An Analysis of the Breakup and Reelection of Local Governments

ABSTRACT

By decree of the Council for Decentralization Reform, the goal of reform will be to carry local governments from "doing the national minimum to achieving the local optimum". The results of self-assessments made by Gifu and Aomori prefectures demonstrate that government services provided by prefectures could be roughly halved. The assessments also reveal that it could be possible to reduce the services provided by prefectures by adopting a new vision that would (1) remove police services completely from the scope of prefectural governments and (2) either privatize public universities and hospitals or place them in the hands of independent non-civil service administrative corporations.

The biggest barrier to the transfer of public universities and hospitals to the control of independent non-civil service administrative corporations lies in the monetary renumeration system-including salaries and retirement allowances-since pay conditions in the public sector are better than those of the private sector, and thus public servants have no incentive for accepting transferal to non-civil service status. Furthermore, the negative reserve in the post-retirement pension fund for national and local public servants currently stands at 143 trillion yen, a situation that weighs heavily on public finance.

In order to accelerate the pace of administrative/financial reform in the direction of disintermediation of administrative services, and to facilitate the transfer of public services into the control of independent non-civil service corporations, it is necessary to revert to the fundamental principle of "bringing public servant pay conditions in line with the average standard applicable to comparable positions in the private sector". Furthermore, a full set of measures that include a 20% reduction in the retirement fund of civil servants and the integration of the welfare pension scheme with the Pension Fund for Local Government Officials and the National Public Service Personnel Fund are required in order for the reforms to be successful.

Introduction

Conclusion