Prime Minister Ryutaro Hashimoto indicated Oct. 20 that to accommodate demands from the Liberal Democratic Party, he may sacrifice some of the streamlining proposals suggested in an interim report drafted last month by a blue-ribbon government panel, which he heads.During the first meeting of a House of Representatives ad-hoc committee on structural fiscal reform, Hashimoto said he will accept “better proposals” related to reform of the nation’s bloated administrative system, his policy priority. His remark was in reply to a question from Takeshi Noda, policy chief of the largest opposition party, Shinshinto.Noda questioned Hashimoto’s determination to carry out the reforms, after the prime minister met with fierce LDP opposition over the preliminary report compiled by the Administrative Reform Council. “It will be only natural to accept better proposals,” Hashimoto replied, implying that some recommendations included in the interim report could be replaced by others suggested by the LDP.Noda criticized the remark, saying it showed an apparent change in Hashimoto’s stance on reform and that such an attitude would spoil the entire reform effort. “We had understood that the prime minister was extremely firm on accomplishing the reform when you, departing from tradition, assumed the post of council head … You should not have done that if you change your stance so easily,” Noda said.It is unusual for the prime minister to serve as head of a government advisory panel. The special committee was set up to intensively deliberate on a government-proposed fiscal reform bill that would designate specific reduction targets for key budget areas. It would also stipulate the government’s aim to cut the fiscal deficit to 3 percent or less of gross domestic product by fiscal 2003.The LDP has demanded that the council rethink some of the recommendations, including one to privatize two of three services of the Posts and Telecommunications Ministry. The council has recommended that “kampo” life insurance services be privatized and that preparations be made to privatize the postal-savings service.However, the LDP, which is backed by organizations affiliated with the postal ministry, has demanded that both services, together with mail delivery, be maintained as state-run. If Hashimoto compromises on the matter, the administrative reform effort is expected to lose momentum, because privatization of the services has been a focal issue of reform.

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