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Tuesday, May 26, 2009

Extra budget plan said wasteful

Economists slam necessity, effectiveness of certain measures among record ¥13.9 trillion


Staff writer

The government's extra budget for fiscal 2009 worth a record ¥13.9 trillion to combat the economic crisis is likely to be approved by the Diet as early as this week.

Although the government claims quick enactment of the budget is crucial to prevent the economy from going into free fall, some economists cast doubt on the necessity and effectiveness of certain expenditures in the stimulus plan.

"The budget's economic boosting effects are close to zero," said Masaru Takagi, an economics professor at Meiji University in Tokyo. "The contents are really a series of wasteful spending."

Under the supplementary budget, the education ministry, for example, will spend ¥11.7 billion to build a pop-art center in Tokyo aimed at promoting "manga" comics, animated films and computer graphics.

The center, which will be a four- to five-story building with total floor space of around 10,000 sq. meters, will display, collect and store artists' works, according to the ministry.

A ministry official said the center will raise the international competitiveness of such industries as animation and tourism, and will lead to Japan's medium- to long-term growth. Takagi, however, criticized the planned center for not having an immediate effect.

In addition, the ministry has earmarked ¥5.8 billion to digitalize and store films at other national museums in Tokyo and ¥4.7 billion to support community cultural events and organizations.

For public schools, the ministry will spend ¥5.7 billion to install 32,000 electronic blackboards at elementary and junior high schools nationwide.

Although ministry officials say the measure is to get children more interested in classes, some question the boards' necessity.

Some expenditures have also been criticized for only benefiting a limited number of people.

The Justice Ministry allocated ¥2.9 billion for more than 33,000 digital televisions and related equipment for prisons and other correctional facilities.

"Although some companies may certainly benefit, the measure will not have a major impact" on the economy, said Hiroshi Hanada, an economist at the Sumitomo Trust & Banking Co. "I don't think it will lead to expanded corporate investment in plants and equipment and increase the number of jobs or people's bonuses."

Meanwhile, ¥294.2 billion will be spent to build or renovate 177 government ministries, administrative corporations and national universities, according to a report compiled by DPJ lawmaker Hiroshi Kawauchi.

Some ¥58.8 billion will be spent to buy 15,332 environmentally friendly cars for the ministries, the report says.

Instead of broadly accepting each ministry's request to increase expenditures, Takagi said the government should have focused on three key policies, such as stimulating personal consumption, creating employment and environmentally friendly measures.

"If these three policies could amount to ¥14 trillion to ¥15 trillion and are implemented, they will have considerably bigger economic effects than this government budget," he said.

Despite the criticism, Hideki Matsumura, senior economist at the Japan Research Institute, supported the extra budget.

"When looking at the entire picture, some contents are more or less positive," Matsumura said. "Because this is an extremely severe situation, it is better to implement measures than not do anything."



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