Finance Minister Masajuro Shiokawa said Wednesday that the government should reduce Japan’s ratio of public works spending to gross domestic product to between 1 percent and 2 percent in the next 10 years to match the level of such spending in western countries.
“Japan should bring the ratio to the level of the United States or European countries over the next decade or so,” Shiokawa told the House of Representatives Financial Affairs Committee.
Public works spending in Japan accounts for 6.2 percent of GDP. In other countries, however, that ratio has recently been as much as 78 percent lower.
“While Japan has built up its economic and urban infrastructures through public works projects, it is time that the nation turned to the quality of such projects,” the finance chief told the Lower House committee.
According to the Finance Ministry, public works spending in 1997 accounted for 2.8 percent of GDP in France, 2.0 percent in Germany and 1.9 percent in the U.S. In Britain, the ratio was 1.4 percent in 1996.
Prime Minister Junichiro Koizumi is seeking to make substantial cuts in public works spending in the fiscal 2002 government budget amid widespread criticism that decades of high-level, debt-financed government spending on rural public works projects have proved ineffective in spurring demand.
In a draft of guidelines on economic and fiscal policies released May 31, the state Council on Economic and Fiscal Policy recommended bringing the proportion of public investment to GDP down over the medium term.
But the government has not yet set a GDP-based target for public works spending, Shiokawa said.
Balance sheets on way
Senior Vice Finance Minister Seiichiro Murakami said Wednesday the government intends to unveil state budget special accounts balance sheets to ensure their transparency.
“It is of utmost importance for the public to be aware of the facts (about the accounts) so that fiscal reform will be promoted,” Murakami told a House of Representatives Financial Affairs Committee meeting.
Hideto Fujii, a deputy director general of the ministry’s Budget Bureau, said two other ministries have the Health, Labor and Welfare Ministry and the Public Management, Home Affairs, Posts and Telecommunications Ministry have allowed the public to access the financial status of their special accounts and that other ministries and agencies will follow suit.
The government has special accounts for specific purposes such as airport and road construction.
There has been criticism that the actual state of the special accounts is unclear because detailed financial reports of the special accounts have not been made public.
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