I am a policy analyst at a central government agency in New Zealand here, but until I make my intention obvious to my employers to move on to other things, I will remain anonymous. Nothing special about this, I just wanted to set up the blog as things start to heat up for this incredibly interesting, and likely to be incredibly important election. You know, as a, “I was there” kind of thing. Also, it is very likely that this election will have some impact, post-expected re-alignment on my topic due to possible (but optimistic) changes to how much effect certain interest groups have on trade policy etc.
Anyway, to start on a completely different note, from my own personal view, I found this interesting today:
So using taxpayers money more effectively, no surprise, we have been through that here in NZ lately too, probably “save”a little bit more in Japan as we all know. Will be more interesting to see what they do in the broader context of administrative reform.
However, the “child allowance” is of some reasonable interest. A similar sort of allowance (called Working for Families), and level of reimbursement is actually what attracted me, after doing all of the relative sums and cost of living calculations, with wife and child in hand, back to New Zealand in the first place after being in Japan.
In addition to possibly, just possibly lightening the financial burdens on couples in Japan to make the idea of procreation attractive (sic), I wonder if there is any possible attraction in this for overseas Japanese. For those more knowledgeable than I on the Japanese diaspora and its demographics, I would be interested if such an incentive might also be of interest to overseas Japanese families to incentivize successful returnees and whether it would help drive against the current demographic trend.
A little bit matters when you have children and one has to make the sacrifice, and at least in NZ a decent child allowance gives the NZ diaspora, which is of the age desired to offset some of the aging population problem, an incentive to come back (usually from places like the UK where so many young kiwis are). According to OECD figures I came across recently NZ has the second largest per capita diaspora, and perhaps more interestingly, the most educated per capita diaspora. You would think it is a horrible place to live.
One interesting thing about this proposal is that it does not seem to be salary-tested in anyway. While on the face of it this might seem odd to a lot of people, and maybe the policy will change post-election, it might actually make sense for it to remain exactly as stated.
1) It cuts down on bureaucracy and the transaction costs involved in trying to figure out who deserves what relative to income etc, especially in my case where the government pays me (salary), I pay the government (tax), and the government pays me back (tax credit).
2) Perhaps more importantly it will take away what I think is one of the most unusual things about NZ’s “Working for families” tax credit which is a sort of enforced middle “classedness” for single income families.
3) It is a nice sum of money – if saved and compounded monthly at 5% over 15 years (easy to do if invested as part of a suitable insurance plan in Japan, with some tax exemptions to benefit from also), plus the final amount compounded monthly again at 5% for the next 3 years with no additional payments, we come out with an approximate value of 8,000,000 yen, which will go a considerable way to any child’s education, especially if good enough to get into a public university.
(Re: point 2) In my case there is a $20,000 yearly salary band where it makes little sense for me to actually get a pay rise, due to losing entitlements such as this and a few others (especially when considered in the context of a progressive tax system). At this point in my career, for every additional dollar in pay increase I receive, I only receive 20 cents in the hand a week for my efforts. And obviously it also does not provide an incentive for a partner to “ease” back into work after childbirth unless they can get a full-time job straight out, which may not be preferable for a lot of people for various reasons.
Now any semi-intelligent person in a professional job is not going to stop working hard and stop trying to get promoted because it makes only marginal financial sense, but I do believe that across the population and in the long-term these kind of perverse incentives do have an effect.
A perhaps even more interesting difference with the NZ Working for Families is the fact it does appear to discriminate between those who work a certain amount of hours, and the entitlement does not decrease as the number of children increases.
If implemented as it stands it would be a good start in altering demographic trends- 3 children (safely over the magical 2.1 number) adds to a not unreasonable 78,000 yen a month. A decent incentive if one of the partners is working in a low-paying job or starting at the bottom of the salaryman ladder. I do have some concerns that it may reinforce gender roles at at time when things were just starting to (perhaps) change, but hopefully the DPJ in emphasizing this as one of their priorities does not forget that there is more to addressing the procreation issue than offering financial handouts.
Then again, my expertise is not social policy.