TOKYO -- Japan will spend roughly 800 billion yen ($7.01 billion) to expand its free preschool program, part of Prime Minister Shinzo Abe's push to increase human resources investment.
The expansion will render all 3- to 5-year-olds eligible for assistance, regardless of their parents' income, making preschools free for an additional 2 million children. Currently, 2.5 million children in that age group attend either nursery school or kindergarten in Japan.
The Abe government has put together a 2 trillion yen package -- around $17.5 billion -- for what he calls "revolutions in productivity and human resources development," promising programs such as free university education for students in low-income households.
Nearly 1.7 trillion yen in revenue expected from a consumption tax increase in October 2019 will finance the package, with the corporate sector contributing the remaining 300 billion yen.
Japan's consumption tax rate is scheduled to rise to 10% from 8% currently. As the higher rate will apply during only part of fiscal 2019, the free preschool program will cover only 5-year-olds in that fiscal year, before expanding to 3- and 4-year-olds the following year.
High-income earners who enroll children in a private kindergarten still will pay at least part of the cost. Japan already provides free preschool for low-income parents and will maintain the current method of paying the average fee, which currently stands at 25,700 yen a month.
Care for children up to age 2 will be free for households that make less than 2.6 million yen a year and are exempt from municipal residency tax. Nearly 10 billion yen will be earmarked to fund this effort.
Policymakers considered limiting nursery school coverage to programs that are certified by the government and meet specific standards. But a Liberal Democratic Party panel decided Wednesday to include all child care facilities, as noted by Seiji Kihara, a member of the LDP policy research council.
Free university education will be limited to low-income students. Currently, children in households exempt from municipal residency taxes can receive a monthly grant of 20,000 yen to 40,000 yen with no obligation to repay. But Japan intends to increase the aid to a maximum of about 1 million yen annually, to help cover living expenses as well. This effort likely will cost 700 billion yen to 800 billion yen.
Abe's push to create a social security system benefiting all generations centers on reducing education costs shouldered by households, a policy critics see as reckless spending. While some families struggle to find day care for their children amid the lack of available slots, others could end up benefiting from free services.
For child care, a deeper problem lies in a shortage of facilities, leaving more than 20,000 children on the child care wait list, according to experts.