EDITORIAL: New economic package should start with review of past ones

The government should carefully weigh the economic challenges facing Japanese society and the justifications for tax-financed policy efforts to tackle them when it cobbles together the proposed new package of economic measures.

It should also have serious debate on the cost-effectiveness of various policy options.

Prime Minister Shinzo Abe’s administration plans to craft a package of measures to achieve three main policy goals--dealing with the damage caused by recent natural disasters including devastating typhoons; supporting small and midsize businesses and primary industries; and promoting investment for the future and preparing for potential problems in the period after the 2020 Tokyo Olympics.

The administration envisions a “flexible and all-inclusive” package containing outlays from both a supplementary budget for the current fiscal year, which runs through March, and the initial budget for the next fiscal year.

The government is sticking to the stance that the Japanese economy is “recovering at a moderate pace,” while the stock market remains on a firm footing.

But there are a slew of downside risks for the nation’s economic outlook, most notably possible repercussions from the trade war between the United States and China. It is hard to predict future trends in consumer spending and production.

We understand the need for the government to be ready to make flexible responses to possible changes in the nation’s economic conditions. It is also clearly necessary to make effective policy efforts for swift recovery and reconstruction in areas damaged by disasters.

But there seems to be no strong case for a big economic package at the moment.

The administration’s overeagerness to ramp up spending on economic measures is troubling.

The list of candidate measures includes programs to help companies expand operations internationally, boost the growth potential of the agricultural, forestry and fisheries industries, promote innovations for the government’s “Society 5.0” vision and the Sustainable Development Goals proposed by the United Nations, and give an additional boost to the rapid growth in inbound tourism.

Many of the proposals on the list are major ingredients of the Abe administration’s growth strategies and other initiatives. This fact raises concerns that the package will end up being a grab bag of programs the administration favors that have not been subject to careful assessment of necessity and effectiveness.

During the seven years since it was inaugurated in 2012, the current second Abe administration has come up with a plethora of growth strategies and economic packages.

Under Abe’s watch, the government has compiled 10 supplementary budgets totaling 30 trillion yen ($275.74 billion) including expenditures on measures to deal with the consequences of natural disasters.

Programs for promoting agricultural, forestry and fisheries exports, providing subsidies for small and midsize companies and boosting inbound tourism as well as innovations have all established a solid presence in the government’s spending plans.

In announcing an economic policy package three years ago, Abe declared that it would strongly prop up domestic demand and maximize the pace at which the Japanese economy would escape from the deflationary hole.

As for the consumption tax hike in October, Abe promised to support consumer spending solidly through “more than adequate measures” including a program to provide an incentive for cashless payments for purchases by offering a special return in reward points.

How does the government evaluate the effectiveness of the measures it has taken? Ensuring the effectiveness of new measures requires rigorous evaluations of the benefits produced by past steps.

In planning measures to support areas and people affected by disasters, the government needs to assess the urgency of the needs concerning efforts to help sufferers rebuild their livelihoods and achieve other goals and set clear priorities.

It is crucial for the government to understand the limitations to what spending on facilities and equipment can do and ensure that no programs that are not urgently needed will get funding.

Some senior ruling camp lawmakers are suggesting “bold” measures, claiming that Japan can afford fiscal expansion.

But it should not be forgotten that the government has pushed back the deadline for achieving key fiscal reform goals.

If the government runs out of revenue sources for new spending, it will find itself without many policy options in the future.

If he believes the nation needs a fresh economic package, Abe should lead the efforts to trim spending on low-priority projects.

--The Asahi Shimbun, Nov. 14