Japan said Thursday it will increase its spending on child care to a level on par with countries like front-runner Sweden, doubling it from the current size by the early 2030s as the rapidly aging nation aims to reverse the declining birthrate.
Under a draft plan to realize "unparalleled" child-rearing support, the government will boost annual spending by around 3.5 trillion yen ($25 billion) over the next three years through fiscal 2027, though the debt-ridden nation is yet to decide how to fund it.
"We will fundamentally strengthen our steps," Prime Minister Fumio Kishida told a government panel meeting.
"Our child-rearing support will match that of Sweden, which ranks top among the OECD members in terms of spending on family benefits per child. This will be epoch-making," he added.
Opposition parties quickly criticized what they saw as the latest "spending binge" by the government at a time of swirling speculation that Kishida will dissolve the powerful House of Representatives for a snap election, an idea that the prime minister has dismissed.
"The LDP (Liberal Democratic Party headed by Kishida) seems to believe that giving out money is an effective election strategy," said Jun Azumi, the Diet affairs chief of the Constitutional Democratic Party of Japan.
Child care policy is a priority for Kishida, who has seen public support for his Cabinet recover from recent lows. The draft plan, which will expand the scope of child allowances, among other steps, will be reflected in an economic and fiscal policy blueprint to be unveiled later in June.
The doubling of spending will be measured by the budget allocated for a government agency in charge of children and family issues, currently at around 4.8 trillion yen, or by state support per child.
Kishida said the government will prioritize spending reform to secure the necessary funding. To make up for the shortfall, it will also turn to government bonds, he added.
According to the draft plan, a support fund scheme to which companies and other entities contribute will also be set up, and Japan will decide on a stable funding source by fiscal 2028.
"We will not be asking the people of Japan to take on any additional burdens," said Kishida, who has already ruled out tax hikes.
The premier had instructed ministers to raise the target to around 3.5 trillion yen from approximately 3 trillion yen, saying that more funding should go to addressing child poverty and abuse and expanding support for children with disabilities or those in need of medical care.
According to the Organization for Economic Cooperation and Development, the ratio of public spending on family benefits to gross domestic product was around 3.4 percent for Sweden in 2019, while it stood at 1.7 percent for Japan. Sweden and other European nations, however, have higher tax rates and higher social security contributions.
Kishida has said now is the last opportunity to reverse a downward trend in births before 2030, underscoring the pressing demographic challenges that cast a shadow over the longer-term growth outlook for Japan's economy.
After the number of newborns fell below 800,000 in 2022, it is expected to decrease further to 500,000 in 2070, according to the National Institute of Population and Social Security Research.
The country's population of around 125 million is forecast to slip below 100 million in 2056.
Along with the upcoming funding debate, Kishida also needs to decide on the exact timing of tax hikes to achieve a separate substantial increase in defense spending for the five years to fiscal 2027.
An advisory panel to Finance Minister Shunichi Suzuki has called on the government to find a stable funding source for recurring expenses like child-rearing support, saying it would be "self-defeating" to pass on financial burdens to future generations.