Japan's Budget Battle

Ishiba Achieved a Majority for the Budget Bill

By Takuya Nishimura, APP Senior Fellow, Former Editorial Writer for The Hokkaido Shimbun

The views expressed by the author are his own and are not associated with The Hokkaido Shimbun
You can find his blog, J Update here.
March 5, 2025. Special to Asia Policy Point

Japan’s House of Representatives (Lower House) passed the FY 2025 budget bill on March 4 with the backing of a Liberal Democratic Party (DPJ)-Komeito coalition and the Japan Innovation Party (Nippon Ishin-no Kai). Ishin’s cooperation was surprising, but welcome. Prime Minister Shigeru Ishiba, the head of a minority government, finally achieved a simple majority in the Lower House, which he had desperately wanted.

Although Ishin had reached a deal with the LDP and Komeito to include financial support for high school tuition in the bill, the party remained skeptical given the relatively small increase in the threshold for imposing an income tax from 1.03 million yen to 1.6 million yen. The Democratic Party for the People (DPP) rejected that increase as too small in its discussions with the LDP and Komeito.

Anxious about its consistently low public approval ratings since the Lower House election last October, Ishin has sought some political gains that would register with the public. Raising the government’s support for high school tuition is an important achievement for Ishin to promote in the upcoming July Upper House elections. However, Ishin’s cooperation with the leading coalition has divided the opposition parties between pro-LDP Ishin on one side and other parties, including the DPP, who want to distance themselves from the LDP-Komeito coalition.

The budget bill was sent from the Lower House to Upper House on March 4, two days after the targeted deadline on March 2 for automatic approval in the Upper House. Article 60 of the Constitution of Japan provides that a Lower House decision on a budget will automatically become the decision of the Diet, if the Upper House fails to act within 30 days of receiving the bill.

If the FY 2025 budget bill had passed the Lower House by March 2, then it could have automatically passed the Diet before the new 2025 fiscal year begins on April 1. With delay of two days, the LDP is planning to accelerate the discussion of the budget bill in the Upper House to enable it to vote by the end of March. Fortunately for the LDP, the LDP-Komeito coalition constitutes a majority in the Upper House. Ishin is likely to cooperate with the LDP to accelerate the discussion in the Upper House.

One of the reasons for the delay in passing the budget bill in the Lower House was a revived argument over the LDP’s slush fund scandal. The opposition parties demanded hearing testimony from a former accounting manager of Abe’s faction, Jun-ichiro Matsumoto, before they would vote on the budget bill. The LDP has yet to put this scandal behind it. Matsumoto, although reluctant to appear, he did.

Persuaded by LDP leaders that his testimony would help pave the way for the budget bill to pass the Lower House, Matsumoto accepted a hearing of Committee on Budget on February 27. In the closed meeting to the press, held in a room in Tokyo hotel, Matsumoto revealed that, after the fund had been scrapped, the faction revived it at the suggestion of a senior member.

Two unsolved mysteries in the slush fund scandal remain. One is when and who started the kickbacks from the sale of fundraising party tickets. Former Prime Minister Yoshiro Mori is suspected of being involved in the establishment of the system in the early 2000s, but former Prime Minister Fumio Kishida did not ask for any details when he interviewed Mori last year. Matsumoto did not know much about the origin of the kickbacks.

The second mystery is the identity of the person who introduced the idea of resuming the kickback system. The faction head at the time, Shinzo Abe, had abolished it in March 2022. Faction leaders restarted it in August 2022, one month after Abe was assassinated.

Matsumoto testified that, at a meeting in August 2022, one of the faction leaders had said that rank-and-file faction members supported resumption of the kickback system. According to Matsumoto, all four leaders of Abe faction -- Ryu Shionoya, Yasutoshi Nishimura, Hiroshige Seko, and Hakubun Shimomura – agreed to revive the system.

Matsumoto did not identify the leader who represented the faction members who favored the kickback system. However, the Asahi Shimbun reported that Matsumoto had told public prosecutors that the leader in question was Shimomura. Shimomura told Asahi, however, that he had not done so, but had only given information about the “feelings” in the faction. In Japan, “giving” information is not so different from “suggesting” it.

The opposition parties have now asked for testimony from the four leaders who were at the August 2022 meeting. While the budget bill is discussed in the Upper House, the parties will keep on negotiating over the scandal in the Lower House. This will not create a warm atmosphere for the Ishiba administration.