Decentralization Reform in Japan – Stagnation or Advance? – Toru Yamada

Brief version of a paper for the International Conference on Decentralization held in Kanagawa University November 14th 2013.

(Ⅰ) Preface

In August 2009, a new Democratic Party of Japan (DPJ) government under Prime Minister Hatoyama took power in a landslide victory, with 308 of 480 seats in the Lower House. The election marked a real change of government, which overthrew the long term dominance of the conservative party in Japan, the Liberal Democratic Party (LDP).The DPJ ran on a platform for “the local sovereignty” (decentralization reform), which was given one of the top priorities among its domestic policies. Now, after three years of DPJ three prime ministers, the reform-plans did not live up to their promises despite a few important advances. The decentralization reform has proved difficult to reach in the current Japanese political climate, especially with the unprecedented disaster of March 2011 Tohoku earthquake and tsunami, and the extraordinary recovery effort that followed.

This paper discusses the facts of the decentralization reform as well as its stagnation and the main causes for it. Of course it is very difficult to analyze the latest political phenomena of Japan and this is only a provisional explanation of them.

Some people believe that the DPJ leadership was not ready for real or practical politics, especially with respect to central bureaucracy. Those same people say that the conflict between the government and its opposing political parties was so severe that it leads to confusion within the government party itself. With regards to the decentralization reform, I want to add another view on the reform, popular among local politicians.

First I will provide some background by outlining the political situations which the DPJ administrations faced and initiated.

During the DPJ control, three leaders of the party were elected to the Diet as Prime Minister, Yukio Hatoyama (September 2009 to June 2010), Naoto Kan (June 2010 to September 2011) and Yoshihiko Noda (September 2011 to December 2012). Now we turn to the question of what developments occurred under these administrations:

(Ⅱ) Performance of the DPJ Administrations

(A)  The Hatoyama Cabinet

In general, the DPJ administration regarded central bureaucracy as the most important and serious problem. The party focused on regaining political leadership and eliminating bureaucratic resistance with the slogan of “political initiative, instead of bureaucratic initiative”.

In line with this idea, the cabinet took several measures modeled after British governmental change. Two of those measures were (1) the establishment of a Three Post Conference composed of the minister, vice-minister and political undersecretary and (2) suspension of the Conference of Administrative Undersecretaries.

The purpose of the Three Post Conference was to take the promised “political initiative”, excluding high officials from the main decision-making-process. When the LDP was in power, the Conference of Administrative Undersecretaries had been seen as a symbol of bureaucratic power. The conference was held twice a week just before cabinet meetings to coordinate the ministries’ intention and interest finally, deciding bills for the Cabinet. Cabinet meetings were more or less brief formalities held to put the minister’s seal on the bills. The DJP administration did away with this conference. However, the result was the loss of contact and coordination between the cabinet and the high-ranking officials as well a weakening of bureaucratic morale.

The second serious issue for the DPJ administration was a financial one, namely, making the new administration’s budget for the following year (In Japan, budget-making starts in June). In the election campaign, the DPJ had pledged to increase child-allowances, subsidies for farmers and so on. They needed enormous financial resources, and the administration planned to cut down on “wasteful” expenses through its new budget proposal.

The Hatoyama’s cabinet attempted to strike a fresh note by introducing a new style to assess the budget proposal, that is, by holding an open forum. The speakers at the forum included DPJ Diet-members, ministry officials and civilians nominated by the government. The forum was broadcasted over the TV, creating a public sensation and partially succeeded –I say “partially”, because the budget cuts totaled 1.7 trillion yen, but the following years’ budget reached 95 trillion yen, an increase of 7.5 trillion yen. The Hatoyama administration was forced to issue an enormous amount of national debt, like the former LDP administrations.

