Type: NSF/Tokyo Report: General Outline of FY 1998 Government Budget "Proposed" for Science and Technology Date: January 22, 1998 The National Science Foundation's offices in Tokyo and in Paris periodically report on developments abroad that are related to the Foundation's mission. These documents present facts for the use of NSF program managers and policy makers; they are not statements of NSF policy. Report Memorandum #98-02 January 22, 1998 General Outline of FY 1998 Government Budget "Proposed" for Science and Technology On December 27, 1997, Japan's Science and Technology Agency made public an outline of the S&T-related budget recently "proposed" by the Cabinet to the National Diet for JFY 1998 (April 1, 1998 - March 31, 1999). When compared with the budgetary figures initially "requested" several months ago by the various ministries and agencies to the Finance Ministry (ref. NSF/Tokyo Report Memorandum #97-10 of 9/12/97), the total S&T-related budget, proposed at this time, represents a slight decrease from the "requested" level of 3,045.9 billion yen to 3,030.9 billion yen (about US$23.3 billion at the current exchange rate of 130 yen per dollar). This is still an increase of 28.3 billion yen (US$218 million) or 0.9% over the JFY 1997 budget level of 3,002.6 billion yen; albeit the lowest increase rate ever since 1984. A yearly comparison of the Japanese government's S&T related budget for the past 15 years is given in Table 1 below. Table 1: Japanese Government S&T-Related Budget (Initial budgets not including supplementary budgets) Japanese fiscal year (In Billion Yen) Yearly Increase 1983 1,461.9 0.6% 1984 1,483,8 1.5% 1985 1,532.9 3.3% 1986 1,606.4 4.8% 1987 1,662.3 3.5% 1988 1,715.7 3.2% 1989 1,815.6 5.8% 1990 1,920.9 5.8% 1991 2,022.6 5.3% 1992 2,134.7 5.5% 1993 2,266.3 6.2% 1994 2,358.5 4.1% 1995 2,499.6 6.0% 1996 *2,810.5 *12.4% 1997 3,002.6 6.8% 1998 Proposed 3,030.9 0.9% *Note that the budget figures for FY 1996 and thereafter are NOT readily comparable with the figures of the preceding fiscal years listed above due to the adjustments made by several agencies and ministries in 1996 in terms of the scope of the budgetary items to be covered in the so-called "S&T related budget" category so as to be more compatible with the scope of activities suggested in the S&T Basic Plan. The proposed total S&T-related budget, as noted above, is divided into 1) appropriations under "general account" and 2) those under "special accounts," with the "general account" budgets further subdivided into (a) expenditures for the promotion of science and technology and (b) other R&D-related expenditures, as follows: Table 2: Summary of the Proposed JFY 1998 S&T Budget Increase Budget Category JFY'97 JFY'98 Rate(%) --------------------------------------------------------- 1. General Accounts: a. S&T promotion expend. 849.3 890.7 4.9% b. Other R&D related expend. 631.7 608.3 -3.7% ---------------------------------------------------- General Account Sub-total: 1,481.1 1,499.0 1.2% 2. Special Accounts: S&T related expenditures 1,521.5 1,531.9 0.7% ---------------------------------------------------------- Total S&T budget proposed: 3,002.6 3,030.9 0.9% (In billion yen) According to STA, definitions of these categories are: 1) General Account: (a) Expenditures for the Promotion of S&T: This is a major budget category for S&T under the General Account, covering most of the expenditures for government research laboratories and various subsidies for S&T activities. If limited to this particular category, which accounts for roughly 30% of the overall S&T-related budget, the yearly increase rate for the proposed FY'98 budget is 4.9%, as compared to 0.9% in terms of the total S&T-related budget. The table below shows the year-to-year changes of the initial budget under the limited budget category of the "expenditures for the promotion of S&T." Table 3: Summary of Funds for the Promotion of S&T (Unit: In billion yen) Fiscal Initial Yearly years budgets increase ---------------------------- FY'92 547.8 8.0% FY'93 594.4 8.5% FY'94 636.4 7.1% FY'95 684.4 7.5% FY'96 758.8 10.9% FY'97 849.3 11.9% FY'98 890.7 4.9% (b) Other R&D-related expenditures: This covers all R&D-related expenditure items except those under 1)-(a) above, including energy-related R&D, defense-related R&D, subsidies for the promotion of education (other than those covered by "Special accounts for National Schools and Institutions"), expenditures for R&D support for small businesses, and others. (Note: This sub-category includes, for example, budgets for nuclear energy R&D, defense-related R&D, ODA-related R&D, etc. all of which are being reduced, or only slightly increased.) 