OECD urges new Japan gov't to review child allowance program+

TOKYO, Nov. 18 Kyodo -
The Organization for Economic Cooperation and Development called on the
Japanese government Wednesday to review the ''purpose and scope'' of its key
pledge to provide allowances to families with children starting in fiscal 2010.

The OECD recommended that Prime Minister Yukio Hatoyama's government channel
more taxpayers' money into preschool education and childcare, rather than
giving a monthly allowance of 13,000 yen in fiscal 2010 and 26,000 yen from
fiscal 2011 for each child of junior high school age or younger.
''Shifting resources to children aged 5 and below, in particular by providing
more childcare and early education, offers a number of benefits,'' OECD
Secretary General Angel Gurria said in Tokyo.
These benefits include possible increases in female labor participation and the
fertility rate, he said at a forum on the OECD's contributions to Japan's
policy objectives.
With adequate childcare facilities, women in the club of 30 wealthy nations
tend to have more children if they work, Gurria said, adding that aiming for
increases in those two fields would help activate the Japanese economy.
''The Japanese government spends a relatively large amount on children who are
10 years old'' compared with other developed countries, the head of the
Paris-based organization said. ''But it spends one of the lowest amounts on
5-year-olds.''
Gurria also said the quality of education is likely to improve if the
government concentrates more on preschool programs as many studies have shown
that ''the rate of return on public investment in early childhood education is
greater than for later years.''
In a set of recommendations for the Japanese government, released Wednesday,
the OECD said a range of policies for child-rearing, such as those also
connected to health and tax, should be more integrated as a package to improve
efficiency.
He said worries about ''the lack of appropriate childcare'' are shared by the
OECD and the new Japanese government, formed two months ago.
Gurria's remarks came at a time when the government led by the Democratic Party
of Japan is finding it difficult to raise enough money to implement its key
economic measures in the year starting next April without increasing the
nation's already snowballing debt, the largest ever among OECD countries.
The government's key economic promises aimed at increasing disposable household
income require a total of about 7 trillion yen in the fiscal 2010 budget, of
which 2.7 trillion yen would be allocated for the allowance program.
''Japan's fiscal situation creates concern,'' said Gurria, who arrived in Tokyo
Tuesday for a three-day visit to meet ministers and senior officials of the new
government.
Noting that Japan's public debt is on track to top 200 percent of gross
domestic product by 2011, he said, ''A key to solving the fiscal problem is
economic growth...in part by ending deflation.''
To achieve sustained, domestic demand-led growth, the OECD recommended that the
government make more efforts to raise labor productivity, promote foreign
direct investment in Japan and undertake a fundamental reform of its tax
systems.
It said the main source of additional revenue for Japan should be the
consumption tax, encouraging the government to raise the rate from the current
5 percent -- the lowest in the OECD area -- once a solid economic recovery is
established.
Later Wednesday, Gurria met with Hatoyama at the prime minister's office and
handed the OECD recommendations to him.
In the 20-minute meeting, Gurria welcomed Hatoyama's taking the initiative in
the fight against global warming, saying it would have a positive influence on
the global economy, which he said is still struggling amid high unemployment
rates despite emerging signs of a recovery, Japan's Foreign Ministry said.
Gurria also welcomed the recent improvement of Japan's GDP data, the ministry
said.
Japan's GDP grew an annualized real 4.8 percent in the three months through
September, expanding for the second straight quarter, according to data
released by the Cabinet Office on Monday.
==Kyodo
2009-11-18 22:27:48