In a bid to push forward Prime Minister Junichiro Koizumi’s fiscal structural reform initiatives, the Finance Ministry will consider scaling down the government’s long-term basic plan on public works projects, Finance Minister Masajuro Shiokawa said Tuesday.

The basic plan, covering the period between fiscal 1995 and 2007, calls for the government to spend 630 trillion yen on public works projects, especially those to improve social infrastructure.

The plan was adopted in response to Washington’s demand in the early 1990s that Japan boost domestic demand as a means to curtail its massive trade surplus.

Speaking before a Lower House committee on fiscal and financial affairs on Tuesday, however, Shiokawa acknowledged the need to review the basic plan in order to push forward fiscal reform pledged by Koizumi.

Shiokawa said he “agrees with the idea,” after Kensho Sasaki, a Japanese Communist Party member in the House of Representatives, called for a review of the plan.

Shiokawa, meanwhile, indicated that the money saved from public works spending could be used for social welfare projects.

“This concerns the review of the basic plan and we need to call for public opinion to make changes,” he said. “The Council of Economic and Fiscal Policy is now studying a balance between public works expenditures and those on social welfare projects. I believe their discussions may provide some hint (for reviewing the basic plan).”

The government has already said it wants to trim the number of public works projects for the next fiscal year. Shiokawa’s remarks are seen as a demonstration of the government’s commitment to continuing fiscal structural reform on a long-term basis.

Such a stance is expected to be included in a set of economic and fiscal policies to be finalized by the fiscal policy council later this month. The panel is headed by Koizumi.

In draft policies proposed in late May, the council called for overhauling public works projects in 16 areas, including roads, ports, airports and sewage systems.

The government’s long-term basic plan is designed to provide a fiscal commitment to realizing those projects.

Japan first began compiling such a basic plan in fiscal 1991. Virtually pledging amounts for spending on public works, the plan has been viewed as a symbol of Japan’s macro policy of stimulating domestic demand.

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