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Saturday, Dec. 7, 2002

ANALYSIS

Battle looms on road-report measures


Staff writer

With a key panel adopting a set of radical recommendations on the future of the nation's tollways, the focus of public attention shifts to the upcoming battle between lawmakers and the reformist Cabinet of Prime Minister Junichiro Koizumi.

The measures in the final report by a government panel discussing the privatization of four public expressway operators would, if realized, deprive politicians and bureaucrats of much power over the new privatized road firms.

Some observers say the move will boost public support in the Cabinet -- the only driving force for Koizumi, who is isolated within his own ruling Liberal Democratic Party.

"In the short term, (the adoption of the report) will definitely be a plus for Koizumi, because it calls for reforms that are in line what he has been trying to do," said Satoru Matsubara, a professor of economic policy at Toyo University.

Reform of the four public road firms, saddled with snowballing debts and criticized for their dubious links with pork-barrel politicians, has been one of the main policy aims of the Koizumi Cabinet, which has called for reducing government debt and inefficient public works.

However, whether the reforms will actually come into reality remains to be seen.

Most LDP lawmakers have expressed opposition to Friday's final report, which calls for, among other things, an end to the construction of unprofitable toll expressways. This stiff resistance will likely make realizing the proposals an uphill battle for the prime minister, at best.

In fact, Chief Cabinet Secretary Yasuo Fukuda hinted during a news conference in the afternoon that the government may not fully utilize the recommendations in the report.

"As (the final report) was not submitted with the full consensus (of the panel members), we will have to give it thorough consideration," Fukuda said, adding that it is "only natural" for the government to hold discussions with the ruling parties on the matter.

Timing is also an issue.

Matsubara, who is also known as an administrative reforms expert, observed that the actual bills for achieving the report's proposals are not likely to be submitted to the Diet for another two to three years, at which time the political situation may be very different.

Under the scheme agreed to by all seven panel members, a semi-governmental body would be established to take over the assets and debts of Japan Highway Public Corp., Metropolitan Expressway Public Corp., Hanshin Expressway Public Corp. and Honshu Shikoku Bridge Authority before they are privatized.

But one key issue that divided them was whether to oblige the newly privatized entities to try to buy back the assets in about 10 years to gain autonomy as privatized firms as early as possible.

Although most lawmakers are believed to want to maintain strong government control over the privatized firms and oppose the 10-year target to transfer the road assets to them, the final report included the target.

Five members agreed this was necessary, fearing that without such wording the privatization would intentionally be delayed and eventually canceled through pressure from lawmakers and bureaucrats.

"If we do not specifically mention (the 10-year target), that would be tantamount to us not having done anything," warned Kazuaki Tanaka, a professor at Takushoku University who was one of the five panel members supporting the final report.

In what is seen as another blow to politicians opposing drastic reforms of the four entities, the final report would ban the privatized bodies from using funds from the government's "zaito" loan program, which has been blamed as the main reason why the four road operators have accumulated huge debts.

Under the current system, local governments do not need to shoulder any financial burden when new toll expressways are built. Instead, the costs are covered with zaito funds, which are supposed to be repaid using toll revenues.

Much of the zaito money comes from funds collected through postal savings and postal insurance. Because a great portion of those assets have been injected into inefficient public corporations via the zaito program, concerns have been raised that people's money could be lost if those semigovernmental firms should fail.

Some members maintained that the report needs to be radical so Koizumi will have ammunition -- popular support -- to battle resistance forces within the LDP.

Panel Chairman Takashi Imai repeatedly said during the deliberations that if radical reforms are proposed, the Koizumi Cabinet would be put in a difficult position due to politicians' resistance.

But Eiko Oya, one of the five members, countered that a report that can be interpreted as yielding to lawmakers with vested interest groups, dubbed the "road tribe," would be a fatal blow to the Cabinet because public support is the only thing Koizumi can depend on.

"If we submit a report that strikes a compromise with 'road tribe' politicians, the Koizumi Cabinet would be doomed," she said during one panel session.



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