EDITORIAL : THE DAILY YOMIURI, JAPAN

Find the funds for quake reconstruction

The Yomiuri Shimbun

The budget for fiscal 2011, which starts Friday, passed the Diet on Tuesday in line with a constitutional provision that gives the House of Representatives legislative precedence over the House of Councillors.
The nation faces a time of emergency in the aftermath of the triple whammy of this month's massive earthquake and tsunami and a series of problems at a crippled nuclear power plant. It was unavoidable that the budget was approved without any revisions even though there are some problems with it.
Charging ahead with handout policies such as child-rearing allowances, at a time when recovering from the disaster and rebuilding are paramount priorities, is nothing but a waste of fiscal resources. We urge the government to promptly compile a supplementary budget so fiscal spending can be channeled toward reconstructing the disaster-hit areas.
According to a government estimate, the earthquake and tsunami caused 16 trillion yen to 25 trillion yen in damage to buildings and roads. Secondary damage, such as cuts in production resulting from the catastrophe, also will be huge.
After the 1995 Great Hanshin Earthquake, three supplementary budgets totaling about 3 trillion yen were compiled, bringing government spending to 5 trillion yen, including reserve funds. The fiscal outlay required this time is expected to be far bigger because the extent and scope of the damage is larger.
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Priority in fiscal spending
The reserve fund of 1 trillion yen currently outlaid for fiscal 2011 will not be sufficient for this rebuilding work. An additional budget was formulated one month after the Great Hanshin Earthquake. A similarly speedy response is needed this time, too.
Priority should be given to urgent work such as restoring transportation networks and other lifelines, removing debris and constructing temporary housing units. Livelihood support to disaster victims should also be extended as quickly as possible.
The problem is how to raise funds for these projects. Deficit-covering government bonds account for about 44 trillion yen of the 92.4 trillion yen budget for fiscal 2011. Therefore, we think the government must, before doing anything else, abandon projects that are not necessary or urgent.
Nearly 2 trillion yen could be saved if the government reinstates the previous child allowance system that costs less than the current system. The 400 billion yen earmarked for making public high school tuition free and for subsidies for private school tuition, and 900 billion yen set aside as income compensation for farming households also are obvious targets for shelving or slashing.
It is also necessary to overhaul the plan to make all expressways toll-free or to adopt a uniform 1,000 yen toll for all passenger cars on weekends regardless of distance traveled.
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Explanations needed
Once disaster reconstruction moves into high gear, additional funds will be needed to build disaster-resistant towns and rebuild industrial infrastructure. Considering the huge sums that will be involved, rehashing spending plans alone will be unlikely to get the job done. One idea would be to issue special government bonds to raise funds that would be exclusively used for reconstruction projects.
However, the nation is in dire fiscal straits and saddled with the biggest fiscal deficit among industrialized countries. To secure reconstruction funds and reliable fiscal resources for social welfare, there is no alternative but to carry out some sort of tax increase.
The government, along with the ruling and opposition parties, must carefully explain the severe state the nation faces to the public to convince them of the need to share the burden.