Editorial: Japan Prime Minister’s New People-Pleasing Inflation Measures a Mess of Contradictions

Prime Minister Fumio Kishida announced that his government will take economic measures in response to rising prices in Japan. Although he listed policies aimed at reducing the burden on society, their content appears inconsistent. But it is natural that contradictions will be revealed if his administration recklessly pushes through citizen-pleasing initiatives just to prolong its lifespan.

The most puzzling decision is the resumption of subsidies on electricity and gas bills for three months, starting in August, after they end in May. This is a sudden change of policy.

The Ministry of Economy explained that the subsidies expired due to the decline in import prices of natural gas and coal, which have recently remained relatively stable. Kishida’s explanation that this is “emergency support to survive the heat” is not convincing.

Also problematic is the decision to continue petrol subsidies until the end of 2024. They were introduced as a temporary measure in January 2022 but have been extended multiple times. This continued reliance on fossil fuels is at odds with the government’s decarbonisation policy.

Both grants are gifts that also benefit high-income earners. If support is to be provided, it should be targeted at low-income households, which are most affected by inflation.

Expanding subsidies to local governments also raises questions about effectiveness. While it is said that the benefits will be widely used to support local industry, there is a risk that they will be diverted to projects unrelated to countering high prices.

The flat tax cut, which Kishida touted as a key measure to ensure residents’ livelihoods, only began this month. Such a quick introduction of other measures could be perceived as weakening the effectiveness of his own policies.

The approach to solving Japan’s dramatic debt problem also appears contradictory. The Prime Minister integrated the goal of achieving sound public finances by fiscal year 2025 into the government’s core economic and fiscal management and reform policies. However, the administration is considering preparing a supplemental budget in addition to using reserve funds for the measures just announced. If the scale of these programs increases, achieving the goal of fiscal honesty will become more difficult.

Kishida has provided no clear direction for reform following the funding scandal of his ruling Liberal Democratic Party (LDP), and his approval ratings remain low. There are increasing calls within the party for a change of leadership. It is hard to resist the impression that the prime minister, who suggested running for re-election in the September LDP presidential poll, is using economic means as a way to maintain his influence.

If political motives take precedence and lead to lavish spending, the burden will be passed on to future generations, and that is simply irresponsible.