Photo/Illutration Prime Minister Fumio Kishida, second from right, addresses a session of the Children’s Future Strategy Council on May 22. (Jin Nishioka)

Programs to address a pressing domestic policy issue, the falling birthrate, are running into an all-too-familiar problem: finding the money to pay for them.

Various revenue sources were considered when the government late last year put together a five-year defense buildup plan that will run into trillions of yen.

Prime Minister Fumio Kishida has vowed to reverse a decades-long decline in the birthrate that has sparked alarm in many quarters.

In calling for urgent action, the government noted that the population of younger Japanese of child-bearing age will drop drastically from the 2030s, leaving just a few years to put appropriate measures in place, or lose the chance to do so.

In a May 22 meeting, the Children’s Future Strategy Council took up the issue of child allowances. One option being considered is to double the monthly allowance for the third child in a family and beyond.

Currently, 15,000 yen ($110) is paid monthly to families for each child under the age of three. A monthly allowance of 10,000 yen is paid from the time a child is 3 years old until graduation from junior high school. But a family with three or more children receives 15,000 yen for the third child and other younger siblings. That amount would be increased to 30,000 yen.

The handouts are aimed at getting young families to have more children and reversing a decline in those with three or more children that began more than 20 years ago.

The three years from fiscal 2024 offer the last chance for the government to implement high-priority policy measures, such as the child allowance, to staunch and perhaps reverse the falling birthrate.

Government officials reckon that annual expenditures for the programs will run to around 3 trillion yen.

During the May 22 meeting, Kishida once again stated that he did not envision raising taxes to pay for the measures. This left officials with two other ways to raise the funds.

One would be to increase social security insurance premiums, in particular the premiums paid for health insurance by a wide part of the population, namely those of working age through senior citizens aged 75 and older.

But representatives of labor and management said doing so would cut into long-awaited wage increases that companies implemented from this year.

As companies are also obliged to pay their share, their contributions to the health insurance program would also rise

The other revenue proposal would be to use the savings generated from fiscal restraints on increases in social security spending. But that would almost certainly impact on medical and elderly care programs.

In opposing such a move, organizations representing medical and elderly care workers cited rising higher personnel costs to deal with worker shortages.

The government will also have to find additional funds for the period after fiscal 2027 when other programs of lower priority will also be proposed.

(This article was written by Kenjiro Takahashi and Akiyoshi Abe.)

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