Editorial
More thinking required on plans to review postal reform
The government's proposal to review postal reform has raised concerns about how the Japan Post group's business activities will change. A number of Cabinet ministers have voiced opposition to the proposal and Prime Minister Yukio Hatoyama has pointed to the need to thoroughly discuss the issue.
The ruling Democratic Party of Japan (DPJ) had initially called for reductions in the Japan Post group's financial businesses. Nonetheless, the DPJ-led coalition administration's latest proposal calls for the expansion of its financial businesses while increasing the government's involvement in its management.
Calls by State Minister for National Policy Yoshito Sengoku for thorough discussions within the Cabinet on the proposed raise in the upper limit on postal savings deposits and postal insurance benefits are understandable. However, one cannot help but wonder why such calls surfaced after the government has officially unveiled the review plan.
Under the proposal, the upper limit on deposits with Japan Post Bank Co., which is currently set at 10 million yen per person, would be doubled, while that on insurance benefits by Japan Post Insurance Co. would be sharply raised from the current 13 million yen to 25 million yen. Moreover, Japan Post Insurance would be allowed to sell cancer insurance policies.
Japan Post Holdings Co. and Japan Post Network Co., which operates post offices across the country, would be merged into a new holding company, and Japan Post Bank and Japan Post Insurance would be placed under the umbrella of the new entity. Moreover, the government would not only hold a stake in the new holding company and indirectly hold shares in the two postal financial firms through the parent company but also have veto power over them.
In other words, the DPJ-led administration aims to use the increased profits that the two postal financial firms would gain through the expansion of their business activities to make up for a decrease in the demand for mail delivery services.
However, Japan Post Bank and Japan Post Insurance, which do not have expertise in operating funds in the market, have no choice but to invest their deposits in low-interest government bonds, even though they are expanding their business activities.
Moreover, approximately 100,000 irregular workers would be promoted to full-time employees under the review plan. Although the move to give permanent positions to those workers with an unstable employment status is welcome, it raises questions as to whether the Japan Post group can constantly gain enough profits to cover a drastic increase in its personnel costs as a result.
In an apparent bid to help cover the increased personnel costs, the government plans to expand Japan Post Bank and Japan Post Insurance's business activities. However, the increase in postal savings deposits and postal insurance policies that are virtually guaranteed by the government would pose a serious threat to small and medium-sized private financial institutions. If the government is forced to financially support private financial institutions that face a crisis as a result of postal firms' business expansion, it would be tantamount to using a massive amount of taxpayers' money to support postal companies.
Having taken these potential problems into consideration, the DPJ had called for reductions in postal companies' financial businesses. However, after taking over the reins of government in mid-September last year, ruling coalition partner People's New Party leader and State Minister for Postal Reform Shizuka Kamei, who is a staunch opponent of postal privatization, has seized the initiative in a review of postal reform. Following the appointment of a former bureaucrat as president of Japan Post Holdings, Kamei again appears to be overriding resistance from the DPJ.
Under the circumstances, Prime Minister Hatoyama and State Minister for National Policy Sengoku are calling for further discussions on a review of postal reform. The prime minister is urged to work out measures to prevent the postal reform review from posing a threat to private financial institutions and from forcing taxpayers to shoulder the financial burden of the reform in the future.
(Mainichi Japan) March 25, 2010