The third and fatal problem for the Hatoyama Cabinet was the one of the U.S. military base in Okinawa Prefecture. There had been an agreement among the U.S, the former LDP, and the Okinawa Prefectural Government to remove the Futenma Marine Base from the center of Ginowan City to Henoko, a more remote location also in Okinawa In the election campaign, the DPJ leader Hatoyama personally spoke about relocating the base abroad, or at the very least to somewhere outside Okinawa. On the one hand, Hatoyama’s words raised the expectation of the Okinawa people and, on the other hand, angered the US government which took the Hatoyama’s remark as an intention to repeal a US-Japanese (including Okinawa) agreement that took 13 years to negotiate.

I omit the details of that situation here, but it is certain that confusion surrounding the issue proved fatal for the Hatoyama’s Cabinet. Caught between the people’s opinion in Okinawa and the U.S. government, Hatoyama was forced to acknowledge the US-Japanese agreement and resigned as prime minister in June 2010. Tension between the Cabinet and the Foreign and Defense Ministry increased the confusion further.

(B)  The Kan Cabinet

The next Prime Minister, Naoto Kan, was a unique politician who entered the political world due to a grassroots movement. At the beginning, the Kan Cabinet was popular with over 60% in the polls. However, the Kan Cabinet had a conflict within the party, namely, a conflict with the group of Ozawa.

The new Prime Minister Kan excluded the Ozawa group from his cabinet, instigating Ozawa’s strong antipathy towards Kan. Mr. Ozawa was a powerful politician whose own party had merged with the DPJ, and he played a major roll in the process of the governmental change. After the 2009 election, Mr. Ozawa organized a strong fraction within the DPJ, and became Secretary-General of the DPJ when the Hatoyama Cabinet was in power. Ozawa’s vulnerability was that he was often criticized about suspicious campaign contribution. In fact, Ozawa was later prosecuted for accepting illegal campaign contribution and declared not guilty. Criticism of plutocracy is a cornerstone of the DPJ platform, and so conflict within the party grew stronger, as time went on.

After Kan’s inauguration as a Prime Minister, he immediately faced an election of the Upper-House. Mr. Kan appealed to the electorate to raise the consumption tax without first discussing it within the party. Mr. Kan acted as Finance Minister in the Hatoyama Cabinet, and tended to be influenced by the Finance Ministry after he became Prime Minister, even though he was originally a political activist of a grassroots movement and an antagonist of the bureaucracy.

The election results caused a great deal of damage to the DPJ, because the party lost its majority in the Upper-House, and since then, criticism from out- and inside of the DPJ increased. For example, the government was blamed for its “timid” diplomacy in the Chinese fishing boat affair around the Senkaku Islands.

The next challenge the government faced was making a budget for the year 2011.The process was difficult, because the DPJ lost the majority in the Upper-House and was forced to compromise with the LDP on many issues such as child allowance. The Ozawa group criticized those compromises as a breach of promises the DPJ made in the 2009 election.

The Diet narrowly approved the 2011 budget, but the plan was attacked by various groups and parties. All this happened just as the Tohoku Earthquake and the Fukushima Nuclear Accident rocked the country and took the lives of over 15,000 people. The Kan Cabinet was forced to continue governing as a crisis management administration.

Even now it is difficult to evaluate the Kan Cabinet’s crisis management. Facing the crisis, there appeared a movement to build a grand coalition of the DPJ and the LDP, but it fizzled out soon. After that, various measures to meet the disaster lead to further confusion among politicians. In June, the Kan Cabinet managed to get over a non-confidence in the Diet with the compromise within the DPJ, but it no longer had the power to govern effectively, and after enactment of a law on renewable energy, one of its few accomplishments, Kan resigned from the position of Prime Minister in August.

(C)  The Noda Cabinet

The third and last Prime Minister of the DPJ was Yoshihiko Noda, Finance Minister in the Kan Cabinet. Mr. Noda was a more conservative politician than Hatoyama and Kan. After the election to party leader, he appealed reconciliation within the party and nominated A. Koshiishi, one of leading members of the Ozawa group, to General Secretary of the DPJ. Additionally, he tried to restore the good relationship with the bureaucrats and revived a conference of administrative undersecretaries to be held not before, but after the cabinet meeting in order to provide more transparency.

