Prime Minister Junichiro Koizumi's initiative to give local governments more fiscal freedom is meeting stiff resistance from within his own administration. He wants to achieve his goal by cutting state subsidies. To make up for subsidy cuts, the central government needs to shift more of its tax-collecting authority to local governments. The bureaucracy in Tokyo, however, is trying -- with the backing of politicians -- to keep control over these strings-attached payments.
In a recent meeting with prefectural governors, Education Minister Nariaki Nakayama rejected their request for a large reduction in education subsidies. He offered no alternative. Health Minister Hidehisa Otsuji also angered the governors with a proposal that would increase social-welfare spending by local governments while maintaining the ministry's jurisdiction.
In his policy speech to the Diet last Tuesday, Mr. Koizumi said the government would "respond sincerely" to the gubernatorial request for a 3 yen.2-trillion subsidy cut. The negative responses by the education and health ministers, however, fly in the face of that positive statement. "They (the ministers) were speaking for the bureaucracy," said Gifu Gov. Taku Kajiwara, who heads the National Association of Prefectural Governors.