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Local authorities turn up noses at broke pension fund resorts

by Shigeru Takahashi

Kyodo News The sale of 12 health resorts to repay debts incurred by the now-defunct Pension Welfare Service Public Corp. is not proceeding smoothly because the local governments that were asked to purchase them are all refusing to do so.

The corporation chalked up losses of 2.3 trillion yen in fiscal 2000 alone and was replaced by the Pension Management Fund in April. The fund is now investing in national bonds and stocks, using part of its 147 trillion yen reserve fund collected from contributions for welfare and national annuity pensions.

Opened in the 1980s, the Greenpia health resorts, located nationwide from Hokkaido to Kagoshima, each have a large area of land and are equipped with campsites as well as first-class lodging facilities.

The state pays the expenses of buying the land, building the facilities and their upkeep, while their operators, the Pension Resort Association and public-private sector companies set up by local governments, pay the utility and personnel costs. Despite these favorable conditions, only five of the 12 resorts have no cumulative debts.

The operators are doing everything they can to attract customers, including abolishing higher weekend fees and offering other incentives, but some of them are in unfavorable geographical locations and are losing out to private competitors.

“There were few resort facilities at that time and it was meaningful to return benefits to insured people who had been paying their premiums for a long time,” said an official at the Health, Labor and Welfare Ministry.

Debts incurred in the expansion of business during the assets-inflated bubble economy have swelled, and the fact that many bureaucrats became executives at the operators of the resorts after retirement from top government posts has been sharply criticized.

The secretariat of the Cabinet’s administrative reform headquarters came up with a revised proposal this month that the resorts be transferred to the private sector by fiscal 2005. The move is part of Prime Minister Junichiro Koizumi’s government’s efforts to streamline the bureaucracy and cut fiscal expenditures provided to state-backed corporations.

However, as all the local governments asked to buy the facilities have rejected the deal, making it impossible to recover the 190 billion yen invested in their construction, taxpayers will have to shoulder the debt.

Also targeted in the reform is Labor Welfare Corp., which runs 39 hospitals throughout the country for treating workers injured in industrial accidents.

With the economic slump, however, such accidents have been decreasing year on year, and the hospitals are losing a combined 15 billion yen a year. The cumulative deficit in the last 10 years amounts to about 137 billion yen.

“Frankly speaking, the reform plan gets on our nerves. There should be reform for bad corporations and reform for good corporations,” one of the corporation’s executives said.