Bureaucratism
Rule of Law and Separation of Powers
Committees
Limits of the Committee System
Conclusion

[Editor's Note]

           Postwar Japan, under the influence of the complex made up of the ruling party, construction companies, local electorates and bureaucrats, spent vast sums on public work projects. Largely as a result, the country came to be burdened with a fiscal deficit well in excess of its GDP. Recently, a majority of people has come to favor a reduction in wasteful public works and a return to fiscal balance. Yet reform does not proceed smoothly. Why should this be so? The analysis in this essay focuses on the problem of roads, and considers the meaning and the limitations of the "Committee procedure" adopted to try to eliminate the influence of bureaucrats and construction 'tribe' Diet members over public works reform.

The year 2001 was a remarkable one for public works, which had hitherto been considered a kind of a "sanctuary." Firstly, TANAKA Yasuo , governor of Nagano Prefecture, issued an "anti-dam declaration" promising the cancellation of nine dams in the prefecture. Then Prime Minister Koizumi announced his challenge to the entire system of public works, pledging the privatization of "highway-related public corporations" as a part of a process he described as "structural reform without sanctuaries." Since both the Governor and the Prime Minister enjoyed strong support from the electorate, it might be assumed that if they made up their minds reform would go ahead.

In reality, however, Governor Tanaka's proposed dam cancellation had to be reversed because of strong opposition at the prefectural assembly, so that the matter was referred to the "Deliberative Committee on Flood Control and Dams" (hereafter the "Nagano Committee"). The Koizumi cabinet's highways corporation privatization too was referred to a "Committee for the Promotion of Privatization of Four Highway-related Public Corporations" (hereafter the "Privatization Committee") for deliberation on concrete steps. Did this mean that the Governor and Prime Minister were somehow lacking in leadership, or did it come about because of unexpectedly strong opposition? The problem cannot be understood in terms of such a simple dichotomy.

Entering upon the year 2002, Japan displays signs of crisis in all areas, not only public works but fiscal, financial, military and diplomatic. Policy change right across the board is called for, and the most urgent and pressing task is to find a concrete method to achieve it. It may well be that the "Nagano Committee" and the "Privatization Committee" (sometimes also known as "Council" or as "Third Party Organ") will play a key role in achieving this objective.

Firstly, let us look at the privatization of highway-related public corporations, which has become the symbol of Koizumi’s reform plans. At the end of 2001, the Koizumi Government finally decided to reorganize and to privatize four highway-related corporations, to cancel the injection of public funds (amounting at that time to 300 billion yen), and to extend from 30 to 50 years the period for redemption of loans. The decision on a number of other matters was referred to the above-mentioned "Privatization Committee": whether to proceed with the privatization of the existing four highways public corporations as a single unit or as separate units following their reorganization, which of the uncompleted roads to complete, and by when, and how to deal with the huge debt (ca 35 trillion yen) these public corporations have accumulated.

Bureaucratism

In order to understand how the "Privatization Committee" might be a model for undertaking policy reform, let us briefly look at the existing mechanism for making decisions on public work projects and for dealing with challenges against those decisions. From planning to implementation, public works matters have always been under the exclusive control of bureaucrats, and that means that everything from the grand design incorporated in the Comprehensive National Development Plan (CNDP) to the long-term plans and year-by-year allocations, including the right to decide on the detail of works for each location and each sector under the 12th Five-year Road Improvement and Management Program based on the CNDP. All stages, from budget to tender, are in the hands of the bureaucrats. Nothing so exemplifies the system of centralized administration by bureaucrats as public works.

What has the Koizumi government done? With a view principally to the fiscal crisis, it chose, firstly, to limit the issue of new national bonds to 30 trillion yen, to convert the special purpose road revenues to ordinary revenues and to bring subsidies to public corporations under control over the long term (cutting outlays in fiscal 2002 by 10 per cent). This may be called "system reform."

Secondly, projects both continuing and still to be launched have been subject to review. Well-known examples are the so-called "timely (toki no) assessment", a practice adopted first in Hokkaido for review of public works projects with no prospect of completion even long after the plan was adopted or the works commenced; the cancellation of more than 260 public works projects at the behest of KAMEI Shizuka , then Chairman of the Policy Research Council of the Liberal Democratic Party (LDP); and the issuance of the "anti-dam declaration" by Governor Tanaka of Nagano Prefecture. All of these may be called "reforms on a "case-by-case basis".