2) Special Accounts: The "special accounts" covered in this category include: "Special Account for National Schools and Institutions" (covering most of the expenditures of national universities and colleges and inter-university research institutes), "Special Account for the Promotion of Electric Power Sources Development," "Special Account for the Measures Related to Coal, Oil and Oil-alternative Energy Resources," and "Special Account for Industrial Investment." Supplementary Budgets: To make a year-to-year comparison of the entire S&T-related budget, however, it should be noted that the budgetary figures listed above show only the "initial budget," NOT including any "supplementary budgets" added in certain fiscal years, often including funds for S&T-related activities. Ordinarily, however, the government does not publish any official data on supplementary budgets allocated specifically for S&T-related activities. This makes it somewhat difficult to make comparisons of the aggregated total in both the initial budget and the supplementary budgets allocated for S&T. AT this time, however, in response to our request, the Science and Technology Agency offered "unofficial" data on the S&T-related portions of the supplementary budgets made during the past several years, as summarized below. Note that these "unofficial" figures are provided only to give "rough" ideas on the extent of the supplementary budgets allocated for S&T, based on informal estimates made! by STA at this time. Table 4: Summary of S&T-related Government Budgets Including Supplementary Budgets (Unit: In billion yen) Fiscal Initial Supplemen- Total S&T Total years budgets tary budgets budgets change ---------------------------------------------------- FY'92 2,134.7 103.7 2,238.4 +10.7% FY'93 2,266.3 549.0 2,815.3 +25.8% FY'94 2,358.5 9.7 2,368.2 -15.9% FY'95 2,499.6 685.4 3,185.0 +34.5% FY'96 2,810.5 155.5 2,966.0 -6.9% FY'97 3,002.6 0 3,002.6 +1.2% FY'98 3,030.9(Proposed) 3,030.9 +0.9% This table also indicates that during the 3 year period from FY'96 through FY'98, a total of about 9 trillion yen is being spent for S&T-related activities, suggesting that it would still require the government to spend another 8 trillion yen in FY 1999 and FY 2000 if the government wished to meet the goal of spending 17 trillion yen for S&T by the end of year 2000, as proposed in the S&T Basic Plan of 1996. Table 5 below provides the FY 1998 S&T-related budgets "proposed" by the Cabinet for each government ministry or agency at this time. The Ministry of Education, Science, Sports and Culture (Monbusho) accounts for 43% of the government's total S&T budget. Following Monbusho are the Science and Technology Agency with 24% of the total, and the Ministry of International Trade and Industry accounting for approximately 16% of the total S&T budget. Table 5: Inter-Agency Comparison by "Proposed" S&T Budget Amounts (In Billion Yen) JFY 1997 JFY 1998 Yearly Ministries and Agencies (Initial) "Proposed" Increase Min. of Education, Science, Sports & Culture 1,289.0 1,311.1 1.7% Science and Technology Agency (STA) 734.5 740.1 0.8% Min. International Trade & Industry (MITI) 472.2 492.7 4.3% Defense Agency 175.3 144.2 -17.5% Min. Agriculture, Forestry & Fisheries 100.9 103.3 2.4% Ministry of Health and Welfare 91.5 95.1 3.9% Min. of Posts & Telecommunications 57.7 60.5 4.9% Ministry of Construction 38.9 39.5 1.5% Ministry of Transport 23.1 23.0 -0.4% Environment Agency 18.0 19.6 8.9% Ministry of Foreign Affairs 13.0 12.4 -4.6% Ministry of Labor 4.3 3.9 -9.3% Ministry of Finance 2.2 2.4 9.1% Ministry of Justice 2.0 2.1 5.0% National Police Agency 1.5 2.1 40.0% Science Council of Japan 1.3 1.3 0.0% Economic Planning Agency 1.1 1.0 -9.1% Ministry of Home Affairs 0.8 0.9 12.5% National Land Agency 0.5 0.7 40.0% National Diet 0.6 0.6 0.0% Hokkaido Development Agency 0.2 0.2 0.0% TOTAL** 3,002.6 3,030.9 0.9% ** Note: The sum of the individual budget figures slightly exceeds the total because funds for the Japan Key Technology Center are double-listed in the budgets for the Ministry of International Trade and Industry and the Ministry of Posts and Telecommunications. Comments by NSF/Tokyo: Whereas the increase rate of 0.9% proposed for the FY 1998 S&T-related budget is not very large when compared with the increase rates achieved in the preceding several years (see Table 1 above), it is still higher than the 0.4% increase proposed for the entire general account budget for FY 1998, not to mention the 1.3% decrease expected in the overall "general expenditures" in FY 1998. In terms of ratio to the GDP (Gross Domestic Product), the proposed S&T budget of 3,030.9 billion yen represents approximately 0.6% of Japan's gross domestic product (GDP) of 1997 (508.3 trillion yen). It should be remembered that the Science and Technology Basic Plan, promulgated in 1996, outlined a scheme whereby the government funding for S&T would total 17 trillion yen in aggregate over the 5-year period from FY 1996 - FY 2000. This would result in a doubling of the S&T-related budget from the FY 1992 level of about 2,134.7 billion yen, by FY 2000. However, in view of the financial difficulties facing the government and the on-going efforts for financial reforms to rectify the long-accumulated deficits in the national treasury, it now looks very difficult, if not impossible, to achieve either the 17-trillion yen or the "fund-doubling" goal by the end of FY 2000. However, the goal of reaching 17-trillion yen can still be achieved by the end of the following fiscal year (FY 2001) without any drastic measures. ?? 1