(Bloomberg) -- Japan’s lower house of parliament passed a bill to add insurance premiums to help finance an expansion of childcare allowances, in a step toward realizing one of Prime Minister Fumio Kishida’s flagship policies. 

The bill, approved by the House of Representatives on Friday, calls for citizens to make an additional monthly contribution averaging between ¥350 ($2.3) to ¥950 to support the government’s expansion of children’s benefits. The added funding will allow the government to widen the criteria of eligibility for receiving financial support.

Policies aimed at boosting the birthrate have been a focus for Kishida as Japan’s aging and shrinking population takes a toll on the economy and public finances. The number of births in Japan has decreased for eight consecutive years, hitting a record low of about 759,000 in 2023, raising concerns about severe labor shortages and the future sustainability of the social security system. 

Last year, Kishida pledged to lift support per child to a level on par with Sweden, where 3.4% of GDP is allocated to family benefits. While presenting a $23 billion package, the premier has not disclosed how these measures will be funded. 

Planned changes include removing the income cap for receiving the child allowance and expanding eligibility to high school-age children. The current ¥15,000 monthly allowance for the third and subsequent children is also expected to double to ¥30,000. The new bill is scheduled to take effect in October this year, with benefits reaching families as early as December.

Opposition parties have argued that the plan is in effect a tax hike, The government counters those claims by vowing to reduce social insurance premiums in the future. The largest non-ruling party, the Constitutional Democratic Party, had proposed using income from distributions from Exchange Traded Funds held by the Bank of Japan as an alternative funding source.

The latest poll by Kyodo News showed public discontent with the plan, with 63.5% of respondents expressing disapproval of the program. The passage of the bill may become a headwind for Kishida’s leadership. It will be a topic on the minds of voters in the three lower house by-elections scheduled for Tokyo and other cities in about a week.

Kishida still has yet to declare an expansion in defense spending, another of his centerpiece policies.

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