Australia, insurance, car, home, live, holidays

Japan’s government wants people to have more children to future-proof the country.Credit:AP

The advisory panel released details of the extra annual spending that will include expanded handouts for families with children.

Almost 30 per cent of Japan’s population is aged 65 or over. Last year the number of children born fell under 800,000 for the first time since records began in 1899.

A study by independent think-tank Recruit Works Institute published in March found the country may face a shortage of more than 11 million workers by 2040.

Kishida has warned the country’s population crisis threatens to undermine its ability to function as a society. He’s promised a raft of measures without specifying where the heavily indebted country would find the money for them.

Finance Minister Shunichi Suzuki told reporters the government wasn’t considering a sales tax hike to fund the measures and that Kishida wasn’t thinking of any other increases in levies.

Imposing new taxes would hurt government support amid speculation that Kishida may call an election in the coming months. While he doesn’t need to hold the vote until 2025,renewing his mandate would help him maintain his grip over his ruling Liberal Democratic Party ahead of a party leadership election next year.

“In securing funding for birthrate policies,we must not damage the economy or reduce incomes for young people or those raising children,” Kishida said. “By reforming spending and making the maximum use of the existing budget,we will aim not to create any additional real burden.”

He added the government would issue bonds to make up initial shortfalls in funding.

“We’ll mull the specifics of fiscal reforms towards the end of the year,” Suzuki said. He added that a new framework would be created to secure stable funding,without going into details.

“If you think about an election that may be held,this is not the time to be talking aloud about who will bear how much of a burden,” said Masato Koike,economist at Sompo Institute Plus.

The prime minister has also put off a decision on how to fund a pledged 60 per cent increase in defence spending over the next five years,as polls show voters struggling with rising prices are largely opposed to tax increases to fund the new policies.

Bloomberg

Get a note directly from our foreigncorrespondentson what’s making headlines around the world.Sign up for the weekly What in the World newsletter here.