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Saturday, Nov. 28, 2009

'Politically binding' budget screening over

Staff writer

Prime Minister Yukio Hatoyama's waste-cutting panel finished its nine-day review of allocations Friday for 447 public works projects in the government's record-high ¥95 trillion budget for fiscal 2010.

By Friday, the panel had recommended budget cuts totaling nearly ¥750 billion, and demanded the return of a further ¥1.05 trillion in reserve funds to the government's general account.

Hatoyama said he needs to consider those recommendations "very seriously," although he might have to make political decisions on some parts of the proposed cuts.

It is still unclear what impact the recommendations by the Government Revitalization Unit will have on the final budget, as they are nonbinding, and many of the suggestions drew fire from supporters of public spending amid the weak economy. One professor who oversaw the effort said the outcome would be "politically binding."

Hatoyama's administration aims to trim the 2010 budget by ¥3 trillion or more.

Under the microscope were budget requests for U.S. forces stationed in Japan, health care, local government subsidies, large-scale research and development projects, and administrative agencies. Lawmakers from the ruling Democratic Party of Japan and experts from the private sector spent an hour on each item on the list, grilling related officials.

Even projects spared the chop faced budget freezes, cuts and reviews.

In one example, the panel sought to freeze a supercomputer project with a proposed budget of ¥26.8 billion. A body under the Education, Culture, Sports, Science and Technology Ministry is working with universities to develop the world's best supercomputer. But members of the panel questioned the practicality of the project.

It also recommended that the ministry's ¥5.8 billion budget request for the experimental GX rocket project be delayed.

While noting some problems with the panel's review, experts largely welcomed it as a new way to cut government spending that was open to the public.

"Its major significance is that the budget (compilation process), which had been invisible to the public, has become visible," said Jun Iio, a professor of politics at the National Graduate Institute for Policy Studies.

People were allowed into a Tokyo gym to see the panel at work; the proceedings were also streamed on the Internet.

With the introduction of the new process, Iio noted, the government officials have realized they need to clarify the objectives of public projects to get funding.

But he pointed out that the budget screeners were largely unprepared for the review. Their comments weren't all convincing, either, he said.

Because the panel's recommendations aren't binding, the review won't free up new funding. Lawmakers should therefore take responsibility for drawing up the final budget, Iio said.

"This budgetary request screening is not a magic bullet. Although it can refer to this (review), the government can still just decide on the budget based on its own view."

A government official said that how the reviews are reflected in the budget will not be known until the Finance Ministry's draft is compiled around late December, adding it will have "various discussions" with other ministries before the final draft is made.

Iio said the government will still need to clearly explain to the public its final budget decisions, where they differ from the panel's recommendations.

Tomoaki Iwai, a professor of political science at Nihon University, praised the budget-cutting effort. "I think very highly of the aspect that increased transparency, and that (the review) can be seen" by the people, he said.

When the budget review was conducted behind closed doors, people never knew what was going on. But under the new process, "what kind of budget will be necessary . . . and what the DPJ administration has in mind will at least be obvious, and that is good," Iwai said.

While noting the criteria of the panel's review are not clear, Iwai said nothing is perfect to start with.

But "by opening the process to the public, people can voice support and opposition" on items under review, Iwai said. "It is an important first step."

In the meantime, the government should make its goals and priorities clear so it can develop clear-cut criteria for the reviews, Iwai said, adding that the government cannot completely ignore the panel's recommendations, because they are "politically binding."

Information from Kyodo added

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