Mr. Abe must come up with credible economic policy
(From The Japan Times August 10 issue)

安倍政権に求められる確かな経済政策

Since Prime Minister Shinzo Abe's Liberal Democratic Party suffered a crushing defeat in the Upper House election, it is all the more important for the government to work out a credible economic policy. As Japan's population grays and decreases at the same time, it will be essential to enhance efficiency in administration and finance, and set policy priorities.

Mr. Abe has made clear that his basic approach in compiling the fiscal 2008 budget is to pursue sustained economic growth and spending cuts. Yet the 2007 basic policy for economic and financial reform, adopted in June, includes one measure after another that would increase spending, including those to accelerate economic growth, and aid local economies and small to medium-size enterprises.

Mr. Abe's election platform called for drastic reform of the tax structure, including consumption tax, by the end of fiscal 2007. This means a possible raise in the consumption tax. He faces an important test in deciding whether to carry out tax reform.

The opposition Democratic Party of Japan emphasizes rectifying the gaps between the rich and the poor, and between urban and rural areas. It proposes a ¥26,000 monthly allowance for each child from birth through their graduation from middle school among other things. It aims to secure the necessary ¥15.3 trillion through such means as administrative and financial reform, and the abolition of corporations with a semigovernmental status.

Increased spending for pension and social welfare such as health and nursing care is inevitable. Both the ruling and opposition camps must consider how to obtain sources of revenue to cover costs and must avoid wishful thinking.

参院選での自民党の惨敗を受け、安倍政権は信頼できる経済政策を策定することを求められている。人口が高齢化し、減少している現在、行財政の効率を高め、政策の優先度を設定することが必要だ。

首相は、08年予算編成にあたり、持続的成長と歳出削減を目標にしているが、6月に決定された07年経済財政改革の基本方針には、成長力強化、地方経済支援、中小企業対策など、歳出増加要因が目白押しだ。

自民党は07年度末までの抜本的税制改革を訴えており、消費税増税の可能性がある。民主党は、貧富の格差の是正を求めており、児童手当などに必要な財源は、行財政改革と特殊法人の廃止で確保するという。

年金と健康保険、介護保険などの社会福祉関係の歳出増加は不可避だ。与野党とも、増大する歳出の財源確保を考えねばならない。