The Noda Cabinet decided to reopen a nuclear power plant in Ôi Town in the Fukui Prefecture. It also decided to nationalize the Senkaku Islands, which sparked a political standoff with China under the new leadership of Xi Jinping.

Prime Minister Noda’s primary goal was to make a “unified reform of tax- and social security system” Mr. Noda and the Finance Ministry wanted to raise the consumption tax rate to balance the national deficit which has been the most serious financial problem in Japan.

Prime Minister Noda made it his mission to solve Japan’s deficit problem. But the Ozawa group opposed him, because of the alleged breach of promises made during the 2009 election. Because of the Ozawa group’s opposition, the Noda Cabinet solicited support from the opposition parties, the LDP and the Komei-Party, which had recognized necessity of the tax-reform during their ruling period. In exchange for their support of Mr. Noda’s tax reform, the LDP and the Komei-Party forced the DJP to dissolve the Lower-House.

The bill for the unified reform passed the Lower-House in July and the Upper-House in August of 2012. The new law regulates raising the consumption tax rate by 8% (at present 5%) in 2014 and 10% in 2015. Meanwhile review of the social security system was postponed until a committee for that purpose could be established.

The result of these reforms on the DPJ was devastating. The Ozawa group and its allies left the DPJ, causing the DPJ to lose its two-thirds majority in the Lower House along with its ability to pass a bill without the agreement of the opposition-controlled Upper-House. After that, there was hardly any time left for the Node Cabinet, until the Lower-House was dissolved at the end of that year.

(D)  Revival of the LDP Administration

The result of the December 2012 election was a landslide victory for the DPJ’s opposition. The LDP won 294 and the Komei-Party 31 of the 480 seats in the Lower-House, so that they gained 2/3 majority and enough to pass a bill. Under the leadership of a new Prime Minister of the coalition cabinet, Shinzô Abe, the Japanese economy has partially regained its positive performance (“Abenomics”). That brought about great popularity of the LDP and the Komei-Party among the general public in Japan.

The LDP and the Komei-Party also won the Upper-House election in June 2013. Prime Minister Abe is one of the most conservative politicians in the LDP. He aims at revision of the Constitution, namely, §96 concerning the revision procedure of the Constitution, and then §9, concerning the article on war-renunciation. In this manner, Mr. Abe intends to “re-nationalize” Japan. So far, the Abe Cabinet has proceeded carefully, stressing strong economic performance. The Abe Cabinet is now trying to change interpretation of §9 to obtain a right of collective self-defense.

(Ⅲ) Reform for the “Local Sovereignty”

So far, I have mentioned the background of the decentralization reform in the period of the DPJ government. Now, I’ll show you some contents of this reform.

The Hatoyama Cabinet’s popularity was very high in 2009. So the Cabinet proposed plans for reform.

The Hatoyama Cabinet’s first attempt at reform was the establishment of the “Council for Strategy of the Local Sovereignty” in the Cabinet Office in November 2009. The Council consisted of ministers, scholars and local politicians under Chairman Hatoyama. Its main objects were: ① devolution, ② reform or abolition of local branches of the central ministries, ③ easing of government’s legal restriction on the local administration, and ④ financial issues, specially the alteration of a subsidy tied to an unconditional grant-in-aid.

What we have to pay attention to here is the fact that the DPJ didn’t work to introduce a “Do” system as the first step of the reform. Ozawa and his group claimed that the country should be divided into 300 self-governments、not into 10 to 12 “Do”s. In December 2009, the “Plan for the Decentralization Reform” and its ”Work Schedule” was finalized by the Hatoyama Cabinet. Seemingly, the trial of the new Cabinet started smoothly.

