A state task force on Friday approved a plan calling for the thorough review of 157 government-affiliated corporations in an attempt to save 1 trillion yen in government expenditures.

The report, approved in the inaugural meeting of the panel, headed by Prime Minister Junichiro Koizumi, calls for the review of 74 special public corporations and 83 government-authorized entities, and outlines the standards for conducting the evaluation.

The panel, which includes all Cabinet ministers, will now begin concrete discussions along lines set by the interim report. It will finalize a reform plan by yearend, three months ahead of the initially set schedule, with the aim of reflecting the reforms in the fiscal 2002 budget.

“The most important thing is to consider how we can minimize the wasteful spending of taxpayer money,” Koizumi told the inaugural meeting. “Along this line, it’s not too much to say that this panel will be the most critical body in our administration.”

Government-affiliated corporations have often been blamed for inefficiency and interference in private sector business. Koizumi’s initiative to review the once-sacred government-backed firms forms part of his efforts to streamline the nation’s bureaucracy and alleviate fiscal woes.

In the fiscal 2001 budget, about 5.3 trillion yen has been allocated to such subsidies.

Specifically, Friday’s interim report names 19 government-backed financial institutions that should be reviewed and possibly merged or abolished in favor of entities that already double up on similar functions.

Among them is the Housing Loan Corp., whose services are similar to those provided by private financial firms, the report said.

The report also says that of the 19 entities, those whose functions overlap should be integrated, and that the financial services provided by 21 other government-affiliated institutions should be taken over by the existing financial bodies.

The report also names 16 entities in charge of public infrastructure as targets of review, saying the government should consider the possibility of abolishing those that fail to ensure profitability.

Among the 16 named in the report are the Japan Highway Public Corp. and the Water Resources Development Corp.

To facilitate the review on the 157 institutions, the report divides the functions of the organizations into 18 categories, such as financial services, research and development and international cooperation.

It outlines 60 standards for review, for example, whether the functions have become redundant, whether private institutions are not offering similar services, and whether the services pay or not.

“An overall reform has finally got started,” Nobuteru Ishihara, state minister in charge of administrative reform, told reporters after the panel’s gathering.

“Although we have discussed reviewing some certain institutions, it is the first time that we are making a full-scale review,” he said.

He also quoted Koizumi as telling the panel that he hopes the planned reform would save 1 trillion yen in subsidies to government-affiliated entities.

Ishihara noted that he will release in September hypothetical reports about performances of those corporations under review on the assumption that the same services have been offered by private firms.

“Then, you will see how much they are wasting,” said Ishihara.

While reform efforts for the government affiliates gather momentum, resistance from the organizations concerned is expected to grow.

Heavily dependent on government subsidies and continuing operations despite dire financial conditions, public corporations have also been criticized for almost automatically granting positions to retired bureaucrats.

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