Japan's Prime Minister Taro Aso has been variously praised and damned for the massive 15.4 trillion yen (HK$1.19 trillion) stimulus package he announced last week to boost the country's slithering economy. However, the measures do not go far enough to reach a deep cancer eating at the economy. Japan is suffering not only from the global recession, but also from deep-rooted structural problems that the country's ruling elite has no idea how to tackle. Most economists expressed pleasant surprise at the size of the package, which amounts to about 3 per cent of the country's gross domestic product. Together with previous packages, Japan plans to pump in 25 trillion yen or 5 per cent of GDP. But it does not fill the gap left by plummeting output - industrial production fell 38 per cent in the year to February and GDP is expected to plunge 6.6 per cent this year. Pledging vast sums of money does not guarantee that the money will be wisely spent. Mr Aso has won good marks for setting three goals for the package - to prevent further economic deterioration, to bolster job security and to invest in future economic growth. More than 2 trillion yen has been earmarked for health and child-rearing assistance. Another 1.6 trillion yen will be provided as incentives for people to buy energy-efficient cars and home appliances. In addition, gifts of up to 5 million yen from parents to allow children to buy a new home will not be taxed. Cautionary questions remain. The package has to be turned into a budget and passed in parliament where the government lacks a majority in the upper house and must face a lower house election before September. Cynics claim that the stimulus is a pre-election political ploy, a challenge to the opposition: dare they oppose the budget, and risk Mr Aso calling a snap election accusing them of trying to scupper his economic rescue? Or will they let it pass, and let Mr Aso claim the credit? Even if it were passed, doubts remain about how wisely the money will be spent. John Maynard Keynes famously said an economy could be boosted even if men were employed digging holes in the ground and others employed to fill them in. Japan sadly has shown too many examples of this kind of economic stimulus, intensified by the sometimes corrupt links between construction companies and politicians seeking projects to attract votes. The real concern is that the stimulus package is still a laundry list that does nothing to address the underlying problems. A snapshot of Japan shows a sophisticated internationally oriented exporting economy alongside a domestic economy in need of reform and still heavily bureaucratically directed. Exporters have shown great flexibility, especially in benefiting from China's growth, but falling world trade has exposed Japan's vulnerability. Leading business executives are questioning whether the volatility of the yen makes it sensible to produce in Japan for export. The easy excuse is that the government cannot be expected simultaneously to try to repair the damage of recession and tackle reforms. But Japan has long ducked reforms and time is running out. A rapidly ageing population is one hazard: one in three people will be 65 or over by 2025. The pension, and health and welfare systems are already too ill, and the government is groaning with debt. The overhang of government debt is already the heaviest of any government anywhere at any time, and will only be increased by the borrowing burden of the stimulus packages, which will push debts to 200 per cent of GDP by 2010. Mr Aso's reminder that the 5 per cent consumption tax will have to be raised as soon as the economy picks up is a painful reminder of the price that still has to be paid - and that itself will act as a drag on the recovery.