The Lower House entered substantive debate Tuesday on two sets of bills designed to reorganize the central government and decentralize state powers, underlining the need to create a new government to meet the changing needs of society.

The Lower House's special committee on administrative reforms is discussing 17 bills to reorganize the 22 existing government ministries and agencies into 10 ministries, two agencies and a commission. It is also debating revisions to 475 bills concerning dispersing state power to local governments.

The government is placing priority on the two sets of bills during the remainder of the current Diet session, which is scheduled to end June 17.

"Japan now faces the third reform period, following the Meiji Restoration and the reforms implemented immediately after World War II," Prime Minister Keizo Obuchi said. "This time, we, the Japanese public ourselves, must implement reforms without any foreign pressure."

The most contentious issue is over who should be granted authority over failed financial institutions and in managing financial system crises.

Last year, the ruling Liberal Democratic Party, the Democratic Party of Japan and New Komeito agreed to strip the Finance Ministry of its policy-planning power in these areas and give it to a new Financial Agency, but the government has since reinterpreted the agreement.

During Tuesday's committee debate, Yukio Hatoyama, deputy secretary general of the DPJ, criticized the government for its decision to have the Finance Ministry and the Financial Agency share policy-planning authority in the two areas.

"We cannot accept the fact that the reform of the Finance Ministry is incomplete," Hatoyama said.

Obuchi only urged the DPJ to support the proposed bills, saying the government made efforts to draft them in the spirit of the negotiations.

In another matter, Yuriko Koike, a Liberal Party member, reiterated the party's assertion that the Defense Agency should be upgraded to Defense Ministry status to make it more responsible for security policy.

Again, Obuchi only urged the Liberal Party to endorse the bills as proposed to the Diet.

On the decentralization of state powers, Hatoyama also contended that local government autonomy will not be strengthened unless the bills include measures to transfer revenue resources from the central to local governments.

Obuchi, acknowledging the importance of strengthening the local government's coffers, responded that the government plans to legislate reforms to this end in the future.

"We are proposing a basic direction for decentralization in the bills. ... We feel that the Cabinet must propose necessary measures and submit bills to the Diet as early as possible," he said.

While the government reorganization bills are aimed at creating a slimmer, more efficient government by Jan. 1, 2001, the decentralization bills are designed to limit the central government's role to matters of national concern and nationwide policy affairs, leaving matters of local concern to local governments.