(March 4): Japan’s lower house passed the budget for the year starting in April, checking off a key item on Prime Minister Shigeru Ishiba’s to-do list for shoring up his leadership ahead of a national election in the summer.

The lower chamber of parliament approved the ¥115.2 trillion (RM3.44 trillion) budget in a plenary session Tuesday, clearing the way for its likely enactment before the new fiscal year begins.

Ishiba’s ruling coalition is operating with a minority in the lower house, making the budget passage a key test of his ability to push through policy. The budget now moves to the less powerful upper house house where the coalition enjoys a majority, essentially guaranteeing that the spending plans will be approved before the end of the month.

The budget plan was revised last week, trimming the earlier ¥115.5 trillion proposal after incorporating opposition demands. This marks the first time in 29 years that a budget was revised after cabinet approval.

The passage of a smaller-than-originally proposed budget shows that Ishiba’s government has played off opposition parties without allowing outlays to balloon. Ishiba has achieved this without sliding into the political instability seen in France, Canada and South Korea, where minority governments have run into trouble sparked partly by budget disagreements.

Social security costs for the ageing nation make up the biggest expenditure set out in the budget at ¥38.3 trillion, followed by debt servicing at ¥28.2 trillion, a reflection of its large debt load. Defence spending accounts for ¥8.5 trillion, an increase of around 9.7%, as Japan responds to increased security tensions in the region.

To win sufficient support for the budget, Ishiba’s coalition revised the spending plans by boosting subsidies for households with high school students at the request of the opposition party Ishin, also known as the Japan Innovation Party. The coalition also maintained a cap on out-of-pocket expenses for high-cost medical care, a step pushed by the main opposition Constitutional Democratic Party of Japan.

Even with the increase in spending items, Ishiba managed to scale back overall outlays by ¥343.7 billion through reductions in reserve funds and tax allocations to local governments.

Separately, the revised budget also raised the tax-free income threshold to ¥1.6 million, beyond the originally proposed ¥1.23 million. Another opposition party, the Democratic Party for the People, had originally proposed increasing the minimum income tax threshold to ¥1.78 million, but negotiations with the ruling coalition reached an impasse.

Each party will likely look to use the budget outcome to make a case for their influence on policymaking in the Upper House election in July.

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