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Editorial: Where are the checks, balances on massive extra budget spending?

  • June 13, 2020
  • , The Asahi Shimbun , 2:01 p.m.
  • English Press

A second extra budget to finance additional steps to ease the impact of the coronavirus pandemic in the current fiscal year that passed the Diet on June 12 comes to a whopping 31.9 trillion yen ($297 billion).

 

It includes 10 trillion yen worth of reserve funds that can basically be used to cover any unexpected expenses.

 

This extra budget, formulated to cure the nation’s enfeebled economy, could give the government unprecedented funds to spend as it likes without being checked by the Diet.

 

By giving a free hand to the government in using such a vast amount of taxpayer money, the Diet has done something that blatantly violates the principles of fiscal democracy. It also negates the justification for its own existence.

 

The Constitution requires any state budget to be authorized by the Diet. A reserve fund that can be spent upon the responsibility of the Cabinet is only allowed as an exceptional funding means to provide for “unforeseen deficiencies in the budget.”

 

Given this constitutional provision, there is no doubt that any reserve fund must be used in a restrained manner.

 

There is no legal provision that sets a clear ceiling on the amount of a reserve fund. Controversies flared in the past over the appropriateness of massive reserve funds.

 

A dispute raged, for instance, over a 1-trillion-yen reserve fund included in the initial state budget for fiscal 2009 as part of emergency financing measures in response to the economic downturn triggered by the collapse of U.S. investment bank Lehman Brothers in 2008.

 

Kaoru Yosano, the finance minister at the time, defended the fund, saying it was not “outstandingly large (compared with past reserve funds) in terms of its ratio to the total budget,” which amounted to 88 trillion yen.

 

But this time, the size of the reserve fund is by far the biggest in the nation’s history. It is 10 times larger than the one in Yosano’s spending plan.

 

Of this amount, 5 trillion yen is to be spent to support troubled small and midsize businesses and help companies avoid cutting jobs, according to the government. But no specifics have yet to be provided. The government has said nothing about the remaining 5 trillion yen except that the money will be used to “deal with the effects of the new coronavirus pandemic.”

 

Despite all this uncertainty and vagueness, all the opposition parties with the exception of the Japanese Communist Party voted for the second supplementary budget along with the ruling coalition.

 

Even though the spending plan includes outlays for measures that need to be implemented immediately, such as expenditures to subsidize rents paid by small and midsize firms, the opposition lawmakers, as well as the ruling camp, fully deserve to be criticized for defaulting on their constitutional responsibility as members of the Diet to check budgets.

 

In stressing the need for the gargantuan reserve fund, Prime Minister Shinzo Abe said the government needs to “take unprecedented steps to ensure that the nation will overcome this once-in-a-century national crisis.”

 

If so, the administration should first ask the Diet to extend the current regular session beyond the June 17 expiry of its term to ensure it can make a swift response to any emergency.

 

The Constitution mandates the Cabinet to get subsequent approval of the Diet for all payments from the reserve fund. But this 10 trillion yen appropriation is no ordinary reserve fund.

 

The government should clarify in advance how the money will be spent and obtain Diet approval. In case additional spending is necessary, the government will be able to submit a third extra budget to the Diet swiftly if it is in session.

 

Diet deliberations in recent days have underscored the vital importance of rigorous Diet monitoring for proper expenditures by the government.

 

Doubt is only deepening over the government’s plan to contract out the administrative work for a program to help cash-strapped businesses survive the current crisis.

 

An appropriation to pay up to 300 billion yen in fees for a contractor to handle the administrative work for the “Go To Campaign” to support the tourist industry, one of the hardest-hit sectors, has drawn much criticism, forcing the government to suspend the process of recruiting the contractor. But the government has yet to say how it will review the contract.

 

The first and second supplementary budgets allow the government to spend more than 57 trillion yen, a scale of extra expenditures without precedent, to cushion the economic impact of the COVID-19 pandemic.

Such a tremendous amount of government spending outside the original state budget requires more transparency than ever before.

 

The Abe administration needs to continue responding to public doubts and suspicions over these spending blueprints without closing the session in haste.

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