An interim report compiled Oct. 24 by the Liberal Democratic Party's study group on fiscal reform has drawn public interest as an indicator of the future direction of fiscal policy b the ruling party and the government.

Media attention on the report tended to focus on the likely increase in the consumption tax rate, giving an impression to the public that the LDP's priority is on a tax hike. However, there was much more to that report.

While making it clear that the current structure of government spending is unsustainable, the LDP panel proposed that an increase in social security costs be kept to the minimum and local government expenditures be streamlined. It also cited methods used by other industrialized countries for fiscal reform, such as setting macroeconomic targets and stringent rules on government spending.