Statement: Council’s Basic Policies for Economic and Fiscal Management and Structural Reforms 2004
03 June 2004
- The Council on Economic and Fiscal Policy adopted today “the Basic Policies for Economic and Fiscal Management and Structural Reforms 2004” which would be a basis for the future policy direction.
The Basic Policies praise that advancements in disposal of bad loans and regulatory and fiscal/tax reforms have brought about a rise in stock prices, promoted corporate rehabilitation and realignment and consequently resulted in a decreasing unemployment rate. They therefore indicate that the Basic Policies should remain as they are. However, the current recovery is not driven by private demands and the gap has even widened between companies, regions and workers with a growing number of workers with atypical contracts. The Basic Policies do not indicate measures to overcome anxiety over the future of employment and living among peoples, but would facilitate the bipolarisation of the society.
- On “Structural Reform and its Objectives”, the Basic Policies emphasise that structural reform should be aimed at a simple, efficient government in supporting challenges of companies and individuals, as well as at curtailed government spending at the central and local levels. However, structural reform aimed at only fiscal reconstruction would not overcome the present deflation-led recession. Furthermore, the Policies call for further disposal of bad loans in the course of 2004 that is the final stage of the “intensive adjustment period”. Policies themselves should not be individual policy objectives, but should be achieved as a result of getting out of deflation. The Policies anticipate that Japan is getting out of deflation, with a 2% or more nominal growth rate in 2006 and later. However, the Policies on the whole are weak in indicating measures for the government to generate demands. They excessively rely on deregulation, opening of markets to the private sector and self-reliance of local governments.
- On the “three-in-one” reform that the Policies identify as an effective means to transfer authorities from the central government to local ones, it is suggested that the transfer of tax revenues should be at the level of around 3 trillion yen. However, this is not calculated on the assumption that an adequate transfer is to be made but will possibly lead to a decline in the quality of administrative services that peoples need. On the administrative reform, the Policies are limited to proposing that targets be set for individual projects, but figures of jobs that have been created should be reported and a General Accounting Office (GAO) established.
On “fundamental enhancement of human resources”, the Policies fail addressing the youth unemployment which has been particularly serious and therefore should indicate concrete measures to establish a steady linkage between human resource development and employment.
- The government should first change its top-down method with the Cabinet given full authority and should shift its policies so as to break distrust of politics, wipe away anxiety over the future of employment and life and do away deflation-led recession and high unemployment, listening to voices of peoples and communities.
Lastly, the ruling coalition today rammed the government-sponsored bills on the pension system through the Committee of the House of Councillors. Rengo will work even harder to get a radical pension reform achieved in a genuine sense and its demand realised.