The third example of a challenge to the bureaucracy is the demand by the citizens of Tokushima Prefecture for a local referendum on the issue of construction of a flood-prevention barrage across the Yoshino River.

The Prime Minister is unquestionably the top leader in the country, as is the Governor in a prefecture, and in a democratic polity the citizens are the bearers of sovereignty. Accordingly, the challenges listed above should have been assured of victory, however long it took. However, of these challenges only in the case of Chairman Kamei was the decision to cancel works actually confirmed. Koizumi's reform ended in confusion, Governor Tanaka's plan was blocked, and the referendum on the Yoshino River project ended not with a "cancellation" but with an ambiguous "suspension" of the project, under which the original project might still be revived some time in the future. Why did things turn out like this? In a sense the answer is simple. Bureaucrats gave their consent to Kamei's proposal, but not to the others. But in that case, how is it that Mr. Kamei, Chairman of the Policy Research Council of the LDP, could accomplish his will while Prime Minister Koizumi could not?

Rule of Law and Separation of Powers

To clarify the locus of the problem, let me summarize in terms of the key concepts of the rule of law and the separation of powers. In textbook terms, under the Japanese constitution Prime Minister Koizumi, as the head of the government would present a bill to the Diet for the privatization of public corporations, and in the same way Governor Tanaka can introduce in the prefectural assembly his plan to cancel dam construction. If the bill passes the Diet or the assembly, the reform is then carried out. If not, then the bill lapses. If their rights are infringed, citizens may appeal to the judiciary and the matter should be resolved there.

In practice, however, things do not work quite like this.

1. At the national level, under the cabinet system the administration is headed by the leader of the majority party in the parliament. In theory, what the Prime Minister proposes should pass the Diet. However, so far as the reform of public works is concerned, it is a different story. Even though the Koizumi Government is supported by a majority of the people no bill can be carried in the Diet unless it has the support of a majority in the LDP, or if it is opposed by the LDP in the Diet. This is one reason why the Government had to resort to setting up the "Privatization Committee."

2. At the local government level, it is commonly assumed that since both Governor and Assembly members are directly elected by citizens of the prefecture, under a system that is more presidential than parliamentary, people holding the same policies will be elected to both. The reality is different. In Nagano, Tanaka is anti-dam, but the Assembly is overwhelmingly pro-dam. It means that Governor Tanaka cannot implement his pledge. Nor is this problem confined to Nagano.

3. An overwhelming majority of people think that public works are wasteful and many should be cancelled. According to a recent survey, between 70 and 80 per cent of the people harbor doubts about public works. But, apart from showing their support for Prime Minister Koizumi or Governor Tanaka, they have no way to implement their will.

Committees

Committees may be set up, bypassing the Diet or Assembly, to bridge the gap between the will of the representative body and the will of the people, although they have not functioned in this way in the past.

Almost all policies in Japan are determined by bureaucrats. Many of the systems now targeted for reform were adopted by bureaucrats in the early post-war period to achieve the early recovery of the country from the devastation of the war. Committees served as the driving-force in the creation and operation of the new system. Committees were set up sector by sector for roads, rivers, and so on, and scholars as well as representatives from various interest groups served on them. Formally, these committees were expected to confer legitimacy on policy decisions by subjecting them to scientific scrutiny and taking account of the interests of the people, thus avoiding any impression that decisions were being taken just by bureaucrats. In fact, however, it is well known that they nearly always became "instruments of bureaucratic will" in which there was little scientific scrutiny and the needs of the people were not taken into serious consideration. If the "Privatization Committee" set up by the Koizumi Government turns out like this, then its outcome can be predicted. For this reason. while Prime Minister Koizumi adopted a course of setting up committees that looked formally identical to the conventional committee, he placed great importance on choosing members who would not be under the influence of bureaucrats or ‘tribe' parliamentarians.

The "Nagano Committee" constitutes an experiment with a new kind of democratic committee from which the influence of bureaucrats was to be excluded. Its main features are as follows.

1. Administrative staff and bureaucrats should be seen but not heard. They must never express any views of their own.

2. The Committee comprises a plenary committee plus nine dam sub-committees. All members are to be chosen by the Governor. The plenary committee mainly comprises scholars and specialists, whose role is to clarify points at issue.

3. The sub-committees are expected as much as possible to give ear to the opinions of local residents. They comprise members from an investigation committee together with representatives of local residents or interest groups chosen in response to public advertisement. These sub-committees hold public hearings and summarize the main points at issue on the basis of the general principles enunciated by the plenary committee.

4. The plenary committee draws up its final report, taking account of the views expressed in the sub-committees.

5. All information, from all stages of the process, is public.

This procedure is probably as democratic as it could possibly be under contemporary conditions.

Limits of the Committee System

The "Nagano Committee" is putting "grass roots democracy" into practice. All information is open to the public, expert witnesses provide input into the Committee, and the local residents speak out freely.

We had assumed that, by adopting such democratic practices, everyone would be able to overcome their initial differences and gradually come closer to the "truth". The experience of the "Nagano Committee", however, points to the opposite outcome. The debate grew sharper and the conflict deepened. There are several reasons for this.

In the case of dams, we can estimate to a fairly accurate degree the amount of water produced by a certain amount of rainfall, and whether or not this would breach the banks. In the sense that everyone can come to a common understanding on such matters, this is science in operation. However, when the question is over how many years to prepare for such a downpour - in other words, should this be 100 years or 150 years - then this is in the end a value judgment.

Finance is also troublesome. As a result of the huge expenses borne in hosting the 1998 Winter Olympics, Nagano Prefecture is suffering from a serious fiscal crisis, second only to Okayama Prefecture nationally. In this situation, next year's budget cannot be prepared. That is why talk of canceling wasteful public works is quite persuasive. But when the discussion broadens to ask whether wasteful public works refers just to dams, or also includes roads, and so on, then in the end we are talking about the whole of the prefecture's finances.

A cost-benefit analysis appears at first sight scientific. There are several reasons why the focus of reform has been placed on the highway and other public corporations, including the hope of tackling the vested interests of bureaucrats who ‘descend from heaven' (amakudari) into plum jobs in public corporations after retirement. But the real reason is the enormous public debt. Notwithstanding the serious state of the nation's finances, however, the crux of the matter as far as "public works" is concerned is whether the correct course of action is to abandon the construction of new roads that do not pay. As in the case of rebuilding after a natural disaster and projects closely connected to the life and health of the people, some "public works" have to be carried out, even if they do not make economic sense. But simply adopting a "scientific", cost-benefit analysis is not going to tell us whether or not highways should be included among this type of public works.

Let us next examine the system for financing public works. No matter how precious life is, if we had to shoulder the total cost of protecting it by building a dam, then we would no doubt have second thoughts. Under the present system, however, we are not faced with making this decision.

The dams under discussion in Nagano Prefecture are the prefecture's own projects. Even so, 85 per cent of the construction cost is covered by the national treasury, leaving the prefecture with only 15 per cent of the burden. In other words, Nagano Prefecture can build a dam worth 100 billion yen for 15 billion yen. Given this system of financing, it makes more sense to build a dam than not. When it comes to expressways, the prefecture bears no financial burden at all. This "free of charge" system is the very reason behind the unanimous call for the "promotion of highway construction" made all the way from the prefectural governor, prefectural assembly, mayors and local councilors, associations, construction companies, right down to local businesses. It takes more than a little courage to say ‘no' in this situation.

The question of interests is also complex. There is a yawning gap in attitudes between those living in the area that will be submerged by a dam's construction and those living in unaffected areas. A similar gap exists between ordinary citizens and those engaged in dam-related work. There is a particular large number of interested parties when it comes to road construction. In this case, conflicts of interest arise between a range of interest groups: cities, towns and villages near where the highway passes, and those where it does not; those with an exit, and those without; those in urban areas, and those in rural areas.

Yet another problem is how to deal with the debt chalked up by public corporations. In the course of the ongoing inquiry into privatization, evidence emerged that the loans taken out by the Japan Highway Public Corporation, the Housing Loan Corporation, the Japan Petroleum Development Corporation, and other public corporations, which had been hidden from public view, were far larger than previously imagined. The total amount of debt shouldered by these corporations, both special public corporations and authorized public corporations, is estimated to be as much as 400 trillion yen. Even if the privatization of these corporations proceeds as planned, no private company could possibly succeed with such enormous debts. This makes the meaning of privatization clear: these public corporations will be handed over to the private sector to make a profit in the market once someone has been found to take on their debts. The question is who. In the earlier case of the privatization of the Japanese National Railways, the burden in the end fell on the tax-paying public.

A long list of people made a fortune through their connection with the highway-related public corporations, including former bureaucrats, companies that carried out work for the corporations (so-called "family companies"), construction companies, and members of the Diet. Despite knowing full well that they were increasing the public debt, they simply kept on constructing "red-ink highways". This problem has been taken up on innumerable occasions in the Diet, in the media, and in as many other places as possible. In spite of this public outcry, none of them did anything to improve the situation or accept responsibility for their actions. Why should the tax-paying public have to foot the bill for the mountain of debt they built up? Here justice as the ultimate value comes into play. From this perspective, the bill should definitely not be paid by the tax payer.

In this way, the more we delve into the problem the more befuddling things become. In a worst case scenario, a division of opinion in the committee could arise over the construction of every single highway and, what is worse, the general consensus on privatization could be completely shattered. The committee's final report may turn out to lack a clear-cut conclusion, simply setting out different arguments for and against. Rather than responding to popular expectations by coming up with the right answer, the whole problem might end up back at the starting point, subject yet again to political forces with strong vested interests.

These are the limits of the committee system.

Conclusion

The Privatization Committee was introduced as a tactic for bypassing the Diet. In contrast to traditional "government-patronized committees," this committee has necessarily opened its membership to scholars and ordinary citizens. Even so, it remains a difficult task to reach a unanimous conclusion. In fact, it is just as likely that the greater the discussion the more confusing things become. It is easy to see that this is the problem not only in the field of road construction, but in all areas of public works. Japanese public works are the largest in the world with an annual investment of 40 trillion yen. They involve the central government bureaucrats of the Ministry of Land, Infrastructure and Transport, and those of the Ministry of Agriculture, Forestry and Fisheries, as well as every local government throughout the land. The construction business is supported by six hundred and sixty thousands companies and 6.6 million workers.

It goes without saying that the construction industry is central not only to the Japanese economy but also to LDP politics. As was shown in the case of Kamei's reforms, bureaucrats agreed to cancel individual projects because of their limited amount of influence. When it comes to "system reform ", however, the situation is quite different. That is because, if the logic of reform spreads without limit, there is the possibility this will lead to the break-up of the entire system. The reform of highway-related public corporations calls for the reexamination of the plan to construct 9,342 kilometers of new roads contained in the 12th Five-year Road Improvement and Management Program (fiscal year 1998-2002). Such a reexamination would have an effect on other long-term programs for forestry and river conservation, which are scheduled for revision this year. In the end, it will be necessary to reexamine the development plan supporting a total of sixteen long-term programs, that is, the 5th Comprehensive National Development Plan (decided in 1998, covering fiscal year 2010-2015). This is no ordinary sized plan with a budget far exceeding 1000 trillion yen. It includes a project to relocate the capital city. To reexamine this plan would sound the death knell for traditional public work projects and would be a devastating blow to the two key ministries, the Ministry of Land, Infrastructure and Transport, and the Ministry of Agriculture, Forestry and Fisheries. What this in the end means is that the LDP and the Japanese economy, both of which have relied on public works, must make a complete break with the past.

The Privatization Committee is now taking the lead in carrying out one small part of these enormous reforms. If we explain the role of the committee in the more general terms of "policy conversion", then it can be put as follows.

Heretofore, we have believed that the most effective way to change politics is to change the government. Let us imagine that a change of government takes place and that the new administration demonstrated a firm resolve to reform public works. What this actually means is that the government will revise the laws, budgets and organizations, which are now centered on bureaucrats, and replace them with fundamentally revised new laws, budgets and organizations.

If the new government has a majority in the Diet, then no problem should arise. But if the situation is as at present, with conflicting interests and a wide gap between the Diet and the will of the people, then exactly the same problems the Committee is facing today might well arise.

The Privatization Committee examines specific problems in particular fields, namely, the construction of roads and dams. However, as pointed out earlier, while the discussion may start out with issues related to "public" and "private", it in the end touches on the very essence of politics - who decides policy in what way. This brings us face to face with the chronic disease suffered by postwar Japan, as seen in the gulf between the theory and reality in the separation of powers.

The Committee will come under pressure to find out exactly what the public wants. Without such public input, the members of the Committee will find it difficult to express their own opinions. A referendum is one way to gain this popular input. If the final report of the Committee proposes use of referenda, the present politics dominated by bureaucrats will be transformed into politics by popular sovereignty.

Of course, as shown in the "Nagano Committee," the opinions and interests of the people are plural. In the final analysis, however, we must place the problem back into the hands of the people, which is the way to return to the founding principle of democracy and bring it back to life. Change needs to start from such a bottom-up perspective.

SEKAI, vol. 699 (March 2002), pp. 158-167, translated by Glenn Hook, Gavan McCormack, and SHIMIZU Nanako.