Budget screening no place for theatrics
The government is preparing to conduct a new round of budget screening, the second of its kind to be staged to identify wasteful items of government spending in what is known as jigyo shiwake. The upcoming jigyo shiwake process will target dozens of independent administrative corporations and public-utility foundations.
The government should ensure the next budget screening does not degenerate into a mere attempt by politicians to play to the gallery. In this regard, there are lessons to be learned from last year's inaugural jigyo shiwake session.
The second screening process has been preceded by interviews conducted by some senior government officials--including Yukio Edano, state minister in charge of government revitalization--with officials from the Cabinet Office and other ministries that govern independent administrative corporations and government-affiliated public-interest foundations. This task was aimed at drawing up a list of institutions to be targeted in the upcoming budget screening process. The next round of jigyo shiwake will comprise two parts, the first of which will take place in late April, followed by the second one in late May.
Many institutions subject to the next budget screening honor the so-called amakudari (descent from heaven) practice in which retired high-ranking bureaucrats take up executive posts at such corporations and foundations. They receive grants-in-aid from the government. They also can win orders for government-funded and other projects to be carried out under terms highly favorable to them.
In some cases, such institutions then farm out these projects to other government-affiliated and private corporations. This means these projects can be subcontracted at lower costs than those incurred by independent administrative corporations and public-service foundations. The money saved through this scheme has been used to pay salaries to amakudari employees at these institutions.
Cut collusive ties
The government should sever its collusive relations with independent administrative and public-interest corporations. Doing so is extremely important for reducing overall government expenditures and promoting administrative reform.
Efforts to drastically curtail amakudari appointments must be complemented by an attempt to reconsider the current national government personnel system as a whole, including the early-retirement program.
In December 2007, the Cabinet of then Prime Minister Yasuo Fukuda put together a consolidation plan targeting independent administrative corporations, which number 104 at present. However, minimal progress has been made in achieving the goal stipulated in the plan, which called for abolishing or privatizing six of these corporations. Only three institutions have been consolidated.
The fundamental idea behind jigyo shiwake screening is that unnecessary projects conducted by such institutions must be scrapped while also privatizing those that could be carried out in the private sector, and that operations for which the national government should bear responsibility must be carried out directly by the government. The upcoming screening process will be tested over whether these guiding principles will be thoroughly adhered to in examining the projects of each independent administrative corporation.
In July 2008, Fukuda ordered a 30 percent cut in government subsidies to public-utility corporations. The target has been accomplished.
However, it is difficult to keep a close check on the hefty 6,625 government-supervised public-interest corporations and the necessity of each project they conduct, as well as the propriety of the number of board members at each institution and the salaries paid to them. Given this, jigyo shiwake bears immense significance as a new tool for reforming the system governing such institutions.
No room for populism
However, the government should not repeat the method it adopted in last autumn's budget screening. Inspectors assigned to the first round of jigyo shiwake frequently lambasted bureaucrats without allowing them to state their opinions and decided on budget cuts. Discussions on each budget item had to be wrapped up within one hour.
Such an approach must be dismissed as a mere form of populism. More careful discussions are desired.
During last year's budget screening, inspectors were apparently preoccupied with the immediate cost-effectiveness of each project. They failed to look at the whole issue from the standpoint of a medium- and long-term national strategy. Inspectors should realize they would fail to see the whole picture if they discussed projects to be conducted in sectors where a high degree of expertise is involved--for instance, science and technology, national security and cultural advancement--exclusively from the viewpoint of cost-effectiveness.
Care and caution also should be exercised in choosing jigyo shiwake inspectors. Private citizens and foreign residents should not be asked to play a role in making decisions about key policies and changes in administrative systems, as they lack credentials in the form of an official appointment.
(From The Yomiuri Shimbun, April 16, 2010)