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Monday, June 27, 2011

EDITORIAL

Go-ahead for reconstruction

The Upper House on June 20 enacted a basic law for reconstruction of Tohoku-Pacific coastal areas devastated by the March 11 quake and tsunami. Besides the ruling Democratic Party of Japan, the Liberal Democratic Party, Komeito and other opposition parties supported the bill, while the Japan Communist Party and Your Party opposed it.

The law stipulates the basic principles and a new government setup for reconstruction. But Prime Minister Naoto Kan and leaders of both the ruling and opposition forces should be ashamed of the fact that the law was not enacted until 102 days after the natural disasters.

Their work was very slow compared with the responses to the 1995 Kobe earthquake and the 1923 Great Kanto Earthquake. A similar law was enacted about a month after the Kobe quake and the Teito (Imperial Capital) Reconstruction Agency was established about a month after the Kanto quake.

The DPJ with the support of the JCP, the Social Democratic Party and Your Party voted on June 22 to extend the current Diet session by 70 days. The LDP and Komeito did not support the 70-day extension. Both the ruling and opposition parties should put a power game aside and concentrate on passing as quickly as possible bills related to the reconstruction efforts and other urgently important bills.

The law declares that Japan will go beyond restoration of the pre-disaster conditions in the devastated areas and aims to build a society suitable for the mid-21st century in which people will be able to rest assured and live a rich life.

Passage of the bill was delayed mainly because the DPJ and the LDP-Komeito bloc could not quickly agree on the power and functions of a reconstruction agency to be established anew. The bill's passage was assured when the DPJ accepted the LDP-Komeito bloc's ideas.

The agency will not only compile an overall plan for the reconstruction and make necessary adjustments among various administrative entities but also implement the plan.

To establish the agency, a new law needs to be enacted. The government is thinking of establishing the agency early next year. But it should try to have the Diet pass the bill as quickly as possible.

In writing the bill, the government should clarify the functions of the agency and empower it to vigorously carry out reconstruction by overcoming the red tape of government ministries and agencies. The new agency should be strong enough so that if local governments and residents contact it, they can have necessary work done without having to contact many government offices.

The newly enacted law also establishes the reconstruction headquarters within the Cabinet. It is headed by the prime minister and taken part in by all the Cabinet members. The reconstruction headquarters will set up branch headquarters in Iwate, Miyagi and Fukushima prefectures.

The law officially places the 35-member Reconstruction Design Council, which is now discussing basic ideas for the reconstruction, under the reconstruction headquarters to submit proposals to the prime minister. When the reconstruction agency is set up, the headquarters will be taken over by it.

As a basic measure, the law calls for a thorough review of budgets not related to the reconstruction in order to find available funds. The law also enables the government to issue "reconstruction bonds" to fund the reconstruction efforts — a measure incorporated into the law following the DPJ's concession to the LDP-Komeito bloc.

Bonds for reconstruction will be managed separately from bonds issued to cover deficits and fund other types of construction. The law requires the government to make clear in advance the way to redeem the bonds.

The government may need to raise through bond issuance more than ¥10 trillion for the reconstruction. The Reconstruction Design Council has proposed raising the consumption, income and corporate taxes to repay the bonds.

Discussions on how to redeem the bonds should not be left to the council. The government and the political parties should seriously discuss how to redeem the bonds, by taking into consideration the effects of the redemption method on Japan's economy.

Another basic measure mentioned by the law is establishment of special zones in the devastated areas. Tax privileges and special deregulation measures will be implemented in such zones.

Special zones will play an important role in reviving and strengthening local industries, including agriculture and fisheries, and creating job opportunities for victims of the March 11 catastrophe.

The government should not hesitate to take bold measures in special zones. But it must take utmost care to ensure that the measures will meet the needs of local industries and people.

Although the Diet session will be extended by 70 days, it is not certain whether the Kan administration and the DPJ can get the Diet to pass a bill to issue the bonds necessary for implementation of the fiscal 2011 initial budget and a second fiscal 2011 supplementary budget.

The person most responsible for this situation is Mr. Kan, who has fomented distrust in politics by clinging to power after his June 2 announcement that he would step down in the near future. He should dispel the distrust among people and lawmakers through concrete action.



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