill its accountability appropriately regarding the contract fees and spending of the reserve funds, by taking advantage of such occasions as deliberations to be held while the Diet is out of session.
— The original Japanese article appeared in The Yomiuri Shimbun on June 13, 2020.