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Reversal on deposit limit a major gamble for DPJ

by Alex Martin

The Cabinet’s recent decision to accept a plan to double the ceiling on postal savings accounts to ¥20 million, as proposed by postal reform minister Shizuka Kamei, marks a drastic policy shift for the Democratic Party of Japan, which in the past argued the maximum should be halved from the current ¥10 million.

Experts say the reversal reflects the strategy of DPJ Secretary General Ichiro Ozawa, who is trying to siphon votes from the Liberal Democratic Party by appealing to unions and associations affiliated with Japan Post, the nation’s most powerful vote-gathering machines.

It remains to be seen whether the gamble will succeed. In fact, Prime Minister Yukio Hatoyama’s about-face over postal privatization could seriously hurt his party’s reformist image ahead of the summer Upper House election, experts say.

“The National Association of Postmasters (Zentoku) . . . is Japan’s largest vote-gathering machine, holding sway over an estimated 300,000 votes,” said Satoru Matsubara, an economics professor at Toyo University who advised LDP Prime Minister Junichiro Koizumi, architect of the postal reforms now being rolled back.

“And Ozawa clearly wanted to win their support,” he said, adding this prompted the DPJ to reverse its stance on postal privatization to align itself with Kamei-led Kokumin Shinto (People’s New Party), which is backed by Zentoku.

Japan Post, the country’s largest financial institution, has long been criticized for funneling private savings to the public sector, an inefficient destination.

During the 2005 general election campaign, when Koizumi was still prime minister, he whipped up public anger at the postal services to push for their privatization.

In contrast, the DPJ said that rather than reorganizing Japan Post, emphasis should be placed on freeing up the giant pool of deposits to help the private sector grow.

“The DPJ had argued that postal savings funds should remain public, but should also be downsized” to prevent further buying of government bonds and increasing the national debt, according to Matsubara.

But he said that after Ozawa took the DPJ’s helm in 2006, the party went through a drastic review of its policies to differentiate itself from the LDP. The DPJ backed out of Koizumi’s privatization process and reversed its call for reducing postal deposits.

“I think it’s appropriate that the postal savings cap differs from what the DPJ proposed before, considering how the scheme of things has changed,” Hatoyama told reporters the day after the March 30 Cabinet meeting, where he gave the go-ahead to draft a bill along the lines of Kamei’s proposals. Kamei, a champion of rural economies where post offices play a key role, was a primary political foe of LDP colleague Koizumi.

“2005, after all, was five years ago,” Hatoyama said.

Indeed, public anger over the vested interests of postal workers may have faded considerably in the past five years.

Hatoyama was referring to the year when Koizumi dissolved the Lower House after the Upper House voted down his postal reform legislation, prompting a snap general election in which his LDP won a landslide victory and succeeded in getting the privatization through the Diet.

Kamei and other LDP lawmakers who were booted out of the party by Koizumi for opposing the bill went on to form Kokumin Shinto, which has pledged to reverse the privatization process.

Since postal reform took effect in 2007, the Japan Post group has repeatedly complained that the privatization process was complicating transactions and curtailing its ability to provide nationwide “universal service,” especially in the countryside, where residents — many of them elderly — have lost their only access to a financial institution.

The DPJ has also been pressured by the Japan Postal Group Union, an organization with 229,000 members that has supported the party and has been rallying for the elimination of the ceiling on postal savings deposits.

During a government hearing in late January between Kamei and representatives from Zentoku, the Japanese Bankers Association and the Life Insurance Association of Japan, Yoshifumi Tsuge, chairman of Zentoku, requested that the government raise the cap to ¥50 million. At present, only ¥10 million is insured.

“If we are responsible for maintaining universal service, it would be unfair without the government providing a certain level of guarantee,” he told reporters after the hearing.

Kamei’s proposed plan, although not granting the full amount requested by Zentoku, will still substantially raise the limit.

“As I’ve mentioned before a dozen of times, our goal is to take good care of (postal) workers while providing universal service without injecting tax money,” Kamei told an April 2 news conference.

Koichi Nakano, a political science professor at Sophia University in Tokyo, said, however, that at this point it is unclear how much influence Japan Post-affiliated votes will have in the upcoming Upper House election.

“Despite being cast in the spotlight with the recent turn of events, Kamei and his party have virtually no public support,” Nakano pointed out.

True, recent opinion polls indicate Kokumin Shinto’s support rate stands at zero percent.

And the DPJ, reeling from money scandals, suffers from an anemic support rate hovering around 30 percent.

A recent poll conducted by Kyodo also indicates a majority of the public is against the government’s plan to roll back the postal privatization process.

Out of 1,024 respondents, 50.8 percent said they disagreed with the government over the revision, while 38.8 percent agreed.

With an unfavorable wind blowing against the ruling bloc, Nakano said “there is a possibility that the 300,000 postal votes will be of little significance” in the election.

Nakano also said that without an adequate explanation of why it has altered its policy toward postal reform, and with opinions within the party yet to be unified, it could be inevitable for the public to view the DPJ as “wavering” in maintaining a consistent policy.

“The implications of the recent policy decisions are substantial,” he said. “The DPJ needs to justify its actions.”