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Monday, Nov. 21, 2011

EDITORIAL

No end to wasteful spending

The Board of Audit on Nov. 7 submitted to Prime Minister Yoshihiko Noda a report turning up ¥428.38 billion in 555 cases of wasteful use or improper spending of public money by government organizations and state-funded bodies in fiscal 2010.

The amount represents the second largest in history, following the ¥1.79 trillion reported for fiscal 2009. But in comparing the two figures, a special factor for fiscal 2009 must be taken into account.

The fiscal 2009 figure included a ¥1.2 trillion surplus generated by the Japan Railway Construction, Transport and Technology Agency in its account for payment of pensions to former Japanese National Railways workers. The agency was ordered to return the surplus to the state coffer.

If this extraordinary factor is excluded from the fiscal 2009 account settlement, it is clear that wasteful use or improper spending of public money has not dwindled.

This shows that wasteful spending of public money has become a semi-permanent feature of the government at a time when it is pushing long-term tax increases to pay for reconstruction from the March 11 earthquake and tsunami and the Fukushima nuclear crisis. Mr. Noda also has made it clear that the government will raise the consumption tax rate in the future to maintain the social security system.

If this wasteful spending pointed out by the Board of Audit continues, people will not accept Mr. Noda's tax increase plans. The government and the Diet must strictly watch use of public money.

In examining the fiscal 2010 account settlement, the board has found that the amounts of special account budgets and surpluses held by independent administrative corporate bodies soared. In the wake of the accidents at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant, which have caused severe suffering to many local residents, the board's scrutiny has found that the funds to be paid through local governments hosting nuclear power plants in their areas were strikingly large. Such money is paid for the sake of securing locations for nuclear power plants.

The trade and industry ministry's Agency for Natural Resources and Energy, in charge of promoting nuclear power generation, planned to secure some ¥190 billion as of the end of fiscal 2009 to secure locations for 14 new reactors. At the end of fiscal 2010, the fund had a balance of ¥123.1 billion.

But 11 of the planned reactors had no prospect of being built. The board determined that the fund will need only ¥7.3 billion for three reactors that may actually be built. It demanded that the ministry reduce the fund by about ¥65.7 billion.

Of the remaining sum, it has already been decided that ¥50 billion will be used for measures to cope with the effects of the Fukushima nuclear crisis.

Having seen the nuclear fiasco, local governments are unlikely to accept the future construction of nuclear power plants in their areas. The system of accumulating a large amount of money for securing locations for nuclear power plants should be strictly reviewed.

A drastic review is also needed of funds related to spent nuclear fuel reprocessing, which has accumulated nearly ¥3 trillion.

In view of the Fukushima accidents, the board's demand to the ministry is reasonable. It means that the board is suggesting that the ¥65.7 billion be used for such purposes as paying compensation to people who have suffered from the nuclear accidents and decontaminating areas contaminated by radioactive substances released by the nuclear power plant.

The board has also found that the Japan Atomic Energy Agency signed improper contracts with a subsidiary of Mitsubishi Heavy Industries Ltd. in fiscal 2008 and 2009 over the development of technology for the next-generation fast-breeder reactor. It says that transparency and economic rationality are not assured for spending ¥12.6 billion included in the contracts, as the contracts oblige the agency to pay that amount irrespective of the actual cost of the technological development.

In checking the special account budget for the construction of new buildings to replace old government buildings and old housing for public servants, the board has found that the account unnecessarily included ¥61.8 billion. It ordered that this money be included in the government's general account budget.

The board also has found that about ¥2 trillion is left unused in local funds set up with subsidies from the central government. Before the Democratic Party of Japan came to power in September 2009, the central government provided subsidies to local governments to set up funds for helping to overcome difficulties caused by the global financial crisis in autumn in 2008.

Examining some 2,500 funds in Tokyo and 42 other prefectures, the board has found that as of the end of fiscal 2010, only ¥1.4 trillion of the total ¥3.4 trillion in the funds had been used. The finding gives rise to the suspicion that the central government just splashed money over local governments.

From now on, the board will examine antiquake and tsunami measures in roads and at ports and airports, as well as quake-proof measures in school and hospital buildings across the nation. It will also scrutinize the budget for the reconstruction from the March 11 triple disasters.

It is hoped that the board will detect any questionable items in the budget to eradicate wasteful spending. As a long-term step, the board's staff should be beefed up.



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