Altogether there were 4 types of reform bills that the three DPJ cabinets intended to submit to the Diet. The first established a council to address local problems between the central government and local associations (ⓐ), the second type of bills concerned devolution (comprised of the first through third bills, ⓑ, ⓒ, ⓓ), the third, bill concerned the reorganization of the local branches of the central ministries (ⓔ), and the fourth revised the Local Autonomy Law (including the first and second bills,ⓕ and ⓖ). As a matter of fact, these bills were not all made under the leadership of the DPJ Prime Ministers, for they got preoccupied with national issues. Most of these bills stemmed from recommendations of the “Committee for Promotion of Decentralization Reform” under the LDP administrations.

Three bills, ⓐ, ⓑ and ⓕ, were presented to Parliament in March 2010, while the Hatoyama Cabinet was in power. However, the bills did not easily pass the Diet because of a complicated debate, for example, on the ambiguous concept of “local sovereignty”. The three bills were finally adopted under the Kan Cabinet in April 2011, just after the disaster of March 11th.

Bill ⓒ was also approved under the Kan Cabinet by Parliament in August 2011 and bill ⓖ was approved in November 2012 under the Noda Cabinet. Bills ⓓ and ⓔ, on the other side, were scrapped because of the dissolution of the Lower House. Finally,

Bill ⓓ was adopted under the Abe Cabinet, after the governmental change in 2012.

An outline of the laws follows.

Law ⓐ established a council to consult local problems between the central government and 6 local associations, namely, the association of prefectural governors, mayors of cities, of towns, and association of speakers of local assembly, of prefecture, of city, and of town. The council was the first formal one, and it is rather surprising that a council of this kind had not been set up so far in the government.

Laws ⓑ,ⓒ and ⓓ mitigate restrictions on local administrations. Specifically the laws ① ease obligations of administrative activities and ② abolish the legally mandated administrative and procedural framework, and extend the legislative power of local assembly. These laws regulate the revision of laws affected by the reform. A total of 303 laws had to be revised in the reform, showing that there were many articles restricting local administrations.

Laws ⓕ and ⓖ mainly relate to the regulation of local assemblies. They extended the local assembly’s discretion to decide number of assembly members, its sessions etc. and broadened the reach of the assemblies’ legislation or resolution. It is important that local assemblies have the ability to regulate matters of statutory entrusted function, that is, functions delegated to local government based on national statutes, as long as they don’t interfere with national security. Thus, the local assembly is expected to be more active than ever.

As regards bill ⓔ, I’ll refer to that later.

(IV) Present Situation of the Decentralization Reform and the Issue of the “Do” System

In essence, the problem has continued unsolved up to this day.

After the earthquake, the reform restarted under the Noda Cabinet, and Prime Minister Noda kept up the enthusiasm for it. The cabinet tried to decide a law to reorganize local branches of the central ministries (this time, local branches of the Ministry of Land and Transport, Economy and Trade, and the Environment). This was one of the key issues of the decentralization reform. The main concept was to transfer the competences of local branches to a newly devised unit called “special wide union” consisting of several prefectures. However, the draft was also this time exposed under the strong pressure of the ministries, central and local politicians.

Surely the idea that the new union should be strictly controlled by central bureaucrats in the case of an emergency was struck down, but some incomprehensible provisions were inserted into the bill. For example, the territory of local branches and “special wide union” shall be combined. Accordingly, the existing Union of Kansai (including Osaka, Kyoto, and Kobe) , which was the biggest supporter for the reform, can’t be a recipient of the transferred competences, because the Union of Kansai doesn’t include the Nara Prefecture, a prefecture included in the Local Branch of Kansai. The Noda Cabinet completed the bill in November 2012, but could not present it to the Diet, for the Lower House was dissolved by the Noda Cabinet in December. This issue is currently in suspense.

