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Mergers of cities and towns should be promoted along with decentralization to reduce administrative costs, said Takeshi Noda, the new home affairs minister.

“It is necessary to promote mergers among local cities, towns and villages to provide better administrative services for a lower cost,” he said in an interview. “We must promote such moves at the same time as we proceed with decentralization.”

Noda joined the new coalition Cabinet of Prime Minister Keizo Obuchi Thursday as the only representative from the Liberal Party, and called on local governments to play a greater role in governing their individual communities.

“We should share work between the central and local governments based on the principle that local governments take care of things closely concerning local residents,” he said. “I believe we already have a broad consensus on this point and the question is at what pace we will proceed on what specific areas. (If we can’t decide) we cannot move forward,” he said.

To promote mergers of communities, Noda said prefectural governments, not the central government, should play a major role because they are more knowledgeable about the circumstances of each community. “It is no good to proceed on mergers based on such a uniform criteria as population size,” he said. “It would create problems.”

Noda, a former Finance Ministry official, said the fiscal strain of local governments has now come to the point where remedial action is needed now. “It is important to secure stable tax revenues for local governments that are not affected by economic performance,” he said. “With that point in mind, we need to review the local corporate taxation system.”

Asked about the potential effect of the introduction of merchandise coupons, Noda said the measure will definitely have a positive impact on the economy although it is hard to measure to what extent. “We will study the possibility of continuing this coupon scheme, listening to the opinion of New Komeito (which came up with the scheme),” he said.

Meanwhile, Noda voiced optimism about reaching final agreement with the Liberal Democratic Party on a set of bills to cover new guidelines for Japan-U.S. defense cooperation. “We might have given people the impression that we postponed the conclusion on the issue as we have yet to specify exactly which points of the government-proposed bills to revise. But we do have clear-cut ideas about the contents.”

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