EDITORIAL: Budget-cutting panel

Many voters who cast ballots for the Democratic Party of Japan in the Aug. 30 Lower House election did so in hopes that the new DPJ government would eliminate wasteful government spending.

The mission has been assigned to the Administrative Reform Council, which held its first meeting Thursday.

The council's first task is to cut back a record 95 trillion yen in budget requests for the next fiscal year, which starts in April. The requests reached such a colossal figure because ministries and agencies went all-out to find fresh money to finance the proposals the DPJ made in its election manifesto.

But it turns out the amount is far bigger than the government's estimated tax revenue.

The only way for the government to avoid reckless debt financing is to eliminate wasteful expenditures and ax nonessential projects and programs.

Yoshito Sengoku, the minister in charge of administrative reform, has set a target of trimming the requests to 92 trillion yen. But Prime Minister Yukio Hatoyama is calling for an even sharper reduction.

Many projects and programs of dubious value were kept alive during the decades-long reign of the Liberal Democratic Party until it was displaced from power by the DPJ.

The change of government offers a great opportunity to overhaul the budget planning process radically without being bound by the fetters of the past. We hope the panel will wield the ax in a bold way to achieve major spending cuts.

One potentially powerful way to chop budgets is to reassess projects and programs. The method, known as jigyo shiwake (sorting out operations), was developed by Japan Initiative, a private-sector think tank. It has been used for seven years to review the expenditures of local governments. It has proved effective in streamlining budgets for greater efficiency.

Under this approach, local government employees and outside evaluators called shiwake-nin work together to prioritize local governments' administrative services one by one. In a nutshell, they try to find out whether each service is really necessary, whether it should be done by the local government or can be outsourced to the private sector and whether the scale of the service and the way it is delivered are appropriate.

It is unclear whether this approach would also work for the state budget, which, by its very nature, is vastly larger than any local government's spending plans. Such efforts could be overwhelmed by the depth and complexity of the budgetary and bureaucratic labyrinth. The ability of evaluators would be severely tested by the task.

The council has recruited the think tank's chief, Hideki Kato, to head the council's secretariat and will mobilize private-sector experts in such matters along with 30 or so DPJ members, including Yukio Edano, a former chairman of the DPJ's now-disbanded Policy Research Committee.

Its task is not confined to ferreting out wasteful outlays. It also involves identifying projects and programs that should be left to local governments or private-sector entities and prioritizing policy proposals. It is only natural that politicians assume responsibility for the panel's decisions.

The government intends to make the process fully visible to the public. That's good because the pressure of public scrutiny helps ensure fair evaluations.

This initiative is also important for raising taxpayers' awareness that they are taking part in the policymaking process. This should trigger national debate on the state of administrative services and the division of roles between the public and private sectors and between the central and local governments. This is where the true significance of administrative reform lies.

Since the new DPJ government has carried out a sweeping review of the budget requests, there is not much time left until the government's decision on the draft budget at the end of December. So the council has good reason to target only about 240 project requests that it expects to scrap or downsize sharply.

But we urge the council to tackle the entire budget next year and thereafter. The panel should obtain the necessary skills and know-how through this year's reassessment work.

--The Asahi Shimbun, Oct. 23(IHT/Asahi: October 24,2009)