Japan scales back child subsidy program

Explaining that the country’s future was at stake, Japan’s ruling party in 2009 came up with a program designed to boost its birthrate, one of the world’s lowest. The plan was simple: Couples who procreated would get cash — a payment every month during a child’s first 15 years.

But last week, to surprisingly little complaint, the government abandoned a proposal to boost the payments, and political analysts suggest the entire child allowance system could soon be dropped.

The political reversal provided the first evidence of a new challenge facing Japan, where efforts to fund reconstruction of the disaster-stricken northeastern coastal region will necessitate cuts in programs that once seemed essential.

With its population aging, its economy stagnating and its agriculture sector in need of overhaul, Japan faced major problems even before the earthquake, tsunami and nuclear crisis that Prime Minister Naoto Kan has described as the country’s greatest challenge since World War II. Now, as it searches for ways to fund a recovery, the central government appears to realize that efforts to combat preexisting problems could be sidetracked, or even shelved, making a full national turnaround all the harder.

At the time of the March 11 earthquake, the government was paying families roughly $155 every month, per child, until that child completed junior high school. This year, the Democratic Party of Japan (DPJ) had been pushing for an increase in payments, with a view toward eventually doubling them.

But even before the disaster, opposition parties had pushed hard against the boosts. When the government estimated that disaster recovery could cost $300 billion, the bulky child allowance program became untenable. A bill calling for spending increases was withdrawn.

In the interim, parliament decided to continue the current payments for six more months, because of the “great inconvenience” an abrupt termination would cause parents, Chief Cabinet Secretary Yukio Edano said.

At the end of the six months, the entire payment system could be scrapped, according to Harumi Arima, a political analyst and former parliamentary aide.

“I think it’s a bad idea that they’re going to quit this,” Arima said. “I actually thought this policy had a level of vision — an idea for what they wanted Japan to look like in the future.”

Compared with people in other industrialized countries, Japanese work longer hours, get married later and have fewer children. The current birthrate of 1.37 children per woman is well below the 2.07 rate necessary for maintaining the population. Potential mothers and child-rearing advocates offer numerous reasons: They say child care is scarce. They say that women who take maternity leave cannot easily reenter Japan’s rigid work system. According to a 2005 government poll, 65.9 percent of women surveyed said they had fewer children than they wanted because “raising and educating children is too expensive.”

The DPJ came to power in 2009 with a populist vision that included trying to ensure that families had more money for child rearing. In addition to the child allowance system, it proposed reducing high school tuition, scrapping highway tolls and increasing scholarships. Opponents criticized the programs as a costly ploy to curry favor with voters.

“Because Japan’s birthrate is so low, we will become unable to sustain our society in the future,” said Naoto Nonaka, a political science professor at Gakushuin University. “In such an environment, we need to turn things around by doing something that will have an impact. In that sense, it was necessary to spend certain sum of money.”

In 2009, just 13.3 percent of Japan’s population was 14 or younger — the lowest percentage ever registered by a country. By 2030, according to government estimates, one in every three people in Japan will be 65 or older. One in 10 will be 14 or younger.

Japan’s top-heavy demographics are most pronounced in rural areas, like those battered by the March 11 earthquake and tsunami. Hard-hit coastal towns such as Minamisoma and Rikuzentakata had been shrinking for decades, consolidating schools and struggling to provide adequate jobs for the young people who wanted to remain. The dearth of youth in rural areas will complicate long-term rebuilding efforts, observers say; even if infrastructure is rebuilt, will anybody live there?

As the government searches for the $300 billion it says it needs to fund the recovery project, which includes building temporary housing and repairing infrastructure, Japan will face debates about how best to come up with the money. The government, already saddled with debt, initially expressed reluctance to issue more bonds. Cuts to other government programs are likely. Kan could also raise the consumption tax, earmarking a certain portion for reconstruction.

In a recent poll conducted by the Yomiuri Shimbun, Japan’s largest newspaper, 83 percent of respondents supported a decrease in child subsidies if the savings were used for reconstruction.

“In this atmosphere, you can’t complain, because everybody wants to help with the earthquake,” said Chizuko Okuyama, who runs a nonprofit child-rearing support center in Tokyo. “But at the same time my feeling is, they’re taking money from children.”

Special correspondent Akiko Yamamoto contributed to this report.

harlanc@washpost.com

Chico Harlan covers personal economics as part of The Post's financial team.
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