Abruptly Announced Support for Utilities

Prime Minister Fumio Kishida abruptly announced financial support for utilites of each family, because of weather forecast expecting extremely hot summer this year. The staffs of Japanese government and the lawmakers with the Liberal Democratic Party were surprised with Kishida’s unilateral announcement. Generally, the fuel price have not significantly increased in these months. The policy seems to be not for defending households, but for maintaining his own administration. Suffering from extremely low popularity, Kishida administration is losing control.

 

In his press conference on June 21, the day after a non-confidence resolution against Kishida was rejected in the House of Representatives, Kishida revealed his idea that he would deliver economic stimulus policies in two steps.

 

One was to resume allowance for stabilizing price of electricity and gas for three months from August. Support for gasoline price, in addition, would be maintained until the yearend. Another was delivery of supplementary budget this fall for allowance for families depending on pension, lightening payment for school lunch and support for agriculture, forestry, fishery and tourism businesses.

 

Supplementary budget has become a routine measure for the government in every fall. What invited skepticism was resumption of subsidy for electricity and gas. Kishida began that subsidy in January 2023 to help households suffering from inflation brought by Russian invasion to Ukraine, and finished it this May when the price of natural gas and coal had dropped to the level before the invasion. The government explained that the policy would not be resumed unless steep rise of those prices would occur.

 

Kishida administration already spent 4 trillion yen for the subsidy since January 2023. It reduced 1,700 yen a month for electricity per an average family and 800 yen for gas. If he resumes the subsidy on electricity and gas between August and October, it is estimated that the policy will cost 600 billion yen.

 

There would be a question why he finished the subsidy in May, if he would resume it in August. His announcement only meant that his decision of finishing had been wrong. And another one is why June and July were excluded, if it was to deal with extremely hot summer. Even though Japan is in a rainy season now, temperature easily gets 30°C or higher in every city these days.

 

One answer is supposedly to take advantage of the economic policy for Kishida’s reelection as the president of the LDP. If the subsidy resumes in August, it will have a good impact on his campaign in September. The polls of Mainichi Shimbunand Yomiuri shimbun conducted last weekend showed further decline in approval rate for Kishida Cabinet by 3 percent from the previous month. It is likely that the support for energy spending is a survival plan of the unpopular prime minister. 

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