Expanding government handouts will encourage the child-rearing generation, many of whom say they can’t afford to start a family, according to the minister in charge of dealing with Japan’s population crisis.

Masanobu Ogura, a former Bank of Japan official, is minister for policies related to children, as well as for measures to tackle the country’s declining birthrate. He was speaking in an interview on Tuesday at the newly established Children and Families Agency in Tokyo.

“Many of those who say they want children but can’t have them cite economic reasons,” Ogura said in a meeting room decorated with children’s drawings. “Expanding child allowances will be a tailwind for the childrearing generation.”

Alarmed by a plunge in the number of children born in Japan last year to a record low of fewer than 800,000, Prime Minister Fumio Kishida has touted plans for policies “on a different dimension” to increase the number of births.

That includes abolishing an income cap on those receiving government handouts for raising children and extending benefits by three years until the child reaches 18.

While Kishida has promised to double spending on children and families, he faces a tough fight over how the deeply indebted country will fund the plans. Kishida told an advisory panel May 22 that he was not considering raising the sales tax or other tax burdens to fund the measures.

Ogura declined to comment on how much money would be needed for the program, or where it would come from, saying the matter was still under discussion. Kishida may announce further details at a meeting of his Children’s Future Strategy Council on Thursday, but will put off the final decision on funding until the end of the year, according to Kyodo News and other media.

The government is planning to spend about ¥3.5 trillion ($25.1 billion) on the policy package, Kyodo News said on Wednesday, citing sources close to the matter, with a surcharge on social security premiums among the funding sources being considered. Bond issuance will be used to bridge the gap until stable sources of funds are found, it said.

A poll conducted by the Nikkei newspaper at the weekend found about 70% of respondents opposed a social security surcharge, and that support for Kishida’s cabinet had fallen by five percentage points.

Ogura added that job market reforms were also needed to increase incomes for young people, given that those without stable employment are less likely to marry and start families.

The 42-year-old minister has no children of his own, but said the study visits he has conducted since taking on his current role have helped him understand the difficulties involved in raising a family.

“When you have children, you don’t necessarily feel that society as a whole is supporting you,” he said. “The economic, physical and mental pressures are becoming greater in this country.”

(Updates with latest report on budget required for policies in eighth paragraph)