Japan Press Weekly

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2008 January 9 - 15 [POLITICS]

Osaka gubernatorial election focuses on fiscal crisis

The Osaka gubernatorial election will be officially announced on January 10 and held on January 27. The Japanese Communist Party recommends lawyer Umeda Shoji, a candidate endorsed by the “Association for Building a Bright and Democratic Osaka Administration.”

Umeda and two other candidates, one backed by the Liberal Democratic Party and the other backed by the Democratic Party, are expected to contest each other in the election. Ota Fusae, the incumbent governor, has given up running for the race due to her involvement in money scandals.

The Osaka Prefectural government has long been in the so-called “all-are-ruling-parties” regime led by the Liberal Democratic, Komei, and Democratic parties. Although it may seem that this time the “all-are-ruling-parties” forces have split into two blocs, the underlying structure of this election is the confrontation between a democratic candidate supported by the residents and candidates supported by business circles in the Kansai region. In fact, the Kansai business world endorses both the LDP and DPJ candidates.

Late last year, it was revealed that the Osaka Prefectural government had covered up a deficit of 350 billion yen by putting off the repayment of the debt. Thus, the fiscal crisis has become a major issue in this election.

The amount of the prefecture’s outstanding debt has reached nearly five trillion yen or more than 560,000 yen per resident.

The debt was swollen in the 1990’s. Its amount tripled from 1.3 trillion yen at the end of FY 1991 to 4.1 trillion yen at the end of FY 2000.

This rapid debt accumulation was mainly caused by the increase of public works projects at the average annual rate of 40 percent at a time when recession reduced the prefecture’s tax revenue at an average annual rate of 20 percent. Almost 60 percent of resources for these projects (1.6 trillion yen) were financed by debt.

As early as 1996, the prefectural government itself admitted that its fiscal crisis was created by the prefecture’s construction projects instigated by the central government’s series of economic-boosting measures and projects related to the Kansai International Airport, an airport constructed on an artificial island, as well as urban development projects and construction of business parks to invite companies to build their plants there.

Governor Ota who assumed office in 2000 also dared to continue the construction of the second runway at the Kansai International Airport based on an overestimate of the frequency of takeoffs and landings. Between FY 2000 and FY 2006, the prefectural government furnished Kansai International Airport Co., Ltd. with interest-free loans of 67 billion yen and shouldered 8.5 billion yen of bank interest.

Unnecessary urban development and irrigation projects to which the prefectural government once considered ending were resumed under pressure from the LDP and the DPJ. An urban development project called “Healthy City with Water and Green” even faced an expected deficit of 75 billion yen from the very beginning.

Furthermore, the Osaka Prefectural government has annually poured up to five billion yen into services to a special-interest group called Kaido (Buraku Liberation League).

Among political parties, it is only the JCP that has been demanding the cancellation and a drastic review of those wasteful and large-scale development projects financed by debts.

“The national government forced Osaka Prefecture to rapidly increase public works projects in order to serve business circles’ interests. The prefectural government dutifully followed the national policy. Osaka’s ruling Liberal Democratic, Komei, and Democratic parties also pushed the prefectural government to implement them. The irresponsibility of all of them is now called into question,” said JCP Osaka Prefectural Assembly Members’ Group Chair Miyahara Takeshi.

Umeda Shoji, the JCP-backed candidate, said, “Amid the deep fiscal crisis, it is important for the Osaka Prefectural government to disclose information on the administration to the public, drastically review large development projects, end services to Kaido, and levy appropriate corporate taxes on large corporations with capital of more than one billion yen. In order to rebuild the prefecture’s finances based on the interests of residents, the prefectural government must put an end to the wasteful use of tax money and drastically change its policy.”