Photo/Illutration The Ministry of Economy, Trade and Industry in Tokyo’s Chiyoda Ward (Asahi Shimbun file photo)

The government has decided to reinstate subsidies for electricity and gas bills. The gasoline subsidy will continue until the year’s end.

It is said to be Prime Minister Fumio Kishida’s “political decision,” but this policy action, taken without a thought-out plan, focusing only on the immediate impact and based on spur-of-the-moment ideas, will do more harm than good.

Policy responses to rising prices need to focus on supporting those in need. The government’s energy policy priority should be to wean the nation away from dependence on fossil fuels.

The electricity and gas subsidies will cover the months of August to October. For a typical household, the subsidy will reduce combined electricity and gas charges by about 2,100 yen ($13) in August and September and by about 1,300 yen in October.

The decision was made under the political leadership of Kishida and his close aides without sufficient prior coordination with the relevant ministries and agencies.

The subsidy program for electricity and gas bills had just ended in May, making this reinstatement seem rather like an abrupt action.

Recently, Kishida has repeatedly stated, “This year, we will definitely achieve incomes that exceed the rise in prices.” He likely decided to reinstate and extend the subsidies in a desperate attempt to prevent this from becoming an empty promise. But any reliance on such indiscriminate financial handouts is not sustainable.

Kishida’s latest action also appears to reflect a desire to bolster his dismal approval ratings and prolong his grip on power. But this might only make it transparent to the public that these are short-sighted, politically motivated measures.

On the other hand, it is a fact that wage hikes have not kept pace with rising prices, placing an increased burden on households.

Elderly people could put themselves at risk of life-threatening heatstroke if they try to save on electricity by sparingly using air conditioning. There is no question that people in impoverished circumstances should be given the appropriate financial support to help them get through the severe summer heat.

As things stand, the across-the-board power and gas subsidies will also benefit consumers who don’t face money problems as well as high-performing businesses. The program undermines the market function where rising prices naturally serve as an incentive for energy savings. It is counterproductive to the efforts for decarbonization and will only push up the debt burden on already strained state finances.

Asahi Shimbun editorials have repeatedly called for a shift away from this kind of uniform policy support. This argument also applies to the government’s proposal to provide additional benefits for pensioner households. Households with substantial financial assets should be ineligible for such benefits.

The government needs to create a system to identify those who truly need support and ensure a swift distribution of funds in such cases.

The gasoline subsidy, originally intended as a “shock mitigation measure,” will end up lasting three years. This demonstrates that once subsidies of this nature are started, they are politically difficult to stop. The extension of the subsidies is said to be “only until the end of the year,” but this bad habit of casually extending and expanding special benefits and subsidies must now be corrected.

The nation’s heavy reliance on energy imports has meant that energy costs in Japan are vulnerable to surges in fossil fuel prices and currency depreciation.

Instead of pouring huge sums into band-aid solutions and stopgap measures, it is imperative for the government to develop and execute policies to promote long-term efforts to tackle the energy challenges, such as increasing the number of energy-efficient buildings and expanding the proportion of domestically supplied renewable energy.

Kishida should remember that only continuing to apply stopgap measures will not lead to real progress toward a better future.

--The Asahi Shimbun, June 29

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