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Thursday, April 1, 2004
Pension reform debate could turn into a battle for the ages
Diet deliberations on government-sponsored pension reform bills appear headed for turbulence, with the ruling and opposition parties locking horns over remarks by Prime Minister Junichiro Koizumi just days ahead of the Thursday start of debate on the contentious legislation.
"It's the start of a war," remarked a senior government official, predicting a stormy time for the government in pushing through the generally unpopular bills, which would cut pension benefits.
While the ruling and opposition camps had been at odds over the bills from the start, many ruling coalition lawmakers received a jolt Saturday when Koizumi suddenly expressed his support for integrating the three public pension schemes to correct the differences in the premium burden depending on occupation -- a key idea of the pension reforms advocated by the Democratic Party of Japan.
"I, too, think that it would be better to integrate (the three schemes). I believe the ruling parties and the DPJ can cooperate to this end," Koizumi said during taping of a television talk show Saturday, adding that the matter should be deliberated for a year or so.
Encouraged by what seems on the surface as a slip of the tongue by the prime minister, the DPJ is now arguing that Koizumi effectively recognized that the government's reform bills have shortcomings.
"The prime minister's remark means he has admitted the government plan is a defective product and far from the fundamental reforms (it has touted them to be)," DPJ policy chief Yukio Edano reportedly said Tuesday night.
"If you sell a product knowing it's flawed, you are called a cheat."
Indeed, Koizumi's stance marks a clear departure from the official position of the government and the ruling bloc, which have insisted that their reforms, unlike the failed efforts to revamp the system in the past, are "fundamental" and will eliminate the need for any more fine-tuning "for the next 100 years."
There are currently three pension schemes, covering self-employed people, salaried workers and public servants. Critics say this has led to huge imbalances in benefits and premiums depending on a person's occupation.
For example, self-employed people are not covered by an additional public pension that is linked to income, although salaried workers and public servants are, while the ratio of premiums paid to benefits received is generally considered better for public servants than for people covered by the other two schemes.
Meanwhile, an increasing number of part-time workers are not covered by the pension system for salaried workers, even if they work in the same office.
But the government-sponsored bills would only set numerical targets for the reduction of benefits and rises in premiums in the long term, and lack structural reforms to correct such existing imbalances, skeptics say.
Welfare minister Chikara Sakaguchi has acknowledged this, telling a gathering at the Japan National Press Club in December that "this time, we have only made proposals regarding burdens and premiums."
"We haven't touched on what the future image of the pension system should look like," he said. "If we were to do so, we have to solve the problems that lie behind it."
One major obstacle to fundamental reforms such as integration of the three schemes is the difficulty in grasping the actual income of self-employed people.
Unlike salaried workers, whose taxes are automatically deducted from their wages, self-employed people make their own income declarations -- which experts believe leave plenty of room for tax evasion.
The DPJ advocates the introduction of a system under which all taxpayers would be given a number that would have to be cited when conducting business transactions, saying this would enable the government to more accurately grasp income and assets.
But the idea is unpopular among the self-employed, who say it would violate their privacy, and they form one of the Liberal Democratic Party's strongest support bases.
"Debate has been really fierce over the pros and cons of the kind of measures that are available to grasp the income (of premium payers)," Koizumi said during Saturday's recording. "(Integration) is a big issue. We would not be able to carry it out in a matter of one or two years."
But any discussion among the ruling and opposition camps that continues for years would prevent the government's pension reforms from becoming the focus of debate before a House of Councilors election scheduled for July.
Some political insiders say that is the real aim behind Koizumi's remarks.