The discussion on the “Do” system has been distorted. As explained above, the DPJ ’s plan on decentralization reform has not contained the idea of the “Do” system because of disagreement within the party. A new advocate of the system came from a new type of right-wing politicians like Toru Hashimoto, Mayor of Osaka (Former Governor of the Osaka Prefecture). He has insisted on introduction of the new system beginning with the merger of the City of Osaka with the Osaka Prefecture, named Osaka-To, like Tokyo-To.

Mr. Hashimoto is an ambitious politician with an authoritarian style. He set up a “Party for Restoration” mimicking the Meiji Restoration and declared a new political regime with a decentralized state. The party gained popularity among the people who expect strong leadership in politics and gained 53 seats in the 2012 Lower House election, becoming the second biggest opposition party. Then, the irony began.

The LDP, winner of the election, wanted to take advantage of the “Hashimoto boom”. The new Prime Minister Abe intended to revise the Constitution, first by simplifying §96, the provision addressing the revision procedure for the Constitution, then §9, for renunciation of war. For that purpose, Abe and the LDP supported the Osaka-To concept and the “Do” system.

In April 2013, the LDP, the Kōmei Party, the Restoration Party and one other small party agreed to submit a bill on the “Do” system to the Diet. Its contents are, (ⅰ) declaration of idea and principles, (ⅱ) establishment of a National Committee for the “Do” System to discuss its formation within 3 years, (ⅲ) preparatory work for its legal system within 2 years after the National Committee’s report is published. Seemingly, the reform started smoothly.

But the scene turned round once more. Hashimoto’s boom lost its momentum after his remark on “soldiers and sex” in May. The Restoration Party was utterly defeated in the Upper-House election of July 2013; the Party gained 8 seats in contrast to the government parties, which gained 76 of 121 seats. Ever since that election, the LDP has kept Hashimoto’s party at a distance.

At the present time, Prime Minister Abe is saying that the bill called the Basic Act for Promotion of the “Do” System will be submitted to the Diet this fall. But there is strong objection against the new system among local politicians and the Diet members associated with them, who have various political and economic interests in the current system.

The National Association of Prefectural Governors, composed of an equal number of supporters and opponents, has not been able to come to a consensus on the issue. The Japan Association of City Mayors has objected to it, because the introduction of the new system will prerequisite another merger of the municipalities, which will weaken their financial power and political autonomy.

The editorial of the Asahi newspaper recently stated that the introduction of the “Do” system is a radical change to the whole system of Japan and most parties seem to support the decentralization reform. However, when we examine the discussion on the issue of local branches of the ministries and the “Do” system, it seems that few politicians are prepared to make it a reality.

(V)Conclusion

In conclusion, the disappointment of supporters for decentralization reform during the rule of the DPJ government is deep. With the conflict between the Hatoyama-, Kan- Cabinet and the central bureaucrats, the dependence of the Noda cabinet on them and the backdrop of national disaster, the three JDP cabinets failed to realize substantial reform.

The new LDP Cabinet appears to continue the reform. But its top priorities are constitutional and economic issues, and the latter is an instrument for the former. Prime Minister Abe’s popularity depends upon economic performance, and without economic stability, he cannot actualize his ambitious constitutional revisions.

At present, the cabinet stresses revitalization of local economies and encourages formation of “special economic districts” being relatively free from the state’s regulation. It is not certain, whether this policy will lead to a new decentralization reform or not.

I would like to close this paper by referring to the energy problem in Japan. Since the nuclear accident, numerous voices surfaced to push the government (including the local ones) to reexamine this problem. Some want to overthrow the nine electric power companies’ regional monopoly system of generation and transmission of power by using renewable energy. These voices are calling for the decentralization of energy production, following one of the Japanese existing catchphrases of local politics “locally product and consume”. I think this movement has considerable potential for decentralization reform in Japan.

Toru Yamada
Professor of Political Science, Kanagawa University, Yokohama

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