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Thursday, Sept. 30, 2010

CABINET INTERVIEW

Katayama: Empowering local governments is key


Staff writer

From the time he started his career as an official at the old Home Affairs Ministry, and then as governor of Tottori Prefecture, Yoshihiro Katayama has been pushing for decentralization of government power.

News photo
Decentralization: Yoshihiro Katayama, minister of internal affairs and communications, is interviewed Monday. KYODO PHOTO

Now, as the new minister of internal affairs and communications, the 59-year-old Katayama is in prime position to advocate his pet policy — taking power and financial resources out of the hands of the central government and turning them over to local governments.

"The decentralization that the Democratic Party of Japan administration is seeking is my life's work," Katayama said at his first news conference.

At the top of his list of goals is to unlock tied government subsidies so local governments can spend this money as they see fit.

In the fiscal 2010 budget, the government earmarked about ¥21 trillion for local subsidies, with some ¥17 trillion aimed at financing social welfare and education. With the proposed reform, the government would untie all of the remaining ¥4 trillion.

This isn't likely to sit well with the ministries that have long held the strings on individual subsidies under their jurisdictions.

"When the ministers held a study meeting Sept. 20, I told them that since this issue is the administration's key policy, we should all tackle it and not be bound by ministerial interests," Katayama said in a group interview Monday.

The tied subsidies fell under the spotlight during the DPJ's presidential election this month, when party heavyweight Ichiro Ozawa said he could dig up financial resources by giving local governments more budgetary discretion.

Ozawa has argued that local governments can slash overall spending by 30 percent if they have the authority, for instance, to integrate local projects, allowing them to cut costs.

Katayama, however, said mending the central government's bottom line shouldn't be the goal.

"It is meant to increase their discretion, not to cut costs," he said. "As a result, there may be additional resources for the central government, but that's just ex post facto reasoning."

Although local governments have welcomed the idea, they are also skeptical the move may lead to a reduction in subsidies — similar to what happened during Junichiro Koizumi's reign as prime minister.

Some ¥4.7 trillion in local government subsidies were slashed for three years starting in fiscal 2004, but the financial resources transferred to local governments mounted to only ¥3 trillion.

"They are traumatized by the experience," said Katayama, who was the Tottori governor at the time.

Known as a reform-minded governor during his eight years in office to 2007, Katayama, the only non-Diet member in the current Cabinet, also said he has instructed officials in his ministry to seek out ways for local governments to issue bonds at their own discretion.

"The current system in which the central government checks the issuance of bonds for individual projects is outdated," he said. "We need to change this."

Local governments are currently required to consult the internal affairs ministry when issuing such bonds.

Asked about postal reform, Katayama didn't have much to say other than promising to respect the agreement between the DPJ and coalition partner Kokumin Shinto (People's New Party) in September 2009.

At that time, the coalition agreed to pass a bill as soon as possible to freeze the sale of Japan Post shares.

In a newspaper opinion piece he wrote in June, Katayama criticized the DPJ for allowing Kokumin Shinto to push a bill aimed at rolling back the planned privatization Japan Post Holdings Co., although the junior party only has a few seats in the Diet.

"Passing the postal bill is a coalition agreement," and he will do everything he can to push it through the Diet, he said.

On the government's policy of raising the ceiling on individual deposits in Japan Post Bank to ¥20 million, double the current amount, Katayama only said that he will "consider the matter based on various circumstances."

Private banks are opposed to the increase because it could spark an outflow of funds from their coffers even though there is no official state guarantee that deposits will be protected above the current cap of ¥10 million.

In his private life, Katayama, a native of Okayama Prefecture, is the father of two daughters and four sons.

His wife passed away last year.

Asked during a news conference what he thinks his wife would say of his appointment to the ministerial post, Katayama said, "Considering her character, I think she would have said 'why do you have to do it?' "



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