The Diet enacted key legislation Friday that lays out a timetable for Prime Minister Junichiro Koizumi’s efforts to reform and slim down the government over the next several years.

The bill easily cleared the Upper House, where the ruling coalition, the Liberal Democratic Party and New Komeito, holds a majority.

The bill aims to create a “simple and efficient government” by cutting the state’s heavy debts and reducing the size of state-held assets.

But the Democratic Party of Japan criticized the bill, saying it fails to deal with core issues, including the corruption that arises from cozy ties between the government and industry, as seen in recent bid-rigging scandals and “amakudari” — the practice of placing former government officials in companies they once regulated.

“The government’s bill lacks the basic principles of administrative reform, a concept of ideal government, and a (definition of) the functions it must fulfill,” DPJ lawmaker Toshio Ogawa told Friday’s plenary session. “Through the deliberations over the bill, it has become obvious that the government and the ruling bloc actually have a halfhearted attitude toward true administrative reform.”

The bill calls for the government to cut the number of bureaucrats by 5 percent, merge four state-run financial institutions into a single body by fiscal 2008, and assess the effectiveness of semigovernmental bodies.

Shoko Chukin Bank and the Development Bank of Japan will be fully privatized, while Japan Finance Corp. for Municipal Enterprises will be abolished. The aid loan division of Japan Bank for International Cooperation will be transferred to the Japan International Cooperation Agency.

Specifically, the number of government employees are to be reduced by more than 16,600 from the current 332,000, with this retrenchment also applied to Self-Defense Forces members.

Local governments are seeking to achieve a net cut of more than 4.6 percent.

The law also aims to slash the number of special state accounts — which currently total 31 — to 12 to save 20 trillion yen while reviewing the management of independent administrative agencies often criticized as being inefficient.

Information from Kyodo added

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