Instead of raising taxes, responsible politicians must fight vested interests to stoke economic growth and rebuild public finances, according to Shigeaki Koga, an industry ministry official who was sidelined for his reform-oriented stance.
“You must fight extremely powerful organizations, such as agricultural cooperatives, the agriculture ministry, medical associations and the health ministry, (to promote agriculture, medical services and renewable energy),” Koga, 55, said in a recent interview with The Asahi Shimbun.
“To raise the consumption tax, on the other hand, you have only to fight ordinary people, who are the least powerful.”
Koga also said the ruling Democratic Party of Japan must present broad visions of Japan and leave specific policy programs to bureaucrats.
Koga was moved to a nominal, do-nothing post in December 2009 after he criticized the DPJ administration’s reform of the public servant system as insufficient. It is unusual for a career bureaucrat to be kept at the post attached to the industry minister’s secretariat for more than 18 months.
Koga has refused the administrative vice industry minister’s request to retire by the end of July. But he thinks he may have to eventually leave if no work is assigned.
Excerpts from the interview follow:
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Question: You wrote a book, “Nihon Chusu no Hokai” (The collapse of Japan’s nerve center). What happened to Japan’s nerve center?
Answer: Politicians decide on broad directions, and bureaucrats implement policy programs speedily. This division of roles is not functioning after the DPJ administrations failed to establish the leadership of politicians over bureaucrats.
To cope with the March 11 Great East Japan Earthquake, an unprecedented catastrophe, the creativity to develop new policies and the preparedness to take responsibility for risks from those policies are required.
But bureaucrats are not equipped with either of them.
The government set up a number of panels, and they have produced recommendations, including the creation of special deregulatory zones.
But what these panels called for was all known already in March. They should have been put into practice by now.
If we compare Japan to a bus company, politicians are managers and bureaucrats are drivers.
Under the administrations of the Liberal Democratic Party, everything was left to the drivers.
It may have appeared that the buses were running smoothly. But flaws in overall service networks left people behind everywhere.
When the DPJ took over, politicians sat at the wheel. But they have caused accidents here and there, leading to confusion.
The division of roles needs to be changed, with bureaucrats being responsible for driving and ministers for redrawing route maps.
Q: Why did the DPJ fail in reforms?
A: You could easily foresee resistance from bureaucrats if you want to tackle sweeping reforms.
But the DPJ failed to assemble capable staff and make preparations to fight against bureaucrats.
I wonder if the prime ministers from the DPJ had anything they really wanted to realize at the helm of the government.
I want to ask the next prime minister to take on the post after he makes clear what he wants to accomplish.
Q: You said, “Steep tax hikes would throw the Japanese economy into an abyss.” Why?
A: It is said that Japan’s public finances will collapse sooner or later. But the recipe you could expect from bureaucrats is only an increase in the consumption tax.
Still, the consumption tax needs to be raised to 25 percent to make up for a revenue shortfall of as much as 44 trillion yen ($574 billion). Whichever way you look at it, it is by no means possible to rebuild Japan’s finances with a consumption tax hike.
What Japan needs is a growth strategy to create an economic framework in which younger generations can pay taxes from their earnings in the future.
Both the DPJ and the LDP list agriculture, medical services and renewable energy as growth sectors. But stock companies are not allowed to engage in agriculture or manage hospitals, and electric power companies are given a virtual regional monopoly.
To create a framework in which excellent companies can succeed, you must fight extremely powerful organizations, such as agricultural cooperatives, the agriculture ministry, medical associations and the health ministry.
To raise the consumption tax, on the other hand, you have only to fight ordinary people, who are the least powerful.
The opponents you really need to fight are people who hold fast to vested interests and hamper economic growth.
Politicians who can fight those people are responsible politicians, and political parties that can do that are responsible political parties.
Q: What do you propose for reconstruction from the Great East Japan Earthquake?
A: Deregulating agricultural and fishing businesses is important.
Miyagi Governor Yoshihiro Murai has asked the government to allow companies to enter the fishing business. We should go a step further and allow foreign companies in.
How about bringing fishing companies from abroad and having them catch fish off Fukushima Prefecture (where the crippled Fukushima No. 1 nuclear power plant is located), check for radioactivity and sell in the European Union markets?
If fish sell in the EU markets, they will also sell in Japan. Overseas fishing companies might employ Japanese fishermen who lost ships (due to the March 11 earthquake and tsunami).
Q: The entire Japan must change.
A: We need to have a framework in which those who really need to be protected are well protected. When vested interests are broken up, resistance would be strong without safety nets.
No other country protects all elderly people, including those who are wealthy.
We must raise our voices and demand that the government help only those who really need help.
I want to tell young people that Japan will fall into a grave situation unless they deliver their voices to politicians regularly through the Internet and other means, not only at the time of